Future of Work: How EORs Drive Hybrid Workforce Models

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Gino Peters

Written By:

Gino Peters

Reviewed By: Belinda E.

June 3, 2026 7:24 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!

From Freelancers to Full-Time: EU’s Role in the Global Shift Toward Hybrid Workforces

The world’s workforce is changing, and more businesses are adopting hybrid models than ever. In 2025, 61% of knowledge workers are now working in hybrid roles, Gartner report. Freelancer vs full-time employee: The classic dichotomy between freelancers and full-time employees is no longer as relevant as companies try to maximize the flexibility of their workforce. The emergence of Employer Of Record (EOR) solutions is also facilitating easy shifts from one work mode to the next while complying with legal and tax aspects. This article examines how EORs are impacting workforce elasticity and making it a competitive advantage for organizations all over the globe.

The Hybrid Workforce Tipping Point

Hybrid workforces are now a reality, not just a trend. And 61 per cent of knowledge workers are projected to be working in hybrid arrangements by 2025, when they represent just 25 per cent of the total workforce, according to Gartner report. This move signals a tipping point in the world of work, where both companies and workers are enthusiastic about combining time working remotely and in an office.

The Death of the Binary Choice

The old freelancer-versus-employee dichotomy is fast becoming defunct. Historically, companies had to decide between hiring employees and paying for benefits and overhead on the one hand or relying on freelancers for flexibility and cost savings on the other. However, the evolution of hybrid work has also shown that there are now more than just these two models on the spectrum of how people can be employed.

Workers no longer easily slot into either “freelancer” or “employee.” Today, we see businesses looking to accommodate a more liquid workforce, one characterized by roles offering different degrees of flexibility, freedom, and security. The new workplace needs a more flexible model that works for the various ways people work but with less burden of legal and financial friction between categories.

EOR as the Enabler of Workforce Fluidity

This is where Employer of Record (EOR) services can help. EORs are crucial in making the toggle between work modes as smooth as possible, such that businesses can hire individuals, freelancers or contractors across all geographies without being burdened with compliance or tax headaches.

So, for example, when a company uses a freelancer for a quick-hit project, and everything goes great, that individual can be on-boarded as a full-time employee without the administrative headache of creating a new legal entity in the freelancer’s home country. Built by companies for companies, this flexibility allows businesses to scale teams easily and professionally while staying compliant and competitive.

By eliminating the formalities of employment contracts, EORs give companies the flexibility to switch between employee and freelancer models as and when required. This effort reduces the threat, streamlines HR, and increases workforce productivity.

The 3-Stage EOR Playbook

The usage of EORs for hybrid workforce management is a strategic move that more and more companies are making in their pursuit of talent acquisition and retention perfection. The EOR Playbook consists of 3 main stages: Freelancer “Tryouts” and Hybrid Transition Dynamic Workforce Scaling. Every step utilizes the malleability of EORs so that workforce demand matches future business objectives, working predominantly hired freelancers into permanent places, and teams are optimized.

A. Phase 1: Freelancer “Tryouts”

The Freelancer “Tryout” This is the first stage of the EOR Playbook. During this stage, businesses convert their top 10% of gig workers into EOR-managed contracts. Businesses can test the pool with the freelancers before hiring full-time, and can ensure that the individuals are a “cultural fit” and also have the skill levels up to the team’s standards of performance.

Canva has been a good example of this approach. The design platform was able to use an EOR to test designers in 12 countries and bring them on a short-term basis so they could see if the new person works out or if they could work in a team. With this model, companies can easily manage contractors while also making sure they don’t lose a highly-skilled worker. It also eliminates the risk of an immediate conversion to full-time, providing companies with a degree of freedom and a window to test long-term fit.

B. Phase 2: Hybrid Transition

During the Hybrid Transition, companies start to slowly introduce freelancers into more classic positions with access to benefits via the infrastructure of the EOR company. This phase is important as it takes people off the freelance world and into hybrid roles that offer them more security and benefits, such as health care and equity.

The primary benefit of EORs for this application is their economic advantage. By 2023, you could enjoy 40% savings versus the cost of that head-end hire when you first brought someone on full-time.” This can ease the financial commitment of full-time benefits and provide a clear roadmap for employees who show the money for long-term value.

C. Phase 3: Dynamic Workforce Scaling

The third phase, Dynamic Workforce Scaling, leverages AI-powered “just-in-time” conversions. In this stage, businesses can easily transition freelancers into full-time employees on a project-by-project basis prior to the launch of key initiatives. This means that you can scale efficiently without the overhead that a company does not need. But companies should tread carefully—Bain’s Workforce Pulse found that 33% of companies over-convert freelancers, wasting talent and locking in excessive long-term commitments.

Why Traditional Models Fail

The traditional freelancer vs employee model is more and more disconnected from the needs of the current dynamic workforce. Using permanent people or simply using freelancers under a binary model is troublesome for organizations of all shapes and sizes. From a risk of compliance violations to concerns around retaining talent, these antique models create friction and are black holes of inefficiency. As organizations try to adjust to the hybrid workforce, the limitations of traditional modalities are apparent.

Compliance Nightmare: 1099 vs. W2 Classification Risks

One of the biggest issues for businesses when it comes to managing freelancers and employees is the 1099 vs W2 classification issue. In the US, 1099 employees generally take home a lower percentage of their pay than W2 employees (who often receive benefits such as healthcare and paid time off). Failing to properly classify workers can result in expensive fines, legal disputes, and a damaged reputation. Traditional models find it difficult to navigate through this web of classification, resulting in a compliance nightmare.

EORs address this point by ensuring workers are properly classified by role and jurisdiction, thereby removing legal exposure stemming from worker misclassification.

Talent Leakage: 68% of Freelancers Walk When Forced into Binary Choices

Another important defect of legacy structures is the leakage of talent. 68% of freelancers say they’d leave a company if they were put into an employee-only or freelancer-only contract, as per a study. This is the paradox of the rigid model of work. Flexibility is a top priority of freelancers and many will not trade their hard-won independence for a full-time position.

On the contrary, EORs let companies offer the best of both worlds — top freelance talent and a well-managed workforce without pigeonholing them into a binary employment decision. Using EORs also lets companies hang on to freelancers who value flexibility but have a keen eye for longer-term opportunities.

Speed Trap: 6-9 Month Hiring Cycles vs. EOR’s 72-Hour Conversions

The traditional hiring process for full-time employees is 6-9 months long – it’s just simply not possible for a business to scale that fast. This can be a problem, especially at times when there’s a critical project, and there could be an urgent need to fill these roles. EORs address this issue by allowing 72-hour conversion times, expediting the hiring process and allowing businesses to get skilled labour to where it’s needed without the hassle of hiring practices.

Here’s a quick comparison of the traditional model vs. the EOR-enabled model:

Issue	Traditional Model	EOR Model
Compliance Risks	1099 vs. W2 misclassification	Accurate classification and compliance
Talent Retention	Talent leakage due to binary choices	Flexible work options for freelancers
Hiring Speed	6-9 months for hiring	72-hour conversion for full-time roles

The New EOR Value Stack

With the workforce changing around us, there is a new value stack emerging with Employer of Record (EOR) services that is taking hybrid workforce management forward. EORs no longer just offer compliance and payroll — they offer strategic advantages to hire, keep and maximize the efficiency of your workforce. This emerging value stack is composed of three main layers: Talent Retention, Financial Engineering, and Culture Bridge.

Talent Retention: 92% Contractor-to-FTE Conversion Rates

One of the biggest advantages of hiring EORs is that they can assist companies in keeping great staff and transitioning contractors to regular employees. According to Remote. According to a recent survey from ISG, 92% of contractors who worked with EORs transitioned from a contract part-time worker to full-time employee status: proof that EOR can effectively handle the transition from contract to employee.

Through the use of EORs, companies can offer contractors the perks and feeling of job stability fulfilled by permanent employment without needing to spend time and money on cumbersome hiring procedures. This is especially beneficial for organizations seeking long-term relationships with proven talent who would rather work freelance as they have that flexibility.

Financial Engineering: Phase Payroll Taxes & Localized Benefits Arbitrage

EORs can also be used to control the financial implications of staffing changes and save money. EORs also help provide phasic payroll taxes during transition periods, enabling businesses to mitigate the economic burden of moving employees from contract workers to full-time-hire positions. This staged approach allows budgeting and managing workforce costs more flexibly.

Furthermore, EORs can exploit the anomaly of local quality arbitrage. The cost of providing Colombian pensions or similar local benefits, for example, may be exponentially lower than U.S. pensions. With it, businesses can create customized benefits packages in different regions and lower total labour costs while still offering attractive benefits to their global workforce.

Culture Bridge: Unified HRIS (Human Resource Information System) for All Worker Types

The Culture Bridge – the last layer of the new EOR value stack. In hybrid work, companies will have to make sure that all their employees, and also the contractors and freelancers they work with, feel like they’re all part of the same culture. EORs make this possible through a single HRIS with the ability to manage all types of workers through a single system.

This way, whether employed or not, all workers have equal access to the same level of support, training and involvement. Combining independent contractors and full-time employees in the same pool enables companies to create a unified, collaborative environment – an absolute requirement for preserving productivity and morale.

The 2025 Hybrid Workforce Blueprint

The hybrid workforce will be key for businesses as we enter the future, where the mix of full-time employees, freelancers, and contractors will only grow. The 2025 Hybrid Workforce Blueprint details the actions organizations need to prioritize to successfully manage the hybrid workforce while utilizing EORs to optimize productivity, keep workers, and remain operationally nimble. This framework drives a systematic approach to managing workforce shifts, scaling capabilities as needed and maximizing overall business performance.

Audit: Tag All Freelancers with Conversion Potential

2025 Hybrid Workforce Blueprint Step 1 Assess the current workforce. Companies should flag all freelancers who could become full-time employees. This entails qualifiers which identify freelancers by performance, skill, and future potential. By labeling employees as a potential candidate to go full-time, companies can maintain control over their talent pools and be prepared to scale rapidly when the time comes.

Activate: EOR-Powered “Transition Tracks”

After freelancers are pinpointed, the next step is to trigger the EOR-enabled “transition tracks”. These tracks indicate a clear path of conversion from freelancer to part-time to full-time. There are three layers at play here:

Lite: Freelancers who are doing well and are ready to move slowly, like introducing basic benefits.
Mid: People who are promising but need more grooming and benefits before they convert to full-time.
Full: These are high-performing freelancers who are now willing to be fully integrated into the company with full benefits and long-term contracts.

Through EORs, companies can help to make these moves as seamless as possible for both employees, from both a legal and financial standpoint.

Optimize: Conversion Triggers

The last part is to make the workflow itself converted and triggered. These triggers automatically convert a freelancer into a full-time hire when key revenue or project milestones are reached – say when a freelancers output results in revenue impacts of over 50k dollars – and automate the guesswork out of workforce planning, right-sizing workforce and skills to support the business at scale, and ensuring the right talent is converted at the right time.

By taking these strategic steps, companies can develop an adaptive, nimble workforce that can respond to changing needs and remain competitive in an ever more global world.

Final Thoughts

The move toward a hybrid workforce is also changing the way businesses think about finding and keeping talent, as well as managing their teams. EORs are a tool that can help businesses through the freelancer-to-full-time maze, make their operations more agile, and support flexible, scalable teams. The 2025 Hybrid Workforce Blueprint provides a plan for how to use EORs to optimize workforce elasticity and support business success in the new world of work. Adopting this strategy will help organizations to keep pace and be competitive and well positioned in the new world of work.

FAQ

What is the hybrid workforce model?
The hybrid work model combines working remotely with working in the office, giving employees flexibility while keeping productivity up.
How are EORs helping the shift to hybrid workforces?
EORs streamline the move from freelance to full-time by taking on compliance, payroll, tax, and legal headaches.
Why are companies adopting hybrid workforces?
Hybrid work provides flexibility and cost savings, and also responds to a work force that increasingly wants to blend work and life.
How does the EU influence the shift to hybrid work?
Hybrid work is EU-valid as partial frameworks for remote work and workers rights as well as flexibility for companies in the modern age.
What are the benefits of EORs for hybrid workforce management?
EORs make it easy to move back and forth between freelance and employee positions, manages compliance, and lightens administrative loads for businesses.