Global hiring has officially gone mainstream, with 54% of companies now having employees in more than one country. But how are they doing it without creating more problems for themselves in the process?

Opening a legal entity is painful enough in one country, let alone multiple. It’s natural to wonder if alternate solutions like Employers of Record (EORs), who handle hiring all around the globe, expedite the process by living in a legal grey zone.

Let’s answer that question right off the bat: EORs are 100% legal. And they’re not a loophole or a workaround. They’re purpose-built to help companies stay compliant across borders by crossing all the necessary T’s and dotting all the required I’s on your behalf.

To explain why, we’ll first have to answer a few other questions you might have about EORs.

What does an EOR actually do?

So where does this confusion around EOR risks come from? It’s largely down to a lack of understanding around what EORs actually do.

Here’s the basics: An Employer of Record (EOR) is a third-party organization that becomes the legal employer of your overseas talent — so you don’t have to open a legal entity.

“We basically take responsibility for local labor law compliance,” says Amritpal Singh, co-founder of EOR provider Multiplier. That includes everything from payroll to taxes, social contributions, benefits and insurance. “It’s all done in line with what the government in that jurisdiction requires.”

You, meanwhile, maintain control over the day-to-day work and direction of the employee. It’s not to be confused with hiring models like professional employer organizations (PEOs), outsourcing, or staffing agencies, which don’t assume the legal responsibility like EORs do.

Do EORs introduce risks or boost compliance?

No small number of national pay-equity laws have emerged in recent years, with more stringent requirements like the EU’s pay transparency directive incoming next year. With 78% of multinationals already reporting that they face compliance issues due to these shifting employment laws, outsourcing compliance is looking like a more attractive proposition than ever — doubly so for SMBs without endless capital to throw at the problem.

“When EORs legally employ workers worldwide, they assume all risk on your behalf,” says Amrit. “That keeps them motivated to ensure complete alignment with local laws.” Which is why you can think of an EOR as a tool in a business’ arsenal, designed for compliance, not circumvention.

Here’s what that means in practice:

• Zero direct exposure: You’re shielded from penalties for delayed tax payments, missed contributions, or improper terminations.
• Everything above board: The EOR ensures payslips, benefits, and tax filings are handled correctly and submitted on time.
• No entity? No problem: You can hire talent without the long-term commitment, audits, and annual filings of setting up a legal subsidiary

“It’s like renting a furnished apartment instead of buying a place outright,” Amrit adds. “You get the flexibility to move whenever you want, without the hassle of buying furniture, setting up (and paying for) utilities, or dealing with local red tape.”

Are there other reasons for using EORs?

EORs offer benefits beyond compliance, not least in the agility they grant.

Traditionally, going global meant either taking on months of legal setup or working with questionable contractors. EORs solve for both, enabling faster market entry and a focus on growth rather than government filings.

“We built Multiplier because opening an entity was so painful. You had to register, file, comply, audit.” Closing your entity is equally painful. “An EOR keeps you free of long-term commitments to any country,” he says.

There’s also the convenience that comes from centralization. The more entities you open, the more systems your employees’ data is distributed between, and the more security risks you face.

With payroll often being the largest expense for a company (averaging around 50-60% of company spending), errors can be catastrophic, both financially and legally.

However, an EOR centralizes all employee information in one secure system, reducing the chances of data breaches and ensuring that sensitive information is protected under local laws.

EORs: The risk free path to global hiring

EORs are not risky. On the contrary, they are the mechanism that allows you to stay within the bounds of the law and avoid risk entirely.

EORs exist to help companies overcome these hurdles without sacrificing compliance for speed.

You’ve got the answers on EORs. Now there’s just one question left.  Do you want to hire internationally or drown in paperwork before you can even start?”