This is general information, not legal or tax advice. How an employer of record works for you depends on the law in your country and on the provider, so check the details of your own offer.
What an employer of record is
To employ someone, a company normally needs a business registered in that person’s country. Most companies hiring remotely don’t have one in every country, so they use an employer of record: a company that is already set up to employ people where you live.
The work is split between them:
- The employer of record is your legal employer on paper. It signs your employment contract, runs payroll, pays your salary, deducts tax and social contributions, and provides the benefits your country’s law requires.
- The company you work for directs your day-to-day work: your manager, your team, your goals and your reviews all sit there.
What it means for you
- You are an employee in your own country. Local employment law applies, including paid leave, notice periods and social security, as it would with a local employer.
- Your payslips come from the employer of record, usually in your local currency.
- Tax is handled for you through payroll, as with a local job.
- Benefits start from what your law requires. The company may add more, such as private health insurance or an equipment allowance, but that is something to agree, not to assume.
That is the main difference from being hired as an independent contractor, where tax, social security and time off become your responsibility. We compare the two in contractor or employee for a remote job abroad.
Questions to ask before you sign
- Who is named as my employer in the contract, and where is that company registered?
- Is the salary gross or net, in which currency, and is it fixed, or tied to an exchange rate?
- Which benefits come on top of what the law requires: health insurance, equipment, internet, training?
- What are the probation and notice periods?
- What happens if the company stops working with this employer of record? Does my contract move, end, or continue?
- Who do I ask about payroll, leave or a payslip error: the company, or the employer of record?
Ask for the answers in writing. The provider’s own website will describe the arrangement in its best light; your contract is what counts.
Things to be careful about
- Recognition varies by country. Not every country’s law treats this arrangement in exactly the same way. If something in the contract looks unusual for your country, a local employment adviser can tell you quickly.
- Providers vary. Some handle payroll questions well; some are slow. It is fair to ask the hiring company which provider it uses and how long its other employees in your country have been paid through it.
- Never pay to be hired. A real employer of record is paid by the company, not by you. A request for a fee for equipment, training or “processing” before you start is a common sign of a job scam.
Spotting it in a job posting
Lines such as “we hire through an employer of record in most countries” are one of the best signs that a remote job is genuinely open to people outside the company’s home country. Our guide to whether a remote job is really open to you covers the other signs, and the ones that point the other way.
How Draftloop helps
When you press Autofill, Draftloop also reads the posting for clues about where the company can hire. Wording such as “employer of record”, “work from anywhere” or “any time zone” counts in the posting’s favour. Wording such as “Remote (US)” or “must be located in the US” counts against it if your profile says you live elsewhere, and Draftloop tells you so in its results, naming the phrase it found. It never stops you applying.