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- An Employer of Record (EOR) is an HR specialist company that becomes the legal employer of a client’s workforce. They take care of payroll, employment taxes and compliance, on behalf of client companies.
- A staffing agency, by contrast, provides a workforce to client companies, and may not stay on as the legal employer of workers indefinitely.
- The key differences between an EOR and a staffing company are: One, a staffing company leads talent acquisition. Two, staffing agencies have more control over workers than an EOR. Three, the relationship between a worker and a staffing company is less permanent than it is between a worker and an EOR.
Do you need help with your hiring? Recruitment agencies cover the talent search, but for the actual hiring part you need a different sort of HR solution. Two key options here are Employer of Record (EOR) solutions and staffing agencies (also known as staffing companies).
Here we look at the key differences between EOR and staffing agencies, and explain when you should choose one hiring solution over the other.
The Role of an Employer of Record
In an Employer of Record (EOR) solution, the role of the employer and the role of the supervisor are separated. An EOR company is a specialist HR company that becomes the legal employer of a workforce, on behalf of a client company. The client company retains day-to-day supervision and oversight of employees (sometimes called the ‘operational employer’), while the EOR takes care of employment compliance and payroll.
Read more about EOR solutions in our guide, What is an Employer of Record?
The Role of a Staffing Agency
A staffing agency is a company that provides temporary or permanent personnel to organizations. Their main role is to identify and source suitable workers, manage interviews and selection processes, onboard the new employees, and provide ongoing support to ensure they have a positive experience while working at the client organization. They are also responsible for managing the payroll and other administrative tasks associated with those staff.
As with an Employer of Record, the staffing company ‘assigns’ its staff to a client company where they work under the day-to-day supervision of that client. However, unlike an EOR, a client company often has the option of eventually hiring that individual as a fulltime, regular employee.
Both staffing agencies and Employers of record have a lot in common with another type of HR firm — Professional Employment Organizations (PEOs). A PEO usually provides EOR services, but also provides a range of additional HR and payroll services (such as HR strategy and visa assistance). You can read more about the difference between these different services at PEO vs Staffing Company.
What Is the Difference between an Employer of Record and a Staffing Agency?
These HR solutions differ in a range of ways, including:
- Staffing agencies recruit, EORs may or may not. Staffing agencies will take control of a client company’s search for staff. While some EOR companies do offer this service, it is an ‘add-on’, and not a core part of the EOR model.
- Staffing agencies have more control over employees. Staffing agencies still reserve the right to direct employees in certain ways, and may even terminate employment. An EOR will only carry out these actions at the direction of a client company.
- Staffing agency relationships are usually less permanent. Commonly, staffing agency employees are offered the opportunity to become the employee of a client company longer-term. In an EOR arrangement, the worker always remains an employee of the EOR company while the relationship between EOR and client continues.
EOR vs Staffing Company: Which is best for you?
For growing businesses in need of employees at short notice, a staffing company may be an ideal solution. They often have available workers on hand that they can transfer to a client company, or can otherwise lead the job search.
If a business already has an existing workforce, or doesn’t need recruitment support (due to either in-house or external recruitment agency support), then an EOR solution may be appropriate. The EOR will take care of all payroll and employment compliance, leaving the client company to focus on its core business.
To find out which staffing company may suit your business, check out our guide to the best staffing companies for 2023.
If you think that an EOR may be more appropriate, consider one of the companies listed in our guide to the best EOR providers for 2023.
FAQ
No. A staffing agency is focused on providing a productive workforce to a client company. They take care of talent search and ensure clients have the workers they need. An EOR, by contrast, is a contracted legal employer of a workforce and is usually not directly involved with recruitment.
Yes. Employee leasing companies are the predecessors to Employers of Record. They become the legal employer for workers, but they do not usually recruit employees.
