What is an Employer of Record?
An Employer of Record (EOR) is a third-party organisation that legally employs workers on behalf of another company. The EOR takes on all statutory employer responsibilities, including payroll, tax filings, social security contributions, employment contracts, and compliance with local labour law, while the day-to-day work is directed by the client company.
For companies expanding into the Netherlands, an EOR provides a compliant way to hire without setting up a legal entity. Octagon's Employer of Record services handle this from contract drafting through monthly payroll to offboarding.
How does an Employer of Record work?
An EOR operates through a two-party contractual structure: a services agreement between the EOR and the client company, and a separate Dutch employment contract between the EOR and the employee. The employee is legally on the EOR's payroll but reports functionally to the client. The EOR files wage tax with the Belastingdienst, contributes to social insurance through UWV, and issues monthly payslips that meet Dutch statutory requirements.
Onboarding typically takes 5 to 10 business days. For a detailed cost breakdown, see EOR cost components for 2026. For a side-by-side view against setting up a Dutch entity, see EOR vs establishing a Dutch subsidiary.
Who does an Employer of Record apply to?
EOR is used by foreign companies hiring in the Netherlands for the first time, by scale-ups that need to hire fast without entity delays, and by multinationals testing a new market before committing to incorporation. It is also common for short-term engagements, for contractor conversions after Wet VBAR reintroduction, and by US, UK, and Asian parent companies hiring small Dutch teams.
When does an EOR not apply?
EOR is not the right model when the client already operates a Dutch entity and can run payroll directly, when direct control over wage-tax filings is required, or when the engaged workers are genuine independent contractors rather than employees. For contractor relationships, 30% ruling eligibility rules and the Wet VBAR determination framework apply instead. EOR also does not cover payroll-only services where the client retains the employment contract.