Compiled by Dr. Vishal Verma

An Employee of Record (EOR) is a third-party organization that acts as the legal employer of a worker on behalf of a client company, especially in countries or regions where the client has no legal entity. The model grew out of global expansion, outsourcing, and remote-work trends, when companies needed a way to hire quickly across borders without setting up local subsidiaries or navigating complex labour laws alone. In practice, the EOR issues the employment contract, runs payroll, manages taxes and statutory benefits, and ensures compliance with local employment regulations, while the client company still directs the employee’s day-to-day work, goals, and performance.

The idea connects to transaction cost economics and risk-sharing theories: instead of bearing the full legal, administrative, and compliance burden internally, the organization shifts those responsibilities to a specialist provider that can handle them at scale. It also links to co-employment and contingent workforce models, where the legal employer and the operational “work controller” are not the same entity. For HR, the EOR arrangement becomes a strategic tool to reduce regulatory risk, speed up market entry, and standardize employee experience across geographies, without sacrificing control over culture or performance expectations.

From an employee’s perspective, the EOR is the name on the payslip and contract, but their sense of identity, belonging, and engagement is usually tied more to the client organization whose teams, leaders, and mission they work with every day. Because of this, Promise Integrity and Brand–Behavior Alignment still matter: if the hiring company promises learning, flexibility, or growth, it must deliver those through its own practices, even if the legal employment wrapper is outsourced to an EOR. In summary, an Employee of Record is a legal and administrative bridge that lets organizations hire globally and compliantly, while keeping the “real” employment experience anchored in the client company’s culture and leadership.