An Employer of Record (EOR) is a third-party organisation that becomes the legal employer of a worker on behalf of a client company. The EOR handles payroll, tax withholding, statutory benefits, and employment contracts in the country where the worker is based, enabling the client to deploy talent internationally without establishing a local legal entity. The client retains day-to-day management of the worker's tasks.
A Professional Employer Organisation (PEO) operates differently: it enters into a co-employment arrangement with the client company, which remains the employer of record. The PEO administers HR, payroll, and benefits under a shared liability model, typically within a jurisdiction where the client already has a legal presence.
In practice, companies expanding into new markets choose an EOR when they lack a local entity, while they use a PEO to consolidate HR administration in markets where they are already incorporated. In the Netherlands, a comparable distinction exists between a "payroll bureau" (payrollbureau) acting as formal employer and a traditional HR services provider supporting an existing Dutch entity.