Employer of Record (EOR) Explained: What It Means for Developers

If you're hired by a foreign company that has no office in your country, you may be told you'll be employed "through an EOR". Here's what that means, how it compares with being a contractor, and what to check before you sign.

What is an employer of record?#

An employer of record (EOR) is a company that legally employs workers in a country on behalf of another company. The foreign company decides your work and manages you day to day; the EOR is your legal employer.

The EOR typically handles:

• Your local employment contract
• Payroll in line with local law
• Statutory deductions and contributions required for employees
• Local benefits required by law, and sometimes extra benefits
• Compliance with local employment law

Well-known EOR providers include Deel, Remote and Oyster, among many others. Not every provider supports every country, and the details vary by country and provider.

EOR vs contractor#

Some platforms that offer EOR services also offer contractor management. That's a different arrangement, so check which one your offer actually uses.

Advantages for you#

• Stability and protection: local employment law applies to your contract.
• Simpler taxes: deductions are usually handled through payroll.
• Benefits: statutory benefits, and sometimes health insurance or allowances.
• Proof of employment: payslips and an employment letter help with loans, visas and rentals.

Possible downsides#

• The headline salary may be lower than a contractor rate, because employer costs and benefits come out of the company's budget. Compare total value, not just the monthly number. See how to compare job offers.
• Less flexibility than contracting, since you work under an employment contract.
• A third party in the middle, so payroll or HR questions may go to the EOR, not your manager.

What to check before you sign#

• Who is the legal employer? The name of the EOR entity in your country.
• Gross salary, currency and payment schedule. If the salary is stated in a foreign currency, how is it converted, and at what rate?
• Deductions: what will be deducted from your pay, and what the employer pays on top.
• Benefits: leave, public holidays, sick leave, health cover, allowances.
• Probation and notice periods.
• Equipment: who provides it, and whether you return it at the end.
• Intellectual property and confidentiality clauses.
• Who to contact for payroll problems.

Ask for a sample payslip or a breakdown of a monthly payment if anything is unclear.

Should you choose EOR or contracting?#

If the company offers both, think about what you value:

• Choose EOR if you want stability, benefits, simple taxes and proof of employment.
• Choose contracting if you want flexibility, multiple clients, or a higher headline rate and are ready to handle your own taxes, leave and savings. Our guide to setting your rate shows how to price that properly.

For your own tax situation under either option, check the current rules with the Inland Revenue Department or a qualified tax adviser.

Key takeaways#

• An EOR legally employs you locally on behalf of a foreign company, which manages your work.
• Compared with contracting, it usually means more stability, benefits and simpler taxes, but sometimes a lower headline number.
• Check the contract: legal employer, currency, deductions, benefits, notice and IP terms.
• Compare offers by total value, not just monthly pay.

Starting your search? Read how to find remote developer jobs from Sri Lanka and working remotely for a US or EU company.

#contracts#payments#remote work

DT

Written by

devlk Team

Editorial team

The devlk team writes practical career guides for software developers: salaries, interviews, remote work and getting paid from abroad.