Contractor payrolling

Advertised prices, verified

How contractor payrolling works

1. You source the worker, the payroller employs them. You identify the person and agree the rate and the assignment. The payrolling provider hires them onto its own payroll as its legal employee, in the United States typically as a W-2 employee, and assigns them to work under your day-to-day direction.
2. The provider runs the employment. Each cycle the provider pays wages, withholds and remits the required taxes, carries the mandatory insurances and administers any benefits in the package. It invoices you the pay rate plus a markup that covers employer costs and its fee.
3. The assignment ends without a termination on your books. When the engagement finishes, the employment relationship is between the worker and the payroller, so ending it follows the provider's obligations as employer rather than adding a termination event and its liabilities to your own entity's record.

Payrolling, AOR and EOR: adjacent tools, different jobs

The three products are easily confused because all involve a third party standing between you and a worker. Contractor payrolling converts the worker into the provider's employee, which is the right tool when the working relationship looks like employment: set hours, your equipment, your supervision. An agent of record keeps the worker as an independent contractor but puts the provider into the contracting chain, taking on classification vetting and a defined slice of that risk. An employer of record is payrolling's international sibling: the provider employs the worker in a country where you have no entity at all, under that country's labour law.

The choice is driven by the facts of the work, not by cost preference. A worker who functions as an employee engaged as a contractor is a misclassification exposure in nearly every jurisdiction, and payrolling exists precisely to make that person an employee, of someone, without you standing up the employer infrastructure. If the person is genuinely independent, payrolling is unnecessary weight and a payment service is the lighter tool.

What payrolling costs, and how to read a markup

Payrolling is priced as a markup on the worker's pay rate or as a monthly fee per worker, and the vendors in this index that publish prices advertise the figures shown in the table above. Whatever the shape, the invoice decomposes the same way: the worker's gross pay, the statutory employer costs that exist whoever the employer is, and the provider's own margin. Ask every candidate to split those three lines, because a quoted markup that silently includes employer taxes is not comparable to one that excludes them, and the difference is large enough to reverse a ranking.

Read the exit terms with the same care. Because the provider is the employer, its obligations on notice, accrued leave and, in some countries, severance are real costs that someone funds; a contract that leaves them undefined tends to define them in the provider's favour when the assignment ends. The stronger providers state exactly what ending an assignment costs you and what the worker receives, before you sign. The service agreement controls; nothing on this page is legal or tax advice.

Common questions

What is the difference between contractor payrolling and staffing?

Recruiting. A staffing agency finds the worker and employs them; a payrolling provider employs a worker you already found. Because sourcing is the expensive part of staffing, payrolling markups run well below staffing margins for the same employment service.

Who is the legal employer in a payrolling arrangement?

The payrolling provider. It hires the worker onto its payroll, withholds taxes, carries employer insurances and administers benefits, while you direct the work day to day. Your company avoids adding headcount but also holds no employment contract with the worker.

When should I use payrolling instead of paying a contractor?

When the reality of the work looks like employment: fixed schedule, your tools and systems, ongoing supervision, no other clients. Engaging such a person as an independent contractor is a classification risk, and payrolling converts them into someone's employee without expanding your own entity.

Does payrolling work across borders?

The cross-border version is the employer of record model: the provider employs your hire in a country where you have no entity, under local labour law. Domestic payrolling and international EOR are often sold by the same vendors, priced separately; the table on this site shows the verified figures.

Coverage by country

• Employer of record vendors covering Singapore
• Employer of record vendors covering Mexico
• Employer of record vendors covering Spain
• Employer of record vendors covering Colombia
• Employer of record vendors covering United Kingdom
• Employer of record vendors covering France
• Employer of record vendors covering Hungary
• Employer of record vendors covering New Zealand