When companies need to hire employees in a country where they do not have a legal presence, they often face significant administrative and legal hurdles—particularly around payroll, tax withholdings, and social security obligations. To manage these complexities, many organisations turn to Employers of Record (EORs).

Although there is no single, universally accepted definition of an Employer of Record, the term generally refers to an organisation that formally employs a worker on behalf of a client company. The EOR becomes the employer for administrative, HR, and compliance purposes while the worker performs their duties for the client. This model is increasingly attractive in a world where remote work is common and companies want access to global talent without the burden of establishing local entities.

However, many jurisdictions regulate activities that resemble labour leasing—also referred to as temporary agency work, personnel leasing, or similar terms depending on the country. These rules apply when a company hires employees and supplies them to another organisation to perform work outside the scope of a genuine service contract. In such cases, EORs may fall under strict regulatory frameworks designed to govern entities that lease labour.

Understanding Global Regulatory Variations

Where an EOR’s activities meet the legal definition of labour leasing, the organisation may be subject to licensing requirements, operational restrictions, employee protections, and significant compliance obligations. These requirements vary widely across jurisdictions.

The below map seeks to visualise how restrictive the legislation on leasing of personnel is as applicable to employers of record undertaking labour leasing activities/ temporary work arrangements (or the specific country equivalent).

Key Takeaways

When entering a new market, EORs must carefully assess the local legal environment and understand which activities could trigger labour leasing regulations. Failure to comply can lead to substantial penalties, operational disruptions, and reputational damage.

Client companies should also seek legal advice before engaging an EOR. Key risks to evaluate include:

• Potential claims from EOR-employed workers seeking employment status with the client
• Joint liability for employment obligations
• Administrative or financial sanctions
• The risk of inadvertently creating a permanent establishment for tax purposes
• Intellectual property and confidentiality considerations

Many of these risks can be mitigated through thoughtful structuring, clear contractual allocations of responsibility, and the inclusion of indemnity provisions. In certain jurisdictions, direct employment without setting up a branch may also be a viable alternative.

How Access Financial Can Help

Access Financial is a leading global provider of end-to-end EOR solutions. With over two decades of experience, we offer comprehensive hiring, payroll, social security, tax, and immigration solutions for recruitment firms, corporates, and employees.

Why choose Access Financial as your EOR partner?

• No need to establish a legal entity
• Engagement of both EU and non-EU nationals through our existing corporate structures
• Full management of onboarding and offboarding
• Tailored payroll and tax administration
• Assurance of compliance with all statutory, regulatory, and legal requirements

Whether your organisation is hiring its first international employee or expanding rapidly across multiple regions, Access Financial offers a streamlined, compliant way to build your global workforce.

Contact us to enhance your international employment strategy:

Email: [email protected]
Phone:
CH: +41 22 365 4620
UK: +44 20 7017 3110
CY: +357 25 820 640