An employer of record agreement is the document that makes the whole EOR model work, and it is really two documents. A service agreement between your company and the provider sets the commercial terms: scope, fees, liability and exit. A separate employment contract between the provider and your hire, under local law, makes the provider the legal employer. Industry guidance describes the result as a tripartite relationship formalised in two contracts: the EOR acts as the legal employer in the target country while your company retains full control over day-to-day work. Because the agreement is where risk is allocated, the handful of clauses below decide what you have actually bought.
The two-contract structure and who owes what
The service agreement defines the provider's obligations to you: running compliant payroll, administering benefits, filing taxes and maintaining the employment relationship. The local employment contract defines the provider's obligations to the worker, in the form local law requires. Sample clause collections show the consistent pattern: the designated EOR pays the workers, maintains employment and payroll records, and undertakes that employees receive the same wages, benefits and terms as comparable employees, with compliance duties such as labour law and workplace safety sitting on the EOR as legal employer. Your company's obligations are narrower but real: accurate information about the role and the person, timely funding of payroll, and lawful day-to-day direction of the work. Confusion about which document governs a question is itself a drafting failure; the split should be explicit.
The risk-allocation clauses
Liability language is the heart of the agreement. Guidance on EOR contracts is direct that the contract should state the EOR is liable for labour law compliance, and that there is no room for assumptions and implications when defining legal obligations between the parties. Look for a misclassification indemnity, a clear statement of who pays if employment claims arise, and warranties that the provider's local entity actually holds the registrations it needs. Intellectual property needs its own attention: work product vests first in the legal employer by default in many places, so the agreement must chain the assignment from employee to EOR to you, explicitly, for each jurisdiction. Data protection terms matter for the same structural reason: the provider processes your hire's personal data across borders, and the agreement should say on what basis, with what safeguards and audit rights.
The commercial clauses that bite later
Fees deserve line-item scrutiny at signature, because the advertised per-employee tier is rarely the whole invoice: onboarding charges, deposits, currency conversion margins, benefits administration and offboarding costs all live in the schedule. The agreement should state the pricing model, when payments are charged, who bears which taxes and what exchange rate basis applies. Termination and exit terms decide how movable you are: notice periods for ending the service, what happens to the worker's employment when you leave, whether the provider assists transition to a new EOR or your own entity, and what final settlement looks like. Dispute resolution and governing law fix the forum before anyone is angry. Auto-renewal with unconstrained fee escalation is a known trap worth striking out in negotiation.
How to review one before signing
Read the agreement against a short list of questions. Who exactly is the employing entity in each country, owned or partner? Where is the misclassification indemnity and what does it exclude? Does the IP assignment chain reach your company explicitly? What does the invoice add to the advertised fee, on what schedule? How do both sides exit, and what does the worker's employment look like on the other side of that exit? What data flows where, under what safeguards? Push every material answer into the written agreement rather than the sales thread, because the contract, not the marketing, controls what happens when payroll breaks or an employment claim lands. Nothing on this page is legal advice; have counsel in the relevant jurisdictions review the actual documents.
Questions people ask about employer of record agreement
Who signs an employer of record agreement?
Your company and the EOR provider sign the service agreement; the provider and the worker sign a separate local employment contract. The worker is not a party to the commercial agreement, which is why the split of obligations between the two documents needs to be explicit.
Who is liable if employment law is breached under an EOR agreement?
The agreement should say the EOR, as legal employer, is liable for labour law compliance, backed by indemnities. In practice liability follows the drafting, so the indemnity scope, exclusions and caps are the clauses to negotiate rather than assume.
Who owns work the employee creates under an EOR arrangement?
By default it can vest first in the legal employer, which is the EOR. A properly drafted agreement assigns IP from the employee to the EOR in the local employment contract and from the EOR to your company in the service agreement, jurisdiction by jurisdiction.
What should be checked in the fee clauses?
The pricing model, everything the invoice adds beyond the advertised per-employee fee, onboarding and offboarding charges, deposits, the currency and exchange-rate basis, when charges fall due, and any renewal escalation. Verified published starting prices for major vendors are in this site's comparison table.