At-Will Employment: Know Your Rights As An Employee

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Gino Peters

Written By:

Gino Peters

Reviewed By: Belinda E.

June 3, 2026 7:26 pm

Category Tag: News

The rise of remote work made international expansion much easier in recent years, but hiring abroad still comes with legal and administrative complexity, as every country has its own labour laws and payroll rules that must be followed. In addition, not many companies can open a new entity in every new market that they are expanding into. That is when the Employer of Record (EOR) solution comes in handy.

The EOR serves as the legal employer on paper, while the client company manages important activities related to the employees responsibilities and performance.

In this guide we will cover what an employer of record is, how it works in detail, how much it can cost and which business should consider an EOR solution.

What is an Employer of Record (EOR)?

An Employer of Record (EOR) is a third party service provider that legally employs a person on behalf of another company in the country where the employee officially resides. As an official employer the responsibilities of EOR include issuance of an employment contract, processing payroll and withholding taxes and necessary social security contributions, as well as preparation of offboarding documents or any documentation that need to be signed by the employer. In addition, EOR ensures the compliance with local labour laws and serves as a first point of contact for any legal disputes.

The client company that hired the employee through an EOR also has a list of responsibilities. As an Employer of Record does not have the visibility on operational activities behind the scenes a client company needs to provide direction and ensure proper team integration.

In simple terms, the EOR provider acts as a legal employer in the country of the employee’s residence, while the client company takes on day-to-day manager work.

Responsibility	Employer of Record (EOR)	Client Company
Employment contracts & any other official documentation
Payroll processing
Income tax & social security contributions
Compliance with local labour laws
Statutory benefits administration
Managing daily work and projects
Setting goals and performance expectations
Providing equipment and tools
Leading the employee’s team and workflow

Employer of Record solutions gain more and more popularity in the field of global expansion as they allow businesses to hire best candidates fast and easy while staying compliant with local employment regulations. More information about EOR service are available if you would like to understand more.

EOR Meaning

The term “EOR” is the abbreviation for Employer of Record.

Employer in this instance stands for the company that hires the employee and takes on duties related to it, such as onboarding and offboarding process, payment of wages and compliance with other legal requirements.

“Record” from the EOR perspective refers to official registration with government authorities. The name of the EOR provider is stated in all payslips and tax filings, and should also be listed by the employee in any documents where employer must be stated, such as mortgage or loan applications.

One might ask a question of why this legal structure exists. As it is not possible to provide an employment contract directly to a person that legally resides in another country, the business expanding abroad typically needs to establish a local entity. That involves legal registration, arrangement of local bank accounts and organisation of payroll structure, as well as compliance with local law.

EOR allows to simplify the global hiring and reduce administrative burden through their existing legal entity.

There are some other hiring models that can be confused with EOR.

EOR and PEO

Many sources online refer to EOR as “international PEO”, which may create confusion as these models have 1 important difference.

A Professional Employer Organisation (PEO) serves as a co-employer of a client company. In other words, a business must already have an established entity in the country. The hiring tasks are, therefore, shared between 2 companies, while legal liability stays only with the client company. In the EOR model all legal risks are being taken by the official employer. Read more about the difference between PEO and EOR here.

EOR and staffing agency

Staffing companies mainly provide assistance for short-term projects by providing temporary workers. If the client wishes to employ a person for a longer time, EOR approach must be chosen.

EOR and contractor model

Contractor agreements assume the involvement of independent workers rather than employees. This model is also often used for temporary, project-based assignments. It is important to remember that there is a big misclassification risk between a contractor and an employee in the company which can lead to potential legal issues. An EOR ensures that employment is legally compliant with local labour law.

How does an Employer of Record work?

While it may sound complicated at first, a process behind the employer of record model is relatively straightforward.

The operating company selects a candidate

The client company recruits the employee they want to hire in another country

The EOR becomes the legal employer & local employment contract is issued

The Employer of Record uses its local legal entity to prepare and issue an employment contract that complies with labour law of the country where the employee is based. Depending on case-by- case situation, the work visa might need to be secured beforehand. Our company provides immigration services, more details can be found here.

Payroll and taxes are managed

The EOR takes on recurring responsibilities related to a payroll and ensures correct processing of income tax, social security contributions etc

Benefits are administered

Paid leave, sick leave, pension contributions and any other statutory benefits are being managed by the EOR.

Ongoing compliance and HR support

It is the responsibility of the EOR to monitor changes in local labour law and ensure ongoing compliance.

Example:

Imagine a UK-based tech company found a perfect candidate in Germany for a position of a software developer.

Instead of going through the administrative burden of opening a legal entity in Germany, the company chooses to work with an Employer of Record. The EOR hires the developer under a German employment contract and manages payroll and taxes. At the same time the UK company welcomes the new employee in the team and manages the daily work of a developer.

What services does an Employer of Record provide?

The Employer of Record does more than just providing an employment contract to the employee. Typically a wide range of HR and compliance services is included in the EOR offer. For example, read about the services included in our EOR package here.

Employment and HR administration

Locally compliant employment contracts and support with other documents requested by authorities
Employee onboarding
Employee record management. For example, control over PTO

Payroll and tax management

Regular payroll processing
Tax withholding and reporting of social security contributions with authorities
Payslip generation and creation of annual wage tax certificates

Benefits administration

Management of statutory benefits
Pension contributions (where required)
Support with benefits such as maternity leave allowance, sick leave allowance etc

Compliance and risk management

Insuring compliance with local labour law
Management of onboarding and offboarding processes
Representation in difficult legal and court cases

Additional services:

Some EOR providers ( such as ThisWorks EOR Services) provide additional services such as:

Work permit and dependent visa support
Background checks
Relocation support
Value added services: support with housing, company car, banking, etc ( depending on the country).

This vast list of services allows businesses to manage international teams, while staying compliant and avoiding complex local employment administration.

Benefits of using an EOR service

There are multiple advantages the businesses can get from working with an Employer of Record provider.

Faster global hiring

Setting up a new entity can take up to several months. With an EOR the hiring process can take several days.

Reduced compliance risk

A trustworthy EOR provider ensures the compliance with all local regulations. As the labour law varies greatly between countries, having a knowledgeable party to rely on can make a big difference.

Lower expansion costs

Establishment of a new entity is not only a time-consuming process, but also costly. With EOR services these costs can be avoided.

Access to global talent

The location of a remote candidate is not a problem if the company uses Employer of Record services. In other words, the best candidate for specific business purposes can be chosen.

Scalable hiring model

EOR services are ideal for organisations that want to scale international hiring quickly. They are particularly useful in the following situations:

Remote-first teams and organisations
Companies testing new markets abroad
Startups expanding internationally

How to choose the right Employer of Record

Choosing between several EOR providers is important, as it influences not only compliance, but also employee experience for new hires and how your company is perceived on the job market.

Here are some important things to keep in mind when deciding on your EOR partner:

Geographic coverage

Make sure that EOR provider can cover the country where you want to expand globally. Read about our EOR coverage here.

Pricing transparency

Check that EOR provider does not have any hidden costs and the pricing is clearly outlined in your MSA.

Compliance expertise

A strong EOR provider should have a team of experienced local HR specialists who understands all in and outs of a national labour law.

In-house vs partner model

Some EOR providers rely on their third-party partners, while others manage employment directly through their own local entities.

Customer support

It is important to find a EOR partner that helps with any questions or concerns in a quick and professional manner. That can be crucial when dealing with employee offboarding or any legal disputes.

Warning signs

Understanding the importance of choosing a right party, your company should be cautious of providers that lack local expertise and cannot give clear answers to your labour law questions. In addition, companies with slow response times can prove to be unreliable in critical situations. Furthermore, providers with complex pricing models with many hidden fees can create a lack of cost transparency and result in unforeseen expenses.

By selecting a provider with strong expertise in local labour law and reliable support from dedicated teams, your company can ensure a smooth international growth. Learn why companies choose ThisWorks as their EOR partner.

How much does an employer of record cost

The vast coverage of services the employer of record provides makes many businesses ask how much an EOR costs.

Pricing models vary greatly on the provider and the country of coverage, but most EORs use one or more of the following structures.

Flat monthly fee per employee.

The EOR provider charges a fixed monthly fee for each employee they have on the payroll from the client.

Percentage of salary

While not being a popular approach, some EOR providers charge a percentage of the employee’s salary, typically ranging between 5%-15%.

Setup fees

Some providers charge onboarding or offboarding fee for each employee.

The fee that the business needs to pay to an EOR provider also depend on the location of a service. Local labour law complexity of some countries can influence the fee. In addition, some countries have specific statutory benefits and payroll administration requirements. Furthermore, employee headcount in the specific location can influence the fee.

EOR vs setting up a legal entity

To establish a new entity the organisations needs to go through legal and tax registration. In addition, accounting support and ongoing compliance costs such as the fees for local labour lawyers can make setting up a legal entity significantly more expensive.

An EOR allows companies to expand globally without these upfront investments.

EOR vs hiring contractors

Some businesses decide to hire international workers as contractors. However, this approach can often lead to a misclassification risk, which can cause legal and tax liabilities.

A professional EOR provider ensures that the new starters are compliantly onboarded under local employment regulations.

EOR FAQs

Is an EOR the same as a PEO?

No. PEO model assumes co-employment and requires the business to already have established local entity, while EOR employs new talents through its own entity only.

Can an EOR hire contractors?

While some EOR providers can support hiring contractors, it is important to remember that main function of EOR is the employment of full-time workers legally in a country. A risk of misclassification between EOR and contractor should be also considered carefully.

Is an employer of record legal?

Yes, when established and structured properly, Employer of Record entities are legal and widely used for international expansion by many companies.

When should you use an EOR?

The most common reason for using EOR include:

Hiring employees located in another countries remotely
Testing new markets before establishing an entity
Expanding internationally

Can you switch from EOR to your own entity?

Yes. Many companies initially hire through an EOR for the ease and speed of expansion and later transition employees to own legal entities upon their establishment. It is important to remember that some countries require specific procedure to be followed in such a scenario.

Get in touch with ThisWorks

Expanding your team globally does not need to be long and administratively complex.

With the use of Employer of Record the businesses can have access to the best talent from around the world while ensuring full compliance with local labour laws.

ThisWorks can support your global expansion with our compliant Employer of Record services.

Contact our team to find our how we can help your international team glow fast and compliantly!

Unlocking At-Will Employment: Laws, Exceptions, and Guide

As of 2023, approximately 94% of private-sector employees in the U.S. work under at-will employment agreements. This means that most employees can be terminated at any time, for any legal reason, without the need for prior notice or a specific cause, except in Montana, where certain protections apply after a probationary period. This structure enables employers to dismiss employees at any time and for any reason, provided that dismissal is not unlawful. Likewise, employees have an open right to quit working without any notice or even being penalized. This flexibility benefits employers by making it easier to manage a diverse workforce, but it presents a challenge for employees due to the risk of job insecurity.

This blog will be about understanding the at-will employment termination process where we will look for legal provisions and exceptions in every state and industry. We will also highlight how federal laws against employment discrimination safeguard employees and provide an overview of the pros and cons of at-will employment for both parties. In the case of employers, it is important to know your rights while on the other hand for the employees, it is important to know how you stand in the modern workplace especially if employment is at-will.

What is at-will employment?

Employment at will means the employee has the right to end the employment relationship any time without any advance notice and for any cause at all provided the dismissal does not violate the common law and statute. It is characteristic for countries such as the U.S., and it provides a great deal of freedom both for the employer and the employee.

For employers, one of the main benefits of at-will employment is the ability to quickly adjust staffing levels without needing to go through lengthy legal or contractual processes. The last primary protection type under this section means that employers can dismiss an employee without providing any reason or going through bargaining sessions. In the same regard, employee also have the opportunity to quit their employment at any time, and they do not suffer losses in laws as those charged with breach of contract.

Unlike other types of employment, at-will employment does not need any special clauses regarding conditions of termination or the length of notice in cases of termination. However, employees under this system of work arrangements are usually offered less statutory employment protections than those who enjoy the benefits of at-will employment contracts.

The at-will employment termination process

The at-will employment termination process permits employers to eliminate the employees at their own discretion for any reasons except legal prohibited reasons. In practical terms, this means that an employer can dismiss an employee at will without prior notice and even without “the rigmarole” associated with the dismissal process – which is one of the attractions of this system. Of course, this freedom implies certain obligations and can be dangerous.

This means that despite the advantages that come with at-will employment, there are certain legal constraints. For instance, an employer is prohibited from terminating an employee for discrimination, retaliation, or for violating public policy. If an employer dismisses someone for reasons that contravene these protections he/she could find him/herself staring at a wrongful dismissal lawsuit. The primary concern of discharging at-will employees is that it may be contested on such legal premises as discrimination, retaliation, or breach of implied contracts.

To avoid such risks, employers should make and retain adequate records even when the employee is hired under an at-will clause. Documentation of termination is preferable when it is lawful and has no connection with discrimination against the TORs. Where an employee is dismissed for poor performance or misconduct, evidence of prior related written warnings, appraisals or disciplinary measures will assist in defending the organization against legal proceedings. A paper done by the society for Human Resource Management (SHRM) reveals that improper documentation is one of the significant reasons for wrongful dismissal legal actions in the at-will employment frameworks. Employers must also be cautious about good faith termination lawsuits, which can arise if employees believe they were dismissed unfairly or in bad faith.

Federal laws against employment discrimination

While at-will employment grants employers the ability to terminate employees freely, federal laws against employment discrimination ensure that this power is not abused. There are several federal legislation that serve to protect the employees, which makes dismissal on grounds of discrimination unlawful.

The most well-known law is called Title VII of the Civil Rights Act of 1964 and it is against discrimination based on race, color, religion, sex or national origin. This means that employers cannot fire employees under any of these grounds even if the employees serve under the at-will employment. Yet another important legal provision is the Americans with Disabilities Act which outlaws discrimination of employees with consideration on issues such as dismissal. Under this law, an employer is required to adopt undue accommodations for a disabled employee provided that the adoption of accommodation causes undue hardship to the employer.

Besides these regulations, the Age Discrimination in Employment Act (ADEA) prohibits employers from firing workers with the explanation that they are old if the worker is over forty years of age. The reason why this law applies to the protection of older employees at termination is plausible because age discrimination is prevalent in workplaces.

Thus, employers need to make sure that their termination decisions are considered by these federal laws in order to avoid legal issues. However, a failure to honor these protections even in an at-will setting leads to legal suits, liability claims, and severe brand image tarnishing. Research conducted by the Equal Employment Opportunity Commission showed that over 67,000 discrimination cases were filed in the year 2020 alone; it, therefore, pays to follow these federal directives on discharge of employees.

Understanding and complying with federal laws against employment discrimination is essential for both employers and employees in maintaining a fair and legally compliant workplace.

Exceptions to at-will employment by state

Even though at-will employment is the majority rule in most states, there are recognized main exceptions to at-will employment by state that offer employee protection. These exceptions may help to limit the dismissal of employees and bosses at their discretion in what may otherwise be at will circumstances.

Public policy exceptions: Generally, employees cannot be dismissed for reasons amounting to a violation of the public policy. For example, whenever an employee fails in being forced to engage in unlawful practices or conducts reporting unlawful practices (whistle-blowing), he/she is protected by public policy exceptions. For instance, California and New Jersey can be referred as states with policy exceptions that highly protect employees against unfair dismissals concerning these matters.

Implied contract exceptions: Sometimes, state laws even allow employers and employees to have an implied contract even when the employment is not written. These contracts may be in the form of verbal or other formal contracts such as work manuals or acts that indicate there is a continued employment contract. Some states like New York and Texas approve implied contracts as grounds for wrongful dismissal in which employees have the right to sue the employer for unfair discharge if there was an expectation of continued employment.

Covenant of good faith and fair dealing: Presently, the states of Massachusetts and Montana have adopted the covenant of good faith and fair dealing. This means that employers have to obey the principles of good faith when dismissing an employee. Failure to do so can lead to good faith termination lawsuits, where employees sue for wrongful termination based on claims of bad faith or unfair treatment. If an employee believes he or she was discharged unfairly or illogically, they can sue for wrongful termination part-bona fide termination action. This protection means that employers cannot fire employees to avoid having to pay them things such as commissions or retirement packages.

Such exceptions to at-will employment by state make legal provisions that mediate the relationship between employers and their employees. At-will employees should understand the protections of their state to be informed of their rights when being employed at-will.

How to navigate implied contracts in employment?

The purely presumed relations may exist in at-will employment where promises, employer’s handbook, or employer and employee’s actions give the employee a reason to expect that he or she cannot be dismissed without a cause. These are usually unwritten as the name suggests but can make employees to think that they have a long-term employment contract with the firm.

Here is how you can navigate your implied contracts in employment:

Employment policies that designate clear disciplinary measures before dismissal or dismissal policies that are contained in the employee manuals.
Promises by supervisors which indicate to the employees that they will remain employed in the company.
During interviews, or any announcement or practice suggesting that employees will not be dismissed for any other reason than unsatisfactory performance or misbehavior.

Thus, for the employees it is important to realise how they can work with implied contracts. If they think they are unjustly fired for breach of an implied contract, they should consider the written and verbal promises, mail correspondence, written company handbooks they signed or performance review that may help make their stand.

Employers, therefore, should not encourage themselves to give empty promises of job security, if they are unwilling to keep the promises. Policies in handbooks that are clearly written, along with regular communication should go a long way to prevent the formation of implied contracts in the organization.

If an implied contract is in question, employees and their employers should consult legal representation in order to better understand the legal nuances of the contract and one’s role.

Understanding the Balance in At-Will Employment

While at-will employment offers flexibility for both employers and employees, it is important to recognize the legal processes in place. Federal and state exceptions, such as anti-discrimination laws and implied contract protections, ensure fair treatment and prevent potential misuse of termination rights. This knowledge is essential for creating a balanced and compliant workplace, where both employers and employees can exercise their rights responsibly.

Final Thoughts

It is possible to conclude that at-will employment has its advantages and disadvantages for the employers and employees. Although it opens the possibility for termination without a valid reason, it includes regard for the legal safeguards, including non-discrimination and federal/state laws.

To avoid accidentally breaking the law and to document many processes to decrease the chances of a lawsuit, it is useful to use various technologies. On the other hand, the employee should know his rights as well as when he will be shielded from wrongful termination by an implied contract or any of the state exceptions. Employers and employees should go to work with at-will employment with an understanding of the pros and cons.

FAQS:

What is at-will employment?

At-will employment is a type of employment contract where either the employer or the employee can terminate the relationship at any time, without needing to provide a reason, as long as the termination is lawful.

What are the federal exceptions to at-will employment?

Other federal statutes, including the Title VII of the Civil Rights Act, the ADA, and the ADEA expressly forbid discharge based on discrimination arising from race, gender, age, disability or other forms of discrimination. The at-will employment doctrine also has exceptions along the following laws.

What are the state exceptions to at-will employment?

Many states have exceptions to at-will employment, including:

Public policy exceptions: Employers cannot dismiss employees for conduct that is unlawful under the laws of the particular state (for instance, the employee’s decision to refrain from contributing to an unlawful activity).
Implied contract exceptions: Several states consider implied contracts and they may arise through oral promises or through handbooks or recognized policies.
Covenant of good faith and fair dealing: It is accepted that some states require that terminations must be done bona fide thereby preventing employers from act in of mala fide.

What are the rights of an at-will employee?

The at-will employees can quit their positions without prior notice and without any reason at all. Employees are also shielded from unfair dismissal, including those that are done based on discrimination and or revenge, by federal and state laws.

What challenges come with at-will employment?

The main problems of at-will employment for the employees are the absence of employment protection and the possibility of discharge without explanation. Employers may face legal problems from the at-will employment if the termination is not conducted well, particularly in areas such as discrimination or the implied contract.

How can contract modifications nullify at-will employment?

If the employer and employee are clear on certain aspects of the employment contract concerning job security or termination policies, it can change or erase the ‘at-will employment’ status of the company. Promises made in written in the form of agreement, or handbooks, or oral statements that employment will be ‘Guaranteed, ‘Sure,’ or ‘Certain’ give rise to an implied contract that negates at-will employment.

How does at-will employment compare to other types?

Different from contractual or union employment relationships that have clear provisions about dismissals, at-will employment provides parties greater freedom of action. However, it does not offer the degree of job security and all the legal processes that come with most other forms of employment.

What rights do at-will employees have?

In the case of at-will employment, workers can be dismissed without any reason, but they cannot be persecuted under federal and state laws against discrimination and wrongful dismissal. They also have a dominant right to quit his or her job at any one time without any reason or by having to give any notice period.