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Employer of Record & PEO
Published:
September 21, 2026
Last updated:
When it comes to engaging an Employer of Record (EOR), a quote is just a starting point. It shows the monthly fee per employee in each country, but what you will actually pay, and who is responsible for your team, depends on how the provider operates behind that number. Before comparing providers, clarify three things for every country on your list:
All three come down to the provider's entity structure, which is why two quotes with a similar monthly fee can lead to very different totals.
An EOR hires employees on your behalf through a locally registered company. That company signs the employment contract, runs payroll, remits statutory contributions and holds the employer's legal obligations. Providers generally use one of three models in each country, and many use a mix:
No one model works for every market. A disclosed partner can be a sensible choice in a country where you plan to hire one or two people. What matters is knowing which model applies in each country before you sign, because each carries different costs and a different line of accountability.
The monthly EOR fee is one part of total cost. Structure shapes the rest.
Margin layers. When a provider works through a partner, both companies take a margin. In a disclosed arrangement, this is visible and can be discussed. In an undisclosed chain, several layers may be built into the fee or passed through as separate charges.
Currency conversion. Salaries are paid in local currency. Each time funds move between entities, a conversion may take place, and each conversion can carry a spread. An owned entity typically converts once. A chain may convert more than once, and the rate applied rarely appears on the quote.
Costs outside the quote. Several costs depend on the employing entity and local rules rather than the provider's fee:
Exit costs. If you later move employees to another provider or to your own entity, the legal employer changes. Depending on the country, that can mean new contracts, new work permits and settling accrued entitlements. The cost of that transition is largely set by the structure you choose today.
Payroll errors, termination disputes and labour inspections go to the legal employer first. The employee's contract names that entity, and it is the entity authorities contact.
With an owned entity, the provider you signed with is the party that responds. With a disclosed partner, responsibilities are split according to the partner contract, and the provider should be able to explain exactly who handles what. With an undisclosed chain, the company dealing with the issue may be one you have never spoken to, and response times depend on how well information moves between entities.
Employee data follows the same path. Salary, identity and bank details pass through every entity involved, so each additional entity is another party processing personal data under that country's rules.
A useful test: ask each provider, "If an employee in this country raises a dispute, who responds, and who do we speak to?" A specific answer is a good sign.
Ask these questions for each country you plan to hire in:
Request answers in writing, per country. A provider that can answer clearly for every market on your list is showing how it will operate once your team is employed.
Entity structure decides who employs your team, who responds when issues arise, and which costs sit outside the quote. Confirming it country by country turns an EOR price from a headline number into a figure you can plan around.
At AYP, we employ through our own entities in Malaysia, the Philippines, Vietnam, Indonesia, Thailand, Hong Kong and Taiwan, and we state clearly where we work with a vetted local partner. To see how employment costs break down by country, try our [Employee Cost Calculator].
Learn more about our EOR services here.
Not necessarily. Compliance depends on how well the legal employer operates in that country. A disclosed partner with clearly defined responsibilities can be compliant and cost-effective, particularly for small teams. Risk increases when the employing entity is not disclosed, because responsibility cannot be assessed.
It depends on the country. Where work permits are tied to the employing entity, as in Vietnam and Indonesia, changing the legal employer generally requires a new application. Ask about transfer terms before signing.
Ask the provider to name the entity that will sign the employment contract in each country and confirm whether they own it. A sample employment contract per country will show the named employer.
Does entity structure matter if I'm only hiring one or two people in a country?
