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Guide

EOR risks and compliance: how to check a provider before you sign

Updated on 7 Oct 2026. Each figure shows its source and the date of our last check.

An employer of record (EOR) employs your staff in another country. It takes on the employer's duties, but some risks stay with you.

This guide lists the main risks and how to check a provider for each. It uses what 12 providers say in our 10 country guides, with a source for each answer.

Key facts

Licence rules
In 8 of our 10 countries, the local rules can ask the provider for a licence or a registration.
Licence stated
In those countries, providers say that they or their partner hold it in 11 of 95 cases.
Legal employer
Providers say that they employ through their own company in 42 of 119 cases, and through a partner in 17.

The main risks of an EOR

An employer of record (EOR) takes on the employer's duties in the country: the contract, the payroll and the taxes. Some risks stay with you, and a weak provider can add more:

  • The provider has no licence where the local rules ask for one.
  • A partner company, not the provider, is the legal employer.
  • The local rules limit the arrangement, for example in time.
  • The contract makes you pay for claims.
  • The provider holds your money: a deposit and the payroll before payday.
  • Your company can still have a permanent establishment for tax.

The sections below explain each risk, how to check it and the question to ask.

Check the licence

In 8 of our 10 countries, an EOR can fall under the rules for agency work, contracting or the supply of workers. Then the provider, or its partner, can need a licence or a registration.

Each country guide asks every provider about it. This list shows what the providers say on their own pages.

Ask: "Which licence or registration do you hold in this country, and which company holds it?"

Germany
What to ask for: AÜG licence. Deel, Rippling, Boundless, Playroll, WorkMotion and G-P say that they or their partner hold it. 6 other providers do not say.Temporary Agency Work Act (AÜG), section 1, Temporary Agency Work Act (AÜG), section 8, Deel blog, 31 Jan 2025, Rippling guide to the AÜG (PDF), Boundless Germany guide, Playroll blog, 18 Feb 2026, WorkMotion blog, 18 Apr 2026, G-P Germany EOR pageChecked 1 Oct 2026
Canada
What to ask for: Agency licence. Boundless says that it or its partner holds it. 11 other providers do not say.Ontario, licensing temporary help agencies, Employment Standards Act, 2000 (Ontario), section 1, CNESST, the licence obligation, Government of Quebec, 27 Nov 2019, Alberta, employment agency licence, British Columbia, licensing employment agencies, Boundless Canada guideChecked 1 Oct 2026
India
What to ask for: Contractor licence. None of the 12 providers says that it or its partner holds it.Occupational Safety, Health and Working Conditions Code, 2020 (PDF)Checked 1 Oct 2026
Philippines
What to ask for: DOLE registration. None of the 12 providers says that it or its partner holds it.Labor Code of the Philippines, DOLE 2022 edition (PDF, ILO NATLEX)Checked 1 Oct 2026
Netherlands
What to ask for: Registered as a supplier (Waadi). WorkMotion says that it or its partner holds it. 11 other providers do not say.Waadi (Placement of Personnel by Intermediaries Act), articles 1, 7a and 8a, Business.gov.nl, registering a foreign company, Staatsblad 2026, 159, the start of the Wtta, Staatsblad 2025, 385, the Wtta, Business.gov.nl, suppliers of personnel must be authorised, NAU, do you need an admission, WorkMotion blog, Deel vs Oyster vs WorkMotionChecked 2 Oct 2026
Singapore
What to ask for: Employment agency licence. None of the 12 providers says that it or its partner holds it.MOM, who needs an employment agency licence, Employment Agencies Act 1958, sections 2 and 6Checked 2 Oct 2026
Spain
What to ask for: ETT authorisation. WorkMotion and Skuad say that they or their partner hold it. 9 other providers do not say.Boundless Spain guide, Skuad Spain page, WorkMotion blog, Deel vs Remote vs WorkMotion, Workers' Statute (Estatuto de los Trabajadores), LISOS, offences and sanctions, articles 8 and 40 (BOE), Ley 14/1994, temporary work agencies (ETT) (BOE)Checked 2 Oct 2026
Mexico
What to ask for: REPSE registration. WorkMotion says that it or its partner holds it. 11 other providers do not say.WorkMotion Mexico page, Remote local terms, Boundless blog, EOR services in Mexico, Federal Labour Act (LFT), SEP copy (PDF), Subcontracting reform decree (DOF, 23 Apr 2021), STPS, the REPSE register, STPS rules for the REPSE register (DOF, 24 May 2021), Changes to the REPSE rules (DOF, 21 Feb 2024)Checked 2 Oct 2026

Check the local rules

The local rules can limit how long one person works for you, or ban some work. In Spain and Mexico, the law does not name EORs, and the providers do not agree on how an EOR fits the rules. See the local rules in each of our countries.

Ask: "How does your service fit the local rules for agency work or the supply of workers?"

Sources: Boundless Spain guide, Skuad Spain page, WorkMotion blog, Deel vs Remote vs WorkMotion, Workers' Statute (Estatuto de los Trabajadores), LISOS, offences and sanctions, articles 8 and 40 (BOE), Ley 14/1994, temporary work agencies (ETT) (BOE), WorkMotion Mexico page, Remote local terms, Boundless blog, EOR services in Mexico, Federal Labour Act (LFT), SEP copy (PDF), Subcontracting reform decree (DOF, 23 Apr 2021), STPS, the REPSE register, STPS rules for the REPSE register (DOF, 24 May 2021), Changes to the REPSE rules (DOF, 21 Feb 2024)Checked 2 Oct 2026

Check who pays for claims

In all 5 public EOR contracts that we read, you pay the notice pay and the severance. Most also pass the costs of employment claims to you, unless the provider caused them. Compare the contract terms.

Ask: "Which employment claims do you cover, and which costs must I pay?"

Sources: Deel EOR, COR and payroll terms (24 Aug 2026), Multiplier EOR terms (1 Jun 2026), Oyster customer terms, version 8.1, Remote terms of service (3 Aug 2026), WorkMotion terms and conditions (PDF, Apr 2026)Checked 7 Oct 2026

Check what happens to your money

8 of 12 providers say that they take a deposit, at least in some cases. Some also invoice the payroll before payday, such as Oyster and WorkMotion. See the deposit of each provider.

Ask: "How do you hold my deposit and the payroll money, and when do I get the deposit back?"

Sources: Deel help centre, EOR deposit calculations (6 Jan 2025), Multiplier EOR terms (1 Jun 2026), Oyster help centre, why a deposit is required (9 Apr 2025), Oyster help centre, deposit refund (15 Apr 2025), Oyster customer terms, version 8.1, Papaya Global blog, best EOR services (11 Aug 2026), Playroll EOR pricing, RemoFirst knowledge base, offboarding, Remote help centre, reserve payments (29 Sep 2026), Remote pricing, WorkMotion terms (PDF)Checked 7 Oct 2026

Permanent establishment: a tax risk that stays with you

The EOR is the legal employer, so your company needs no office or company in the country. But the tax tests look at what the person does for your company. A person who habitually concludes contracts for your company can still create a permanent establishment. Read about permanent establishment.

Ask: "What can the person do for my company without a permanent establishment?"

Sources: OECD Model Tax Convention, condensed version 2017, Articles 5 and 7Checked 6 Oct 2026

How to check a provider before you sign

  1. Check the licenceWhere the local rules ask for one, ask for the licence or the registration, and the name of the company that holds it.
  2. Check the legal employerAsk which company signs the employment contract: the provider's own company or a partner.
  3. Check the local rulesAsk how the service fits the local rules, such as time limits for agency work.
  4. Read the contractCheck the liability cap, the indemnities and who pays the costs of claims.
  5. Check your moneyAsk about the deposit, the payroll invoices and when you get the deposit back.
  6. Check your tax positionAsk a tax adviser what the person can do for your company in the country.

Questions and answers

What are the risks of using an employer of record?

The provider can lack a licence that the local rules ask for, or use a partner as the legal employer. The local rules can limit the arrangement. The contract can make you pay for claims. And your company can still have a permanent establishment for tax.

Is an employer of record legal?

It depends on the country. In 8 of our 10 countries, the rules for agency work, contracting or the supply of workers can ask for a licence or a registration. In Spain and Mexico, the law does not name EORs, and the providers do not agree on how an EOR fits the rules.

How do I check an EOR provider?

Ask for the licence where the local rules need one, and for the name of the company that will employ the person. Then read the contract: the liability cap, who pays for claims, the deposit and the exit fees.

Does an EOR remove compliance risk?

Not all of it. The EOR runs the contract, the payroll and the taxes. But the local rules and your tax position still matter. In the 5 public EOR contracts that we read, you also pay the notice pay and the severance.

Change log

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Warning: This page is not legal or tax advice. The figures come from official sources, but your case can be different. Check them with a payroll expert before you hire.