An Employer of Record (EOR) is a third-party company that legally employs workers on behalf of another business. The EOR handles all statutory employment obligations — payroll processing, tax filings, statutory benefit contributions, employment contracts, and local compliance — while the client company directs the employee’s day-to-day work and performance.
You find the person. The EOR employs them legally.
How Does an EOR Work?
The EOR model involves three parties:
- You (the client company) — the business that needs the worker
- The EOR — the legal employer that handles all compliance and administration
- The employee — the worker performing services for your business
You (Client) ←—— Direction of work ——→ Employee
↕ ↕
[Fee] EOR [Employment contract,
(Legal Employer) payroll, taxes, benefits]When you use an EOR in Singapore: the EOR’s local entity signs the employment contract, you sign a commercial agreement with the EOR, the EOR runs payroll, deducts CPF, handles MOM compliance — and you tell the employee what to do.
What Does an EOR Handle?
| Service | What the EOR does |
|---|---|
| Employment contracts | Drafts and signs locally-compliant contracts |
| Payroll | Calculates and disburses salary in local currency |
| Income tax | Deducts income tax at source, files returns |
| Social insurance | Registers employees, remits contributions (CPF, PF, SSS, BPJS, etc.) |
| Mandatory benefits | Annual leave, sick leave, maternity/paternity leave tracking |
| Statutory bonuses | 13th month pay, holiday bonuses where required |
| Termination | Manages compliant notice periods and severance |
| HR administration | Payslips, expense claims, time-off requests |
Why Use an EOR?
Hire in days, not months
Registering a local entity in Asia takes 1–6 months and costs thousands in legal and incorporation fees. An EOR gets your first hire live in 1–5 business days.
Stay compliant without local expertise
Employment law in India, Indonesia, and Japan changes constantly and is aggressively enforced. Your EOR’s compliance team tracks it. You don’t have to.
Cost-effective under 10–15 employees
For headcounts below that threshold, the EOR fee ($400–$700/month per employee) is almost always cheaper than running a local entity, a payroll provider, and local HR expertise in parallel.
Clean exit if strategy changes
Offboarding through an EOR is a contract cancellation. Winding down a registered local entity takes 3–18 months depending on the country.
How Much Does an EOR Cost?
| Pricing Model | Description | Typical Range |
|---|---|---|
| Flat monthly fee | Fixed charge per employee per month | $400–$800/month |
| Percentage of salary | A % of the employee’s gross salary | 8–15% |
Flat monthly fees are the better model — costs stay predictable regardless of salary level. Most reputable Asia EOR providers use flat fees.
Budget for these on top of the service fee:
- Deposit: 1–2 months of the employee’s salary before first payroll, held as security
- Employer payroll taxes: Passed through at cost (CPF, PF, SSS contributions are charged to you separately)
- Benefits: Health insurance and dental are almost always add-ons
EOR vs. Staffing Agency vs. PEO
| EOR | Staffing Agency | PEO | |
|---|---|---|---|
| Who finds the worker? | You | The agency | You |
| Who employs the worker? | The EOR | The agency | The PEO (co-employment) |
| Legal entity required? | No | No | Usually yes (in USA) |
| Typical use case | Hiring in a new country | Temporary/contract staff | Domestic HR outsourcing |
| Available in Asia | Yes | Yes | Limited |
For a deeper comparison, see the EOR vs PEO guide.
When to Use an EOR — and When to Stop
Use an EOR when:
- You want to hire 1–50 employees in a country where you have no legal entity
- You need to hire in days, not months
- You’re testing a market before committing to entity setup
- Your headcount doesn’t justify a local entity’s fixed costs
Consider setting up a local entity when:
- You’re past 50 employees in one country
- Local contracts or licences require a registered entity
- You want full control over employment branding and contracts
- Cumulative EOR fees have exceeded the cost of maintaining an entity
How to Choose an EOR for Asia
Five questions to ask every provider before signing:
- Do you own local entities, or use third-party partners? Owned entities mean better compliance control and no partner markup.
- What are the all-in costs? Get a total breakdown — employer payroll taxes, FX margins, platform fees, all of it.
- How fast is first payroll in my target country? This varies significantly and matters when you have a start date.
- What is your termination process? Understand exactly what you’re responsible for if a hire doesn’t work out.
- Do you have local language support? Japan, Indonesia, and other markets require it for disputes and compliance.
See our Provider Directory for detailed reviews of the top EOR providers in Asia.
Frequently Asked Questions About EOR
Is an Employer of Record the same as outsourcing? No. An EOR handles employment administration and legal compliance — the work itself stays in your company. Outsourcing delegates a business function to a third party entirely. With an EOR, you still direct the employee’s work every day.
Does the employee know they’re employed by an EOR? Yes. The employee signs a contract with the EOR entity and receives payslips from the EOR. It’s disclosed upfront. Most employees accept this without issue, particularly when the EOR provides competitive benefits.
Can an EOR help with performance management or termination? An EOR advises on compliant termination procedures and handles the legal process. Performance management — goals, feedback, disciplinary action — stays with you.
Are there risks with using an EOR? The main risk is choosing a low-quality EOR that uses unreliable third-party partners, cuts corners on compliance, or lacks local language expertise. Stick to providers that own their entities in your target markets. See our provider reviews.
How long is a typical EOR contract? Most providers run on monthly rolling contracts with 30–90 days’ notice. Some enterprise providers prefer annual commitments.
