Hiring an employee in a foreign country is rarely as simple as determining a salary and making a monthly payment. When hiring globally, you’ll need to account for employer taxes and social contributions, statutory benefits administration, global payroll processing, compliance obligations, and the fee charged by your Employer of Record (EoR) provider in your budget.
Comparing EoR prices only on the basis of advertised monthly fees can be misleading. The real cost of employing the person is very dependent on many other factors. The provider can charge a fixed fee per employee, a percentage of salary, or a customized price. EoR costs typically range from $199 to $800 per employee/month. Additional costs for using EoR services can include onboarding fees and foreign exchange markups.
This guide covers how EoR pricing works, what should be considered while planning your budget, what other costs you should check before signing a contract, and how to compare providers correctly. And if you're still deciding whether an EoR is the right structure for your business, Garna's Employer of Record overview walks through how the model works.
What Is the Cost of an EoR?
First, let’s start with the fact that there are two figures to differentiate:
- The EoR service fee – what you pay the provider for the EoR service.
- The total cost of employment – the full amount your business spends to employ the worker.
These are different things. The EoR service fee includes services such as administering local employment, payroll support, and maintaining compliance. Here is a complete picture of what the total cost consists of:
Gross salary + employer taxes and statutory contributions + EoR fee + applicable benefits and additional costs
This is important to understand because employer contributions are determined by local law, not the EoR provider. For example, in the EU, if employers register staff in another member state, they must cooperate according to the social security system of the country in which the employee is working. This is in line with the EU’s cross-border coordination rules, which require that an employee is covered by only one country’s system at a time. An EoR does not eliminate these statutory expenses. It does the related administration on your behalf.
Keep in mind that countries in Western Europe or North America usually have higher EoR costs due to mandatory taxes and benefits.
So how much does an EoR cost?
There is no one global EoR price. Provider fees vary depending on the pricing model, some providers charge a flat monthly fee per employee, some a percentage of salary, or a customized volume-based rate. To understand the true cost of global hiring for your company, let’s examine the full cost structure below.
The 4 Main Components of EoR Cost
1. Gross salary of employee
The starting point is the gross compensation agreed with the employee. For example, if your company agrees to pay an employee €4,000 a month, that figure forms one part of the employment budget, but it is not, by itself, the amount your company spends. With that salary, legal employers have some additional statutory obligations depending on the country.
2. Employer taxes and statutory contributions
It’s one of the most variable elements in international employment. The employer’s contribution may consist of social security, healthcare, pension or retirement plans, unemployment insurance, and any other mandatory statutory payments required by local labor law.
How this plays out by country is illustrated by these two examples:
- United Kingdom: employers pay Class 1 National Insurance on earnings above the Secondary Threshold. The employer rate is 15% for 2026-27, based on an annual £5,000 threshold
- United States: employers pay a matching 6.2% Social Security tax (up to an annual wage base of $184,500 in 2026) and 1.45% Medicare tax with no wage cap, in addition to that withheld from the employee
These two examples alone explain why you can't use a single "employment tax percentage" for all countries. A large part of the total cost is dictated by the country of employment, and any EoR quote should provide a country-by-country breakdown instead of just applying a generic markup.
3. EoR service fee
Providers usually use three typical ways to set prices:
Fixed monthly fee – a set fee for each worker, no matter what salary they get. This plan is the easiest to predict because the fee doesn't change when compensation does.
Percentage of salary – the fee is based on the employee's pay (gross salary x a provider’s percentage). It can cost a lot more than a flat fee for an employee who gets high compensation. Percentage-based pricing can range from 10% to 25% of salary.
Custom or hybrid pricing – it can be pricing that is based on the country, enterprise pricing that is negotiated, or a mix of fixed and variable charges. This model is harder to compare across providers. Always ask if the price is just a starting point or if it applies to every country and employee.
4. Benefits and additional employment costs
Some benefits are required by local law, some are part of your company’s compensation package. Depending on jurisdiction, you might also need to budget for statutory paid leave, mandatory insurance, pension contributions, healthcare-related benefits, bonuses or mandatory additional payments, and severance obligations. The exact treatment varies country to country, and so an EoR quote should always be viewed together with the employee’s salary and local requirements, and not as a standalone monthly subscription.
How to Calculate the Total Cost of an EoR Employee
A practical budgeting formula usually looks like this:
Total employment cost = gross salary + employer contributions + EoR service fee + applicable benefits + additional charges
- For monthly budgeting: monthly gross salary + monthly employer contributions + monthly EoR fee + monthly equivalent of applicable additional costs
- For annual planning: annual gross salary + annual employer contributions + annual EoR fees + annual additional costs
Let’s explore it through an example. A company wants to hire someone in another country and pay them $5,000 a month. Putting "$5,000 + EoR fee" in your budget and thinking that's the end result is a mistake in this case.
Finance should clearly identify: the $5,000 gross salary; the applicable employer taxes and social contributions for the country; any legal benefits; the EoR service fee; any extra benefits the company chooses to offer; and any one-time or extra charges. It wouldn't be correct to figure out the exact price without knowing the employee's country and the terms of their employment, which is why the provider's fee is only a part of the budget.
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Get StartedWhat Determines EoR Pricing?
Country of employment. Different jurisdictions have different payroll, tax requirements, social security systems, and termination rules. Costs can vary from one employee to another even if they have the same salary.
Employee compensation. The fixed fee model means that the provider charges a fixed fee, irrespective of salary. But under a percentage-based model, it increases if the compensation increases, which makes a big difference when hiring senior or highly paid specialists.
Number of employees. Some providers offer volume pricing for larger teams, but check the actual price per employee and total contract cost, don’t just assume a higher team size automatically means a lower rate.
Services included. Two providers may have similar monthly fees, but provide different scopes of service. Always check what’s included in the base price.
Employee lifecycle events. Other costs may adjust to changes in employment terms, off-cycle payroll, employee termination, severance processing, or immigration support. Not all providers charge for these separately, and that’s why it’s recommended to check their policy before you sign.
Hidden EoR Costs: What Should You Check?
The most typical pricing mistake is comparing only the headline monthly fee. The additional charges below should also be identified in a transparent EoR comparison.
Setup fees/onboarding fees. Ask if the monthly fee includes onboarding a new employee or if that will cost you extra.
Security deposits. Some providers require money up front to pay payroll and employer obligations. Ask how the deposit is calculated, when it is paid, and when it is returned.
Off-cycle payroll runs. If your company regularly processes bonuses, corrections, or commissions outside the regular payroll schedule, find out if these runs carry an additional charge.
Fees for currency conversion and payment processing. Check what exchange rate is used and whether a conversion margin or a payment fee applies. A small difference is amplified when payroll runs repeatedly across a large international workforce.
Offboarding. Final payroll calculations, statutory payments, and termination documentation are available on a separate chargeable basis. Before an employee leaves, check what's included.
Benefits. Ask for a detailed breakdown of required benefits, optional benefits, which costs are passed through, and which are included in the provider fee.
This is one area where the Employer of Record pricing model itself matters: Garna’s platform is built around a flat, published $200 starting fee and a “no hidden fees” transparent pricing structure across its payroll and EoR products, so the service fee and the country-specific employment costs will stay visible as two separate items rather than one blended number.
EoR Cost vs Setting Up a Local Entity
An EoR isn't always the only best strategy to hire people. "What kind of employment structure works best for our business in terms of total costs and operations?" is the important question.
Setting up your own local business can involve incorporating, getting legal help, accounting, setting up payroll, registering as an employer and paying taxes, banking, health insurance, and ongoing administration. All that with costs that vary a lot from place to place. For example, in the EU, business owners who hire people to work in another member state usually need to register as an employer and pay into that country's social security system directly. Establishing a local entity costs between $20,000 and $150,000. An EoR is meant to take care of all of that registration and continued compliance work.
You should use an EoR when you need to hire a few people in a new market, want to test the market before committing to a stable presence, don't want to set up a subsidiary, or don't have local employment experts on staff yet. It may make more sense to have a local legal entity once you have a larger workforce in a country. In either case, you should look at both the direct fees and the costs of running the business.
EoR vs Contractors: Is an EoR More Expensive?
On paper, a contractor arrangement can look cheaper, as the company does not have the same employer-side tax and benefit obligations. However, the two structures are not interchangeable: a contractor is self-employed, while an EoR employee is legally employed by the EoR under the employment framework of that country.
The use of a contractor arrangement solely to reduce employment costs where the actual working relationship looks like employment creates the risk of misclassification, bringing back taxes, penalties, and legal exposure far outweighing any short-term savings. The question shouldn't be ‘Which is cheaper?’ but ‘Which structure accurately reflects the working relationship and complies with local law?’. For companies that truly want employees instead of contractors, an EoR offers a compliant and inexpensive local employment model without the need to establish an entity.
How to Compare EoR Providers on Cost
1. Compare the same employee profile. Match country, gross salary, employment type, start date, benefits, and payment currency across providers, otherwise, the comparison is superficial.
2. Separate the provider fee from employment costs. Ask each provider to show the EoR service fee as well as the employer taxes/statutory costs on two separate lines so you can see what you’re paying the provider and what local law requires.
3. Request the full first-year cost. A monthly number can hide one-off costs. You can ask for 12 months of EoR fees + projected statutory employer costs + benefits + one-time fees + any additional services.
4. Review exceptional scenarios. What if the employee leaves? What if the employee’s salary changes? What if the contract needs to be amended? What if payroll needs an off-cycle correction? What if immigration support is needed? Ask all that if necessary.
5. Read the contract, don't just look at the pricing page. The commercial agreement spells out what is included, what is billed separately, and what the conditions are under which fees can change.
Use our EoR cost calculator to compare prices and fees by different droviders to see what works best for your business.
How Garna Helps Control EoR Costs
When companies go international, they want to have a predictable budget for employment but still keep the required local employment structure.
Garna offers employment administration, payroll, compliance, and workforce management in one platform with EoR pricing starting from $200 per employee a month. It is intended that the initial fee is easy to extract from country-specific employment costs rather than being part of some blended figure. Garna also supports employment and payments in 150+ countries and in 80+ currencies, meaning a company doesn’t have to create a separate administrative process for each market it enters. Garna takes care of the local employment infrastructure, so your team can focus on the actual work and performance of the employee.
It’s also particularly useful for startups and scaling companies that want to hire across borders but don’t want to set up local entities, and for HR and Finance teams that want to see a single, transparent line item for the EoR fee rather than managing multiple vendors across regions.
Get an accurate breakdown of costs for countries you’re hiring in with a demo from Garna.
Conclusion
Now it’s clear that EoR cost goes beyond the fee information shown on a provider’s offer page. We talk about a budget that is calculated based on an employee's gross salary, benefits, employer taxes, and any other additional charges for extra services.
That’s why the most reliable way to find out what price is reasonable for your business is to look at all those factors and review your potential employee’s lifecycle based on that information.
For businesses that want to hire internationally without setting up local entities, Garna provides EoR, payroll, compliance, and employment administration in one platform. If you're planning your next international hire, book a demo with Garna to discuss countries you plan to work in and expected employment costs.