Employer of record payrolling is often used loosely for two different arrangements: an EOR that legally employs the person and runs their payroll, and a bureau that runs payroll for people you employ. The difference is who the employer is.
An EOR employs, a bureau processes
Under an employer of record the provider is the legal employer in that country: it holds the contract, carries the employment obligations and pays the person under its own registration. A payroll bureau does none of that; it calculates and files for people you employ. Buying one while meaning the other is the source of most disappointment in this category.
Payrolling is usually only part of the service
The EOR arrangement normally bundles the contract, statutory benefits, local filings, leave administration and termination handling with the payroll itself. If you only need the calculation and filing because you already have an entity, you are paying for employment risk you are not using, and a local bureau is likely cheaper.
The questions that separate providers
Whether they hold their own entity in that country or use a partner, who the legal employer on the contract is, what their notice and termination handling looks like, how statutory benefits are administered, and what happens to the employee if you end the agreement. Ask them of every country, because a provider strong in one may be a partner arrangement in another.
Keep the classification question in view
Using an EOR does not by itself resolve whether the work creates a taxable presence for your company, and it is not a substitute for advice where the role is senior or revenue generating. Treat it as a way to employ someone lawfully and quickly, and keep the separate question of your own footprint under review as the role grows.
Questions people ask about employer of record payrolling
Is an EOR the same as a PEO?
Not quite. A PEO is typically a co-employment arrangement in a country where you already have an entity; an EOR is the legal employer where you do not.
Can we use an EOR for contractors?
You can convert a contractor to employment through one, which is often the point. Paying contractors as contractors is a different, simpler service.
What happens if we end the arrangement?
The employment relationship has to be resolved: transferred, or ended under local law. Ask exactly how before signing, not after.