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We help you find the Best Providers at the lowest cost.
The most cost-effective Employer of Record (EOR) in 2024 are Skuad (starting from 9), Horizons (starting from 9), and Multiplier (starting from 0).
Key Takeaways
- EOR service providers feature diverse pricing structures.
- Pricing ranges from budget-friendly options to premium-tier services.
- EOR typically charges a monthly fixed fee per employee or a percentage of payroll (POP).
- Employer of Record Cost varies from provider to provider, depending on the country of hire.
How much does an Employer of Record cost?
When expanding a business globally, navigating the complexities of international employment can be daunting. This is where an Employer of Record (EOR) comes into play, offering a seamless solution to manage overseas employees legally and efficiently.
Understanding Employer of Record (EOR) costs (in other words, the costs associated with employing a team through an EOR) is crucial for businesses to make informed decisions and budget effectively. This post delves into the intricacies of calculating employer-of-record fees and employer of record pricing models. It provides a comprehensive comparison and pricing analysis to help businesses strategize their global expansion with financial clarity.
| EOR Provider | EOR Cost Per employee per month in $USD | Contractor Cost Per month in $USD |
| Skuad | $199+ | + |
| Horizons | 9+ | + |
| Multiplier | 0+ | + |
| Oyster HR | 9+ | + |
| Atlas | 5+ | + |
| Deel | 9+ | + |
| Remote | 9+ | + |
| Papaya Global | 0+ | “+ |
| Globalization Partners | 15% service fee applied to all employee salaries (minimum monthly charge of $1500) | $49 |
| Velocity Global | No public pricing | No public pricing |
Are you considering an Employer of Record to support your international growth? While an EOR can be a fantastic expansion tool, the actual EOR cost can vary. Fortunately, providers offer a range of pricing options to fit different budgets. It’s tricky to give an exact figure upfront, but let’s break down the typical fees you’ll likely encounter:
Components of EOR Pricing
Understanding the pricing structure of an Employer of Record (EOR) service is essential for businesses planning to engage in these services. Here are the key components that typically factor into the overall cost of using an EOR:
Employee Salaries and Benefits
The most significant part of EOR costs often comes from the salaries and benefits of the employees hired through the EOR. This includes the gross salary paid to the employee and the cost of benefits like health insurance, retirement plans, and other perks. The EOR manages these aspects, ensuring the compensation packages are competitive and aligned with local standards.
Compliance and Legal Fees
An EOR ensures that employment practices comply with local labor laws, which can vary significantly from country to country. This service includes handling legal requirements such as employment contracts, tax withholdings, and adherence to working conditions. The costs of maintaining legal compliance are factored into the EOR providers’ pricing, helping businesses avoid costly legal issues and fines.
Administrative and Operational Costs
The day-to-day management of employees involves various administrative tasks such as payroll processing, time tracking, and leave management. EORs take on these payroll management responsibilities, and their fees include the costs of these ongoing operational services. Efficient handling of these tasks is crucial for smooth business operations, especially internationally.
Technology and Infrastructure Expenses
Many EOR providers leverage technology platforms to streamline HR processes, provide reporting capabilities, and ensure efficient communication. Investing in technology infrastructure, which often includes access to proprietary software or platforms, is another component that contributes to the pricing of EOR services.
Each component plays a vital role in a client company’s overall EOR cost. By understanding these elements, businesses can better anticipate the expenses of using an EOR service and make more informed budgetary decisions for their international expansion efforts.
What Factors Affect EOR Cost?
Many factors can influence the cost of partnering with an Employer of Record (EOR), each playing a pivotal role in determining the final price tag.
- Firstly, geographical location plays a significant role. Different countries and regions have unique living costs, labor laws, and market conditions, all of which directly impact the cost of EOR services. For instance, operating in countries with stringent labor laws or higher living costs generally translates to higher EOR expenses due to the increased cost of compliance and employee benefits.
- The industry in which a business operates is another crucial factor. Industries such as technology or finance might demand higher salaries and more specialized employee benefits, thereby increasing the overall cost. Furthermore, industries with specific regulatory requirements may require more extensive legal and compliance support, adding to the EOR cost.
- The scale of operations and the number of employees under the EOR’s management also significantly influence costs. More extensive operations and a higher number of employees usually mean increased costs, although some EORs offer volume discounts for larger workforces. This scalability factor is crucial for businesses, especially those planning rapid expansion or operating in multiple countries.
- Lastly, the level of service customization required can affect pricing. While standard EOR service packages might be more economical, businesses requiring tailored solutions — such as specific reporting requirements, unique benefit plans, or particular compliance support — can expect increased costs. This reflects the additional resources, expertise, and time needed to meet these specialized needs.
Types of EOR Fee
- EOR Contract Setup Fee
Collaboration with an EOR frequently involves a one-time setup fee for newly recruited employees. This expense encompasses contract establishment, employee onboarding, setup of mandatory employee benefits, and payroll enrollment. The actual value of this setup fee varies based on the selected EOR provider. - EOR Security Deposit
EOR entities generally require a security deposit for each employee as a safeguard measure. This deposit can be a lump sum or a percentage derived from the employee’s salary. This deposit remains withheld throughout the employee’s tenure and serves as a contingency in case your company faces financial difficulties, such as insolvency, affecting salary payments. If not utilized, the deposit is refunded upon the employment contract’s termination. - EOR Management Fee
Most – if not all – EOR providers charge a monthly management fee for providing employment services, which will often include specialist topics like benefits management and global tax compliance. In the main pricing models of EORs, this is a set monthly service fee (see table), but it could also be a percentage of the employee’s salary. - FX Fee
An EOR’s most basic compliance task is ensuring employees receive salaries in their jurisdiction’s currency. Nevertheless, several EORs facilitate invoice payments in a currency of your preference. Consequently, covering currency exchange may necessitate an additional fee.
How to find the Best EOR
Finding the best Employer of Record (EOR) demands careful consideration, encompassing various factors, before finalizing any commitments. Here are some important considerations as you explore EOR providers and their respective employer of record pricing models.
- Thorough EOR Comparison
Solicit comprehensive pricing quotations from multiple EOR providers; you can simplify this assessment by reading our comparison of the best EOR Providers. This empowers you to juxtapose their pricing models, fee breakdowns, and potential supplementary charges. Amassing a wealth of information facilitates informed choices, shielding you from unexpected concealed costs. - Evaluate EOR Offerings
Scrutinize the services and features integral to each pricing proposal. Beyond cost, contemplate aspects such as service scope, customization flexibility, and the technological tools furnished by the EOR company.
How to select an EOR
While cost is pivotal, other dimensions of the service warrant consideration when you are considering hiring an employer of record. Look into:
- Reputation and Track Record
Investigate the EOR’s reputation, client feedback, and testimonials. Gauge its industry experience and capacity to deliver dependable, efficient services consistently. - Client Support
Ascertain the level of customer support and responsiveness offered by the EOR. A dedicated account manager or reliable customer service can significantly elevate the experience for you and your international employees. A well-supported global workforce is a productive one! - Scalability
Evaluate whether the EOR can accommodate your business’s expansion plans. Assess its ability to manage increased employee counts or ventures into new markets while upholding quality standards and ensuring compliance with local laws.
Some EORs might impose concealed or supplementary charges that are not immediately evident, and these potential hidden costs could significantly impact the overall employer of record costs you will face. Beware of the following:
- Setup Fees
Inquire about one-time setup fees for onboarding your company and global talent onto the EOR platform. - Termination Fees
Understand the terms of contract termination or cancellation. Determine if ending the partnership with the EOR involves any penalties or charges. - Additional Service
Ascertain the related costs if specialized services or customizations are required beyond standard offerings. Ensure clarity on the base fee and what necessitates an extra charge.
Choosing the right EOR — it’s not just about cost
When choosing an EOR, it is essential to weigh both the EOR cost and the quality of its global service. Exceptional user and employee experiences foster enhanced engagement and superior employee retention rates, influencing a business’s long-term profitability.
FAQ
Typically, the EOR cost ranges from $290 to $1000 per employee, depending on the specific services and the EOR company you partner with.
Yes, it's possible to employ international workers directly. However, employing full-time international workers often necessitates establishing legal entities in their respective countries, which is a greater cost than the EOR cost for most companies.
Most EORs handle a range of responsibilities, including employee management, payroll processing, and various HR tasks. Additionally, they can assist with international legal and tax compliance, provided they have operational entities in the relevant countries. The EOR cost typically factors in these additional services, but always make sure.
Absolutely, EOR services can also be extended to onboard and compensate independent contractors. Remote EOR services are particularly advantageous for hiring independent contractors on a global scale. Ask about contractors when comparing EOR cost levels.
Employer of Record services can benefit all industries, offering both local and global solutions. That said, some industries are ripe for global expansion, and EOR services can provide quick access to new markets for companies in these areas.
