What is Employer of Record?
Hiring employees in another country can be complex. Local labor laws, payroll regulations, tax requirements, and statutory benefits vary widely and expose businesses to compliance risk if handled incorrectly.
An Employer of Record (EOR) simplifies international hiring by acting as the legal employer of your team in another country—while you retain full control over how your employees work day to day. With an EOR, companies can build and manage international teams without setting up a local legal entity or navigating unfamiliar employment regulations on their own.
What Defines an Employer of Record?
An Employer of Record is a third-party organization that legally employs workers on behalf of a client company in a specific country. The EOR assumes responsibility for local employment compliance, payroll, tax withholding, and statutory benefits, while the client company directs the employee’s role, responsibilities, and performance.
This model allows companies to expand internationally with speed and confidence, reducing legal exposure while maintaining operational control over their teams.
Responsibilities of an Employer of Record
An Employer of Record serves as the legal employer of your international workforce. This means the EOR is responsible for meeting all local employment obligations under applicable labor laws.
At the same time, your company remains fully responsible for:
- Day-to-day management
- Role definition and performance expectations
- Project ownership and decision-making
- Team culture and alignment
The EOR manages the employment framework; you manage the work.
Key Functions and Responsibilities of an Employer of Record
An Employer of Record handles the employment infrastructure required to hire and retain staff compliantly in another country.
These responsibilities typically include:
Drafting and maintaining locally compliant employment contracts
Processing payroll, taxes, and mandatory contributions
Administering statutory benefits and employee entitlements
Managing onboarding and offboarding processes
Staying current with local labor laws and regulatory updates
Serving as the legal employer in dealings with government authorities
By centralizing these functions, the EOR enables companies to scale internationally without the operational burden of maintaining local HR, payroll, and legal entities.
Benefits of Utilizing an Employer of Record in the Philippines
Using an Employer of Record in the Philippines allows companies to access highly skilled talent while minimizing risk and administrative overhead.
Key benefits include:
Faster market entry without entity setup
Reduced compliance exposure
Predictable employment costs
Centralized payroll and HR administration
Local labor law expertise
An EOR model enables businesses to focus on building and leading high-performing teams, rather than managing regulatory complexity.
When Should You Engage an Employer of Record (EOR)?
Want to test a new market before long-term investment
Need to hire quickly in another country
Lack internal expertise in foreign labor regulations
Are scaling teams across multiple jurisdictions
Require a compliant bridge while setting up a local entity
Why Companies Choose an Employer of Record
Reduced Administrative Burden
The EOR manages payroll, benefits, and compliance, removing the need for internal teams to navigate foreign employment laws.
Improved Time and Cost Efficiency
By outsourcing employment administration, companies can redirect resources toward growth, product development, and customer success.
Compliance Monitoring and Risk Mitigation
Labor and tax laws change frequently. An EOR ensures employment practices remain compliant with local regulations at all times.
When to Use an Employer of Record
To Explore New Markets
An EOR enables companies to hire local employees and evaluate market potential without establishing a legal entity upfront.
To Reduce Contractor Misclassification Risk
Hiring international contractors can expose businesses to compliance and tax risks. An EOR provides a compliant employment alternative.
To Act as a Temporary Entity Solution
An EOR can legally employ staff while a company completes entity setup or transitions into a permanent local structure.
To Support Mergers or Acquisitions
During acquisitions or restructuring, an EOR can maintain compliant payroll and employment continuity without disruption.
Build Your International Team with Confidence
Employer of Record services remove the complexity from international hiring—allowing you to focus on building strong teams, maintaining control, and scaling responsibly.
Connect with KMC Teams to explore how an Employer of Record solution can support your expansion goals and help you hire with confidence.