International hiring no longer belongs only to big companies. Smaller startups, SaaS outfits, agencies, and marketplaces are now regularly making global teams. And while finding the right talent is a challenge itself, it's not the only one. The real issue is figuring out which legal hiring model to use.
Employer of Record (EOR) and Contractor of Record (COR) often get mixed together as two sides of the same thing, because they both allow you to do business with people in markets where you don't have a local entity. But the truth is, they are different. An EOR takes care of the employment side, from contracts and payroll to statutory benefits and local employment requirements, while you stay focused on managing your business. A COR helps you with an independent contractor arrangement, takes off administrative burden of added compliance and payment support.
To answer whether this person should be classed as an employee or a contractor, we explore both models in this article, find out what to use in different scenarios, and how to choose the one that’s right for you.
What Is an Employer of Record?
An EOR provides the local employment structure and manages employment-related administration, while your company remains responsible for the employee’s business goals, and performance. To understand how an employer of record works in practice, it helps to look at what an EOR handles on your behalf: the local employment contract, payroll, and statutory benefits.
An EOR gives you a flexible way to hire employees and build a team in another country without having to establish your own local employing entity from day one.
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What Is a Contractor of Record?
A Contractor of Record helps businesses manage independent contractors across different countries. It takes care of contractor agreements, onboarding, invoicing, payments, and related administration, while the contractor remains self-employed.
A COR is a practical option for freelancers, consultants, and other independent professionals working on defined projects or assignments where the scope is clear. You stay focused on working with the contractor, while the COR handles the administrative side of the engagement.
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Learn moreThe Real Cost Comparison
Contractors look cheaper on the invoice, but that's only part of the picture. Let’s look at those rough estimates that vary depending on a contractor service provider and locations.
EOR ≈ Gross salary plus statutory employer taxes (which can range from 15–35% of salary, depending on the country) plus EOR fee (which can run from $400 to $800 per employee per month, depending on a provider).
COR ≈ Contractor rate plus the fee COR providers charge (often between $50 to $150 per month, or % of the invoice value) plus time and expenses you have to spend on the scope and renewals.
Direct contractor ≈ Contractor rate plus your time on paperwork.
For clearly defined engagements with independent professionals, a COR can be a straightforward and cost-effective way to manage the relationship. When you need to hire someone as an employee, an EOR provides the local employment structure and handles the related administration. The right choice depends on the nature of the engagement and local requirements.
A Practical Decision Guide
1.
Consider the nature of the role. An EOR can be a practical option when you want to hire the person as an employee, while a COR can support engagements with independent contractors. If the role involves signing contracts, making deals, or representing your company, consider the wider tax and regulatory implications of the arrangement before deciding to proceed with either EOR or COR.
2. Consider how you want to work with the individual. If you want to hire someone as an employee and build them into your team, an EOR can provide a practical way to manage the employment relationship through a local employing entity. If you want to work with an independent professional on a defined scope of work, a COR can help manage the contractor relationship and related administration.
3.
Consider the duration, scope, and local requirements. The length of an engagement is only one factor when choosing between an employment and contractor arrangement. The nature of the work, the way the engagement is structured, and the requirements of specific jurisdiction can all be relevant. Local rules vary between countries, so the right approach may differ from one market to another.
Still unsure which way to go? The right model depends on your hiring needs, the nature of the engagement, and local requirements. Talk to our team to explore the EOR or COR options available for your specific situation.
Why Businesses Choose Garna for Global Hiring
Managing international employees, contractors, payroll, and payments through separate providers can make it harder to maintain a clear view of your workforce and the requirements that apply in each market. Garna brings these services together in one operational framework:
- EOR services that provide a local employment structure and support employment administration in line with applicable local requirements.
- COR services that help manage contractor agreements, onboarding, payments, and related administration from the start of the engagement.
- Global payroll and multi-currency payments, with coverage across 150+ countries through our network of local employing entities and partners.
This allows you to manage employees and contractors across different markets, while keeping employment and contractor administration in one place. And as your needs evolve, Garna can support transitions between different engagement models.
Choosing Between Two Hiring Models: A Conclusion
Fundamentally, the choice is less about picking one model over the other and more about choosing the right setup for each hiring need and understanding the requirements that apply in each market.
Use an EOR when you want to hire someone as an employee and build them into your team. Use a COR when you want to work with an independent professional and need support with the administration of the engagement.
In practice, many businesses use both EOR and COR arrangements for different needs. As your workforce evolves, the right approach may change too, and having a clear framework for managing different engagement models can make global hiring more efficient and easier to manage.
Garna helps businesses build and implement a global hiring strategy, with EOR and COR solutions designed to support different types of international engagements.