also called EOR
A company that legally employs a worker in a country on behalf of another business that lacks a local entity.
A company that legally employs you in a country on behalf of another business with no legal entity there. It puts you on a proper local payroll with local benefits, so a foreign employer can hire you without opening an office. A PEO is a close cousin, but it co-employs alongside a company that already has a local entity, whereas an employer of record is the full legal employer in your country.
Someone lands a job with a company on the other side of the world that has no presence in their country. Rather than pay them cash with no protections, the company hires them through an employer of record, so they get a local contract, payslips and benefits as if the firm were based there.
It lets you be legally hired abroad with local payroll and benefits without your employer opening a foreign office.
The difference is the whole point, so here is each one in a line.
These are the arrangements for paying someone who works in a different country from their company.
An Employer of Record legally employs the worker in that country on the company's behalf; a Professional Employer Organization co-employs within one country; and a contractor of record does the same for a self-employed contractor.
Payroll is the ordinary wage-and-tax system, invoicing is how a contractor bills instead, shadow payroll is a reporting-only second payroll to satisfy a second country's rules, and global mobility is the corporate team that manages all of it.
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