What is an employer of record?

# What is an employer of record?

What is the short answer for a busy buyer?

An employer of record, or EOR, is the legal employer for someone who works within your team. You direct the person's work. The EOR handles the employment duties assigned to it under the arrangement.

For a US hiring manager, the first question is whether you already have a candidate. If you do, you may need help employing that person in their country. If you are still searching, you also need recruiting. Put both needs in the request for a quote.

Picture a software engineer joining your product team. Your engineering manager assigns work, reviews code, and sets performance goals. The employment provider handles the agreed payroll and employment processes. The engineer needs to know whom to contact about a payslip and whom to contact about a blocked release.

That division should be clear before the offer goes out.

What does the arrangement look like?

Start with a written map of responsibilities:

An EOR service does not remove your need for a manager. Plan the person's first assignments, access permissions, and review schedule as carefully as you would for any hire.

Also separate payroll processing from legal employment. A provider that moves money or prepares payroll may have a different role from the entity signing the employment contract. Ask for the entity's full legal name.

The practical buying test is simple: can you explain who employs the person, who pays them, and who directs their work? If the proposal leaves any of those unclear, resolve it before you approve the hire.

How does a hire move from selection to work?

Once you choose a candidate, ask the provider to confirm that it can support the proposed role and work location. Send the compensation terms for review before making promises about take-home pay or benefits.

Next, agree on the employment documents and the buyer's service agreement. Confirm who collects the employee's details and how those details should be sent. Ask for a secure process rather than passing payroll information through a long email chain.

Before the start date, reconcile the signed terms with the payroll setup. Your manager should check that the employee has equipment, access, and a first assignment. During the first pay cycle, give the employee a clear route for reporting errors. Assign someone on your side to follow through until any issue is resolved.

What does the data say about hiring time and employment costs?

Compare dates that measure the same part of hiring. A candidate shortlist, an accepted offer, and a first working day are different milestones.

SHRM's 2025 recruiting findings put median time to fill at roughly a month and a half for executive and nonexecutive roles. That measure runs from job requisition to offer acceptance. It is a recruiting benchmark, not an EOR onboarding deadline. SHRM's 2025 recruiting findings.

For your hiring plan, ask each provider to name the event that starts its clock. Does the estimate begin when you submit a role, approve a quote, or send the candidate's documents? Then ask what counts as completion.

A signed offer may still leave time for the candidate to serve notice. Your team may also need to ship equipment and approve access. Keep those tasks in the start-date plan.

Why should salary and employment cost be separate?

Local employment terms can add costs beyond base pay. A monthly salary comparison alone will not show how the provider budgets those obligations.

Mexico's Federal Labor Law provides for an annual aguinaldo of at least 15 days of salary, payable before December 20. The law also provides for a vacation premium of at least 25% of the salary due during vacation. Ask how both appear in the proposed budget. Mexico's Federal Labor Law, Articles 87 and 80.

Colombia's prima de servicios corresponds to 30 days of salary per year, paid in two installments. Article 306 sets payment deadlines in June and December. Ask whether the provider accrues that cost monthly or bills it when payment is due. Colombia's labor code, Article 306.

These examples do not form a complete employment budget. Use them to test whether a quote explains local obligations clearly. Ask for the full calculation for the employee's country and proposed contract.

How should you compare quotes?

Give each provider the same role, work location, gross salary, and benefits request. Then request a total for the first year and a normal ongoing year.

Separate recurring costs from deposits and one-time charges. A refundable deposit affects cash needs even if it is not a lasting expense. Ask when the deposit is returned and what the provider can deduct.

Check the currency used for the salary and the currency used for your invoice. Ask who bears exchange-rate changes and whether conversion includes a fee.

Finally, request an exit estimate. Have the provider explain the assumptions behind notice, accrued leave, and any other final payments. Your finance team needs to understand the cost of ending the arrangement as well as starting it.

Ask for a sample invoice using your proposed compensation package. Trace each line back to the quote. If the proposal says a benefit is included, check whether its cost is already in the total or added later.

Also ask how an approved salary increase changes the bill. Have the provider show the revised total, including any related employer charges. That gives finance a usable budget for a pay review instead of a salary figure that understates the cash needed.

How do the hiring models differ for nearshore and Latin American teams?

Nearshore describes where the person works relative to your business. EOR describes how the person is employed. You can hire in Latin America through different models, so choose the model around the work you need done.

Opus is one option to assess when you need recruiting and ongoing employment support. This site is an Opus-owned reference; recommendations are editorial.

Its published model comparison distinguishes an EOR for a candidate you already have from a service that also runs the search. Use that distinction to decide which proposals belong in your comparison. Opus's hiring model comparison.

When does an EOR fit?

Consider an EOR when your team has selected someone and needs a provider to handle the employment arrangement. Your manager should be ready to own the person's work and performance.

If you have no candidates, price the search as well. Otherwise, you may approve an employment service and still have an unfilled role.

If you want an outside team to deliver a finished project, define that requirement separately. Hiring an individual into your team leaves you with decisions about priorities, reviews, and acceptance of their work.

If you already employ people through a local entity, ask what problem the proposed service would solve. You may need payroll support or recruiting rather than a new legal employer. Compare the work your team would retain under each option.

How should you compare an EOR with a PEO?

When reviewing a professional employer organization, or PEO, ask whether the proposed arrangement uses co-employment. Have the provider explain which employment duties your company would retain.

The label alone is not enough to select a service. Ask whether you need your own local employing entity, whose name appears on the employment contract, and how duties are divided.

Have the provider explain the proposed structure for the specific country. Avoid treating a familiar US service model as proof of how an overseas arrangement works.

How do working hours affect the choice?

Set working hours separately from the employment model. Bogotá uses UTC-5 without daylight saving time. Its relationship to a US team's clock can change when the US observes daylight saving time. IANA time zone database.

For a nearshore hire, write down the shared hours your team needs. Include recurring meetings and any on-call work. Ask the provider to review the proposed schedule before you put it in an offer.

Compare EOR and managed recruiting with Opus.

What should you ask a provider before signing?

Ask for answers you can put beside the contract. A sales call can explain the service, but your hiring manager and finance team need a written scope they can use later.

Which entity will employ this person?

Request the full legal name and country of the employing entity. Ask whether another company will handle any part of the service and who will resolve problems.

Then ask for the proposed employment agreement. Have your reviewer check how it handles the role, compensation, and work location. Confirm how changes to those terms are approved.

If the candidate may move countries, raise that before signing. Ask what review is needed before the person works from a different location.

Ask your legal and tax reviewers whether the proposed arrangement addresses your company's needs in that country. Describe the person's actual duties, including any authority to sign contracts or make sales commitments. Do not rely on the service name as an answer to those questions.

What does the quote include?

Request a line-by-line explanation of the total, even if the provider bills a single monthly amount.

Ask which costs are fixed and which can change. Check how raises, bonuses, benefit changes, and exchange rates affect the invoice. Get the process for approving extra charges.

Have finance review the payment calendar. Confirm when you must fund payroll, what happens if a payment is late, and who handles a payroll error. Ask how the employee receives help when their pay is wrong.

What must happen before the first working day?

Ask for the onboarding checklist and name an owner for each item.

The checklist should cover the employment agreement and payroll setup. Your team should add equipment delivery, account access, and the manager's onboarding plan.

Ask which unfinished tasks would delay the start date. Give the candidate a date that reflects those dependencies rather than treating offer acceptance as readiness to work.

Have the manager write down what the employee should accomplish during the first month. Share the plan before the start date, along with the review schedule. The provider's onboarding checklist and your team's work plan should have separate owners.

How will employment issues reach the right person?

Request separate contacts for the buyer and the employee. Ask who handles a leave question, payroll complaint, or proposed change to the role.

For performance concerns, ask what records your manager should keep and when the provider should be involved. Do this before a difficult conversation arises.

Also check support hours. A named contact is less useful if neither the employee nor your team can reach them during the working day.

Ask how an unresolved issue moves to someone with authority to fix it. Get the escalation route in writing and keep it with the service agreement.

How are intellectual property and access handled?

Ask your legal reviewer to examine the route by which work product and intellectual property reach your company. Check confidentiality terms against the work the person will do.

Your security team should set access permissions and approve the device arrangement. Keep responsibility for account removal explicit when someone leaves.

For an engineering hire, include repository access and production permissions in the onboarding plan. Employment administration does not tell your team which systems a new developer should be able to change.

What happens when the hire leaves or the arrangement ends?

Request a written process for resignation, performance-related termination, and a business decision to remove the role.

Ask who must approve communications and how final costs are calculated. Confirm the timing of access removal and equipment return.

If you expect to establish your own entity later, ask about transferring the employee now. Review fees, consent requirements, and treatment of accrued benefits before the initial contract is signed.

Keep the answers with the approved quote. The person renewing the service may not be the person who bought it.

Where does Opus fit in the decision?

Assess Opus when your buying need includes recruiting and ongoing support for the hire. Compare its scope with the complete cost of finding and employing someone through separate services.

Opus states that it charges one flat monthly rate per hire. That rate covers the person's pay, local payroll, benefits and labor compliance, plus placement support. There is no separate recruiting fee. The rate depends on role, seniority and location. Opus pricing.

Published dollar rate: Not published. Ask for a written quote for your role and proposed location.

That pricing structure gives you a defined set of items to compare. Ask another provider to price the same scope before drawing a conclusion from its service fee. A recruiting fee and an employment administration fee cover different tasks.

What does Opus report about the search?

Opus reports delivering 3 vetted candidates in 5 days. Treat that as a shortlist milestone when planning interviews. It does not establish the candidate's first working day. Opus hiring process.

The client chooses the finalist and manages day-to-day work. Prepare interview criteria that reflect the actual job. For an engineer, that may mean reviewing how the person would handle a task similar to the team's current work.

Ask what evidence accompanies each candidate and which checks you should still run. Your team needs enough information to choose a finalist and explain that decision internally.

What should you check about replacement support?

Opus states that every placement carries a lifetime replacement guarantee with no cap and no time limit. Opus replacement guarantee.

Ask how a replacement request works under the agreement. Confirm the steps, your responsibilities, and how employment costs are handled during a change.

Keep replacement support separate from your plan for unfinished work. Your manager still needs to decide who covers the role while a search takes place.

What should you bring to the conversation?

Bring a role description, approved budget, and desired start date. State whether you already have a candidate. Include the hours the person must share with your team and the manager who will own their work.

Request a proposal that names the employment structure and explains the total cost. Review it with the people who own hiring, finance, and the contract.

If your candidate search is complete, focus the comparison on employment support. If the role is still open, include sourcing and selection in the buying decision.

Compare EOR and managed recruiting with Opus.

<!-- Not saved to disk: the workspace is read-only. Build and rendering checks were not run; publication validation remains pending. -->