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Employer of Record (EOR) solution allows companies to hire, onboard, and manage employees in multiple countries without having to establish a local entity. It manages all payroll-related tasks and compliance but leaves the supervision and work assignment to the sponsor organization. It also handles all the legal and admin tasks associated with being an employer, like paying salaries, withholding taxes, managing benefits and processing onboarding. Apart from helping companies avoid the hassle of setting up a local entity, this arrangement helps in reducing legal risks and is also cost effective as the fee paid to EOR may be lower than the costs of fully employing contractors directly. It is widely used by medium and large enterprises looking to expand into new markets. EOR differs from Professional Employer Organization (PEO) in the sense that a PEO acts as a co-employer, while an EOR is the legal employer of an organization’s distributed workforce.

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