Top 5 Myths About Employer of Record Payroll Services—Debunked

 

As companies go global faster than ever before, the demand for a solution to onboard international talent quickly and legally has skyrocketed. Enter the Employer of Record (EOR)—a company that provides payroll, tax, employee benefits, and other human resources activities for your remote or international employees in one package. Despite being a great solution for companies who are looking to add overseas employees, the stigma attached to a remote employee through an EOR has made many companies hesitant to use EOR services.  
 
In this blog, we will touch on the top 5 myths about Employer of Record payroll services and discuss how a great EOR can change your global talent strategy overnight.  
 
Myth 1: EOR Services Are for Only Larger Companies  
Reality: 
It’s easy to think that only large players with large budgets are the ones that use EOR services, but that is usually the opposite. Small businesses and startups use EOR payroll services and gain significantly from that investment. Why? Because opening a legal entity in each country you want to employ from is expensive, time-consuming, and unnecessary in most cases.  
 
With the service through the EOR, smaller companies can utilize world-class talent without the cost of creating a new legal entity or respective legal systems of each country. When a start-up is looking to hire its first overseas software developer or to create a remote sales team, the EOR provides an accessible approach to this engagement.  
 
Myth 2: You’ll Lose Control Over Your Employees 
Reality: 
One of the greatest myths is that using an EOR requires giving up control of employees. But in reality, you control everything regarding the employee's day-to-day work—what projects they're working on, how they report, performance measurements, and communication. 
 
The EOR is the legal employer for compliance purposes, and you are the functional employer. Think of them as a backstage stagehand; you handle the performance, and they handle the paper. 
 
Myth 3: EORs only do payroll processing 
Reality: 
Yes, they do payroll processing--but EORs offer much more than just payroll calculators. A quality EOR provides a complete range of HR and legal services, such as: 

• Local- language employment contracts  

• Tax withholding and social security reporting 

• Local-country benefits administration 

• Termination management and dispute resolution 

• Compliance tracking with labor regulations 

With an EOR, you have a full-blown backend HR and legal department—no internal specialist hiring necessary for each nation you hire from. 
 
Myth 4: EOR Services Are Too Expensive 
Reality:  
Though hiring directly can be sticker shock when comparing costs versus EOR services costs, direct hire always has costs embedded - setting up a local entity, getting local accountants and lawyers to hire, hiring them to ensure compliance, and the risk of costly fines for non-compliance. 
 
EOR pricing is mostly adjustable, counts your hiring volume, is known so more quantifiable, provides front-end time savings (quicker speed to market, and less administrative burden on your team). 
 
If you are sure to capture opportunity cost, in terms of cost, EOR might be the least expensive way to go overseas! 
 
Myth 5: EORs Are Not Legally Compliant or Reliable 
Reality 
A global payroll firm with EOR services will always have extensive knowledge of every country in which they do business. This knowledge is from the labor laws to the tax code, to local HR policies. 
 
Compliance is their business model. They will monitor regulatory changes from local locations and adjust accordingly to employment agreements with employees, the tax process, and their benefits packages. 
 
They can eliminate legal risk because EOR will ultimately be the employer under the legal definition (which is synonymous with a domestic employer). For example, there is no risk of the maternity leave policies in France or taxes in Brazil, because you, the employer, are covered by EOR. 

 
Bonus: What to Look for in a Trustworthy EOR Partner 
If you're ready to consider Employer of Record payroll services, here are essential features to consider in a provider: 

• Real-time support in different time zones. 

• Local employment law-advising legal teams. 

• Payroll and HR management platforms that are integrated. 

• Data protection and GDPR compliance 

Select an international payroll provider that behaves more like a partner, rather than simply a processor. An effective EOR should be an extension of your internal HR team. 
 

Conclusion 

EOR payroll services are not a secret or high-risk shortcut— they're a strategic solution that allows businesses to go global quickly, securely, and easily.  
 
By debunking the myths, hopefully, it's apparent how a good EOR service can give your business the power to go global without the hassle of legal red tape or administrative overload.