EOR vs Contractor vs COR: Which to Use Abroad (2026)

When you hire someone in a country where your company has no entity, you have three realistic ways to pay them: as an independent contractor, through a contractor of record, or as an employee of an employer of record. This guide sets out what each one costs, how the law in each country decides which one you are allowed to use, and what happens when a company picks the cheap route for a role the law treats as employment.

The fee gap looks decisive and is not. A contractor platform charges a median of $37 per contractor per month across the 34 platforms we track that publish a price, a contractor of record a median of $199, and an employer of record a median of $349 per employee per month across the 56 providers that publish one. On fees alone, a contractor looks like the obvious answer. But the fee is the small number. The large number is the employer contributions the law attaches to an employee's salary, which run from 0% to 42.5% of gross pay in the countries we track, and which a contractor's client does not pay. That gap is exactly what a labour inspector, a tax authority or a court recovers, usually for several years back and often with penalties on top, when it decides that a "contractor" was an employee all along.

So the real question is never "which route is cheaper". It is "which route does the law allow for this role, in this country", and only then "which of the allowed routes costs least". This guide answers both, from the statutes up: the legal test each of the countries we compare applies, quoted from the statute, the regulator or the court that sets it; what misclassification costs there, with the amounts those sources state; and what each route costs, from the prices the providers publish on their own sites, every figure linked to its source.

Contents

1. The three routes, and what each one actually is
2. What each route costs
3. How the law decides who is an employee
4. Country by country: the test and the price of getting it wrong
5. What misclassification costs, added up
6. When a contractor is the right call, role by role
7. The contractor of record: what it fixes and what it cannot
8. Moving a contractor onto an employer of record
9. A decision checklist
10. The bottom line
11. Frequently asked questions

1. The three routes, and what each one actually is

Start with who holds the legal relationship with the person, because every other difference (cost, risk, what you can ask the person to do) follows from it. In each route the person does the same work for you. What changes is whose contract they sign, who is responsible for the taxes and contributions the law attaches to their pay, and who answers to the authorities if that relationship turns out to be something other than what the paperwork says.

An independent contractor is a business of one. They sign a services agreement with your company, invoice you for work, and pay their own income tax and social contributions in their country. You owe them the invoice and nothing else: no payroll, no paid leave, no notice period, no severance. A contractor management platform does not change that relationship. It is software that issues the agreements, collects the invoices and pays them in the contractor's currency; the contract is still between your company and the contractor, and the classification question is still yours. Platforms such as Papaya Global, Remote, Oyster HR and Deel sell this, and we compare 57 of them on our contractor management board.

A contractor of record (COR) puts a provider between you and the contractor. The provider engages the contractor, pays them and invoices you, and in most offers it says it carries some or all of the classification risk. Deel describes its product as one that takes on the liability as your agent of record↗; Remote says its own engages and pays the contractor directly, with uncapped indemnity↗; Papaya Global says it becomes the contractor of record and assumes the liability↗. The person is still a contractor, though, and Section 7 explains why a contractor of record changes who pays a penalty more than it changes whether a penalty is owed.

An employer of record (EOR) employs the person. The EOR's local entity signs an employment contract under local law, runs payroll, withholds tax, pays the employer contributions, provides the statutory benefits and handles termination by the local rules, while your company directs the day-to-day work under a services agreement with the EOR. The person is an employee in every legal sense, so the classification question disappears: there is nothing left to reclassify. Our EOR guide covers how that works in depth, and our price board compares the 93 providers we track.

There is a fourth route, your own entity: a subsidiary or branch that employs people directly. It is the cheapest per head once a team is large enough and the slowest and most expensive to start, and it is the route the other three are usually a bridge to. Our EOR cost report works through when an entity starts to pay for itself.

The diagram shows the one structural fact that decides most of this guide. In the first two routes the contract that a court or an authority will examine is yours. In the third it is the provider's, but the work it describes is still done for you, under your direction. In the fourth there is no contractor relationship left to examine.

2. What each route costs

Price the routes on what you actually pay in a year, not on the monthly fee, because the fee is the smallest part of the bill for an employee and close to the whole bill for a contractor. The figures below come from the prices each provider publishes on its own site, read and linked on our contractor management and EOR price boards, so a figure that changes on the provider's site changes here too.

Contractor platforms are cheap, and some are free. Of the 57 platforms we track, 34 publish a price per contractor per month: from $5 to $199, with a median of $37, which is $444 a year per contractor. Papaya Global offers OnePay: $0 platform fees, pay only when you pay↗; Remote charges $29↗ a month per contractor, Oyster HR $29↗ and Deel $49↗. A few sell an add-on that covers classification claims: Remote charges $99↗ a month per contractor for Remote Contractor Management Plus↗, Oyster HR $49↗ for Oyster Shell↗ and Teamed $130↗ for Teamed Guard↗.

A contractor of record costs a little more than half an EOR fee. Of the 28 contractor-of-record services we track, 14 publish a price: from $99 to $400 per contractor per month, a median of $199, or $2,388 a year. At the low end, Native Teams starts at $99↗ a month and Skuad at $99↗; the large platforms sit higher, with Deel at $325↗, Remote from $325↗ and Multiplier at $400↗.

An EOR fee is the middle of the bill, not the bill. 56 of the 93 EOR providers we track publish a starting fee, from $99 to $740 per employee per month, with a median of $349, or $4,188 a year. What the fee does not include is the employer side of the payroll: the pension, health, unemployment and accident contributions the law requires on top of gross salary. Those are the same whether the employer is your own entity or an EOR, and they are what a contractor's client never pays.

The chart is the reason the fee comparison misleads. In the countries this guide compares, the employer's contributions run from ~8%↗ of salary in Canada to ~42.5%↗ in France. The table below turns those rates into money on one example salary, adds the median EOR fee, and sets each country's rate beside the share of its workers who are self-employed, which tells you how ordinary contracting is in that labour market.

Read the last column against the contractor routes. On a $60,000↗ salary, the employer side of an employee in Poland costs $12,480 a year, and with the median EOR fee $16,668; the same person paid as a contractor through a median platform costs you $444 in fees on top of their invoice, or $2,388 through a median contractor of record. In Brazil the employer side is $21,600 and in France $25,500. That gap is real money, and it is why companies reach for the contractor route.

It is also less of a saving than it looks, for two reasons. First, a contractor who knows the market prices their invoice to cover the contributions, leave and downtime an employee would not pay for, so part of the gap moves into the rate rather than disappearing. Second, and decisively, the gap is exactly the amount an authority recovers when it reclassifies the relationship, usually with interest and penalties, and often for every year it can reach back. The rest of this guide is about when that happens.

The self-employment column carries a second lesson. In Colombia 45.6%↗ of workers are self-employed, in Mexico 30.8%↗ and in Brazil 30.3%↗, against 6.1%↗ in the United States and 8.1%↗ in Germany. A high share does not mean the law is relaxed about contractors; much of it is small farming and trade. It does mean that a contractor arrangement will look normal to the person you hire, which is precisely why it is easy to drift into one for a role that is employment in everything but name.

3. How the law decides who is an employee

Every country in this guide has its own test, written in its own statute or case law, and Section 4 quotes each one. But the tests are far more alike than their names suggest, because they answer the same question and most of them grew from the same idea. The clearest statement of that shared idea is the International Labour Organization's Employment Relationship Recommendation, 2006 (No. 198), which its member states adopted as the template for national rules on exactly this problem.

The first principle is that the facts beat the paperwork. The Recommendation says the existence of an employment relationship "should be guided primarily by the facts relating to the performance of work and the remuneration of the worker, notwithstanding how the relationship is characterized in any contrary arrangement, contractual or otherwise, that may have been agreed between the parties" - ILO, Recommendation No. 198, paragraph 9. In practice, that means a contract titled "independent contractor agreement", signed by a person with a business registration, is the start of the analysis, not the end. Every national test in Section 4 applies some version of this rule, and several state it in their own words.

The second is a common list of signs. The Recommendation suggests that countries define specific indicators of employment in their own law, and lists the ones that recur everywhere: work "carried out according to the instructions and under the control of another party", that "involves the integration of the worker in the organization of the enterprise", that "is performed solely or mainly for the benefit of another person", that "must be carried out personally by the worker", that "is of a particular duration and has a certain continuity", or that "involves the provision of tools, materials and machinery by the party requesting the work" - ILO, Recommendation No. 198, paragraph 13. On the money side it adds "periodic payment of remuneration", pay that "constitutes the worker's sole or principal source of income", "recognition of entitlements such as weekly rest and annual holidays" and the "absence of financial risk for the worker".

Read that list against a typical remote hire and the difficulty is obvious. A developer who works full time for one company, under its product manager, in its tools, for an open-ended period, paid the same amount every month, ticks almost every box, and the contract's title does not change any of them. That is why the role-by-role scoring in Section 6 matters more than the country you hire in.

The third is the presumption. The Recommendation also invites countries to provide "for a legal presumption that an employment relationship exists where one or more relevant indicators is present" - ILO, Recommendation No. 198, paragraph 11(b). Where a country has one, the burden flips: once the worker or the authority shows a few signs of employment, it is for the company to prove the person was genuinely independent. Several countries in Section 4 have exactly such a presumption, and it changes the risk of the contractor route sharply, because a company that cannot produce evidence of the person's independence loses by default.

The diagram is a summary, not a test. No country decides on one factor, and the weight each factor gets differs: some tests put control first, some put integration or economic dependence first, and a few have added a statutory list that a contractor arrangement must survive. Section 4 sets out what each country actually looks at, in its own legal words, and what it costs when a company gets it wrong.

4. Country by country: the test and the price of getting it wrong

The fifteen countries below are the ones companies hiring abroad most often ask about, from the large markets that set the pattern (the United States, the United Kingdom, Germany, France) to the places where companies most often hire remote engineers and support staff (Poland, Portugal, Brazil, Mexico, Argentina, Colombia, the Philippines). For each one we set out the test the law applies, in the words of the statute, the regulator or the court that sets it; what getting it wrong costs, with the amounts those sources state; and what has changed recently, because several of these rules moved in the last two years.

Two warnings before the detail. First, these are summaries of the general rule, written so a buyer can judge where a role sits; they are not legal advice for a specific contract, and a local adviser should look at any arrangement you rely on. Second, the amounts are the ones the law states, not the ones you would pay: real exposure depends on how long the arrangement ran, what the person was paid, whether the authority treats it as deliberate, and how many people are involved. The point of the numbers is their order of magnitude, which in most countries is several times the fee saving that made the contractor route attractive.

United States

The test. There is no single American test. For federal tax, the IRS asks who controls the work and weighs the whole relationship: "The keys are to look at the entire relationship and consider the extent of the right to direct and control the worker" - IRS. Working remotely changes nothing, because "What matters is that you have the right to control the details of how the services are performed" - IRS. For federal wage law, the Department of Labor's 2024 rule weighs six factors together: "(1↗) opportunity for profit or loss depending on managerial skill, (2↗) investments by the worker and the potential employer, (3↗) degree of permanence of the work relationship, (4↗) nature and degree of control, (5↗) extent to which the work performed is an integral part of the potential employer's business, and (6↗) skill and initiative" - Federal Register.

California is stricter. Its ABC test starts from employment: "a worker is considered an employee and not an independent contractor, unless the hiring entity satisfies all three of the following conditions" - California Labor and Workforce Development Agency. Those conditions are that the worker is free from the company's control, does work outside the usual course of its business, and is customarily engaged in an independent trade of the same kind. The second prong alone rules out most remote hires, because a software company's engineer does exactly what the company does.

If you get it wrong. When the IRS reclassifies a worker, the employer owes its own full share of payroll taxes plus a set share of what it should have withheld: income tax withholding "equal to 1.5 percent↗ of the wages" and the employee's social security and Medicare share at "20 percent↗ of the amount imposed" - 26 U.S.C. section 3509. Those reduced rates double, to "3 percent↗" and "40 percent↗", when the employer also failed to file the information returns, and they do not apply at all to intentional disregard - 26 U.S.C. section 3509. In California, state agencies "have authority to assess civil penalties of between $5,000↗ and $25,000↗ per violation" for willful misclassification, on top of back wages and contributions - California Labor and Workforce Development Agency.

What changed. Since May 2025 the Department of Labor no longer applies its 2024 rule in its own investigations, though "the 2024 Rule remains in effect for purposes of private litigation" - Federal Register. In February 2026 it proposed to bring back its 2021 approach, in which control and the opportunity for profit or loss are "the two core factors" that "typically carries greater weight in the analysis than any other factor" - Federal Register. No final rule had been published when we read the Federal Register in November 2026, so a company hiring in the United States faces the same core questions under every version: who controls the work, and does the person run a business of their own.

46 EOR providers name the United States on their own sites: compare them with their fees.

Canada

The test. For tax, the Canada Revenue Agency asks one question: "whether the person is engaged to carry out services as a person in business on their own account, or as an employee" - Canada Revenue Agency. It starts from what the parties intended and then checks the facts against it. Those facts come from the Supreme Court of Canada's Sagaz decision of 2001: control "will always be a factor", alongside "whether the worker provides his or her own equipment, whether the worker hires his or her own helpers, the degree of financial risk taken by the worker, the degree of responsibility for investment and management held by the worker, and the worker's opportunity for profit" - Supreme Court of Canada. Quebec applies its Civil Code instead, so "These factors differ if the contract is formed in the province of Quebec" - Canada Revenue Agency.

If you get it wrong. An employer that should have deducted pension and employment insurance contributions "has to pay both the employer's share and the employee's share of any contributions and premiums owing, plus penalties and interest" - Canada Revenue Agency. The agency "can assess a penalty of 10%↗ of the amount of CPP, EI, and income tax you did not deduct", rising to 20%↗ for a repeat failure made knowingly or through gross negligence in the same year - Canada Revenue Agency, T4001.

What changed. Since 20 June 2024, the Canada Labour Code presumes employment: "A person who is paid remuneration by an employer is presumed to be their employee unless the contrary is proved by the employer" - Canada Labour Code. The Code also prohibits "treating an employee as if they were not their employee", and puts the burden of proof on the employer in any dispute - Canada Labour Code. That Code covers only federally regulated sectors such as banking, telecoms and interprovincial transport - Canada Labour Code; most employers fall under provincial employment standards, which apply their own tests.

47 EOR providers name Canada on their own sites: compare them with their fees.

United Kingdom

The test. The UK keeps two status tests, one for employment rights and one for tax, and "A person may have a different employment status in tax law" - GOV.UK. The signs of employment are the familiar ones: work the person is required to do, no right to send a substitute, the business providing the equipment, and "a manager or supervisor is responsible for their workload, saying when a piece of work should be finished and how it should be done" - GOV.UK. Self-employment is the mirror image: "A person is self-employed if they run their business for themselves and take responsibility for its success or failure" - GOV.UK.

Contractors who work through their own company fall under the off-payroll working rules (IR35), which "apply if the worker who provides services to a client through their own intermediary would have been an employee if they were providing their services directly to that client" - GOV.UK. Who decides depends on the client's size: "In most cases, the client will be responsible for determining the employment status of the worker", while a small private-sector client leaves the decision to the worker's company - GOV.UK. The rules do not reach a client that is wholly overseas, which is one reason a foreign company hiring a UK contractor is often treated differently from a UK company doing the same - GOV.UK.

If you get it wrong. "Individuals and their employers may have to pay unpaid tax and penalties, or lose entitlement to benefits, if their employment status is wrong" - GOV.UK. A client that must decide and fails to give reasons takes on the worker's tax: "If you do not, the worker's Income Tax and National Insurance contributions become your responsibility" - GOV.UK. Penalties for an inaccurate return run up to "30%↗ of the potential lost revenue" for careless action, "70%↗" for deliberate action and "100%↗" for deliberate and concealed action - Finance Act 2007, Schedule 24.

What changed. Since 6 April 2024, HMRC can set the tax a contractor already paid against a client's off-payroll bill, which lowers the double-tax risk of a wrong determination - HMRC Employment Status Manual. And higher company size thresholds, a turnover above £15↗ million and a balance sheet above £7.5↗ million, will make more clients count as small, for financial years that begin on or after 6 April 2025 and in practice from the 2027/28 tax year - HMRC Employment Status Manual.

49 EOR providers name the United Kingdom on their own sites: compare them with their fees.

Australia

The test. Since 26 August 2024, the Fair Work Act decides employment by "ascertaining the real substance, practical reality and true nature of the relationship" - Fair Work Act, section 15AA. That means "regard must be had not only to the terms of the contract governing the relationship, but also to other factors relating to the totality of the relationship including, but not limited to, how the contract is performed in practice" - Fair Work Act, section 15AA. It reversed the High Court's 2022 decisions that had made the written contract decisive, and the Fair Work Ombudsman now weighs control, financial risk, tools, the right to delegate, hours and the expectation of continuing work - Fair Work Ombudsman.

Sham contracting is a separate offence: an employer "must not represent to the individual that the contract of employment under which the individual is, or would be, employed by the employer is a contract for services", unless it proves it "reasonably believed that the contract was a contract for services" - Fair Work Act, section 357.

If you get it wrong. The maximum penalties for each sham contracting contravention are "$21,840↗ for individuals $109,200↗ for businesses with fewer than 15↗ employees $546,000↗ for businesses with more than 15↗ employees" - Fair Work Ombudsman. On the tax side, the employer owes the super guarantee charge, "which is more than the super that would have been paid if the worker was classified correctly" - Australian Taxation Office, along with unpaid withholding and its penalties.

What changed. Besides the 2024 test, the Commonwealth penalty unit rose to $364↗ from 1 July 2026, which is what lifted the sham contracting maximums - Federal Register of Legislation. And under Payday Super, for earnings paid from 1 July 2026, the new charge for missed super includes an administrative uplift that is "Initially the administrative uplift amount is 60%↗ of your total individual final super guarantee shortfalls" - Australian Taxation Office.

50 EOR providers name Australia on their own sites: compare them with their fees.

Germany

The test. German social insurance law defines employment by two signs: "Anhaltspunkte für eine Beschäftigung sind eine Tätigkeit nach Weisungen und eine Eingliederung in die Arbeitsorganisation des Weisungsgebers" (the signs of employment are work under instructions and integration into the work organisation of the person giving them) - SGB IV, § 7. Employment law adds that reality beats the label: "Zeigt die tatsächliche Durchführung des Vertragsverhältnisses, dass es sich um ein Arbeitsverhältnis handelt, kommt es auf die Bezeichnung im Vertrag nicht an" (if the way the contract is actually carried out shows an employment relationship, what the contract calls it does not matter) - BGB, § 611a. The worker is employed when integrated into the business and subject to instructions covering "Zeit, Dauer, Ort und Art der Ausführung" (time, duration, place and manner of the work) - Deutsche Rentenversicherung.

Germany offers a way to ask in advance. Either party can ask the clearing office of the federal pension insurer for a binding status decision, the Statusfeststellungsverfahren, which "ist kostenfrei. Es dauert im Durchschnitt drei Monate" (is free of charge and takes three months on average) - Deutsche Rentenversicherung. For a long engagement with a German freelancer, that procedure is the cheapest insurance there is.

If you get it wrong. The pension insurer warns that a client who assumed self-employment risks "die Nachzahlung von Gesamtsozialversicherungsbeiträgen" (back payment of the total social security contributions, employer and employee shares) after an audit - Deutsche Rentenversicherung. Those claims run for four years after the year they fell due, and for thirty years if they were withheld deliberately - SGB IV, § 25. The employer can recover a missed employee share only from "den drei nächsten Lohn- oder Gehaltszahlungen" (the next three pay runs), so for older periods it effectively pays both shares itself - SGB IV, § 28g. A late-payment surcharge of "1↗ Prozent" of the arrears is added for every month started - SGB IV, § 24. And an employer who withholds employees' contributions commits a crime punishable by up to five years in prison - StGB, § 266a.

What changed. The Federal Social Court's Herrenberg ruling of 28 June 2022 found a music school's freelance teacher to be an employee "unabhängig von den vertraglichen Vereinbarungen" (regardless of the contractual agreements), and the pension insurer has applied the stricter standards it set to every period from 1 July 2023 at the latest, existing cases included - Deutsche Rentenversicherung. A transitional exemption for teaching was extended in March 2026 to the end of 2027; it covers teachers only, not contractors in general - Deutsche Rentenversicherung.

42 EOR providers name Germany on their own sites: compare them with their fees.

France

The test. French law turns on the lien de subordination, which the Cour de cassation defines as "l'exécution d'un travail sous l'autorité d'un employeur qui a le pouvoir de donner des ordres et des directives, d'en contrôler l'exécution et de sanctionner les manquements de son subordonné" (work done under the authority of an employer that can give orders and directives, check their execution and sanction failures) - Cour de cassation, Uber ruling. Working inside "un service organisé" whose conditions the employer sets on its own is a sign of it - Cour de cassation, Uber ruling.

A registration helps, but only up to a point. People registered as self-employed are presumed not to be employees of their clients, but the presumption falls when they work "dans des conditions qui les placent dans un lien de subordination juridique permanente" (in conditions that place them in permanent legal subordination) to the client - Code du travail, L8221-6. If the client did that intentionally to avoid an employer's obligations, the arrangement is travail dissimulé, concealed employment - Code du travail, L8221-6.

If you get it wrong. Concealed employment is punishable by three years in prison and a fine of €45,000↗ - Code du travail, L8224-1. A company faces fines of up to €225,000↗ and penalties such as closure of the business - URSSAF. The employer must pay the contributions owed "sur les 5↗ ans qui précèdent le constat" (for the five years before the finding) - URSSAF, increased by "35 %↗" for concealed employment - Service-Public. And when the relationship ends, the worker is entitled to "une indemnité forfaitaire égale à six mois de salaire" (a flat indemnity of six months' salary) - Code du travail, L8223-1.

What changed. A law of 25 June 2026 on social and tax fraud created a "procédure de flagrance sociale" that lets the authorities act immediately against concealed employment - Service-Public. With France's employer contributions the highest in Section 2's table, the gap a reclassification recovers here is larger than almost anywhere else.

42 EOR providers name France on their own sites: compare them with their fees.

Spain

The test. Spanish employment law covers anyone paid to work "por cuenta ajena y dentro del ámbito de organización y dirección de otra persona" (for another's account and within another person's organisation and direction) - Estatuto de los Trabajadores, article 1, and article 8 presumes an employment contract wherever that is the case - Estatuto de los Trabajadores, article 8. A genuine autónomo works "por cuenta propia y fuera del ámbito de dirección y organización de otra persona" (on their own account and outside another's direction and organisation) - Estatuto del Trabajo Autónomo. The labour inspectorate defines the falso autónomo as a worker registered as self-employed "que, sin embargo, trabaja bajo las condiciones de una relación laboral" (who in fact works under the conditions of an employment relationship) - Labour Inspectorate strategic plan, BOE.

A middle category exists, and it is not a way out. A self-employed worker who receives "al menos, el 75 por ciento↗ de sus ingresos" (at least 75 per cent↗ of their income) from one client is an economically dependent self-employed worker, a TRADE, with extra protections but still self-employed - Estatuto del Trabajo Autónomo, article 11. The category assumes genuine independence in how the work is done; it does not convert directed work into self-employment.

If you get it wrong. Each worker not registered with Social Security is a separate serious offence - LISOS, article 22, fined from "3.750↗ a 7.500↗ euros" at the minimum grade up to "9.601↗ a 12.000↗ euros" at the maximum - LISOS, article 40. Social Security can assess the unpaid contributions for "cuatro años" (four years) back - Ley General de la Seguridad Social, article 24. And imposing illegal conditions on workers "mediante su contratación bajo fórmulas ajenas al contrato de trabajo" (by hiring them under arrangements other than an employment contract), or keeping them after an administrative order, is a crime punishable by "prisión de seis meses a seis años" (six months to six years in prison) - Código Penal, article 311.

What changed. The labour inspectorate's 2025 to 2027 plan steps up inspections built on "cruce masivo de datos fiscales y de Seguridad Social" (mass cross-checking of tax and Social Security data) to find companies that fill employee posts with self-employed workers - Labour Inspectorate strategic plan, BOE. Spain has presumed employment for app-based delivery riders since its 2021 rider law, and is transposing the EU's platform work rules described below.

42 EOR providers name Spain on their own sites: compare them with their fees.

Netherlands

The test. An employment contract is work "in dienst van de andere partij, de werkgever, tegen loon gedurende zekere tijd" (in the service of the employer, for pay, for a period of time) - Burgerlijk Wetboek, article 7:610. In its 2023 Deliveroo judgment the Hoge Raad held that what the parties intended "niet van belang" (does not matter) once the relationship meets that definition, and that the nature and duration of the work, how work and hours are set, and how embedded the person is in the organisation all count - Hoge Raad. The tax authority asks the same question in plain words: "Kunt u bepalen hoe, wanneer, waar en met wie uw opdrachtnemer aan de opdracht werkt?" (can you decide how, when, where and with whom your contractor works?) - Belastingdienst. And the law already presumes employment for anyone working for the same client "gedurende drie opeenvolgende maanden, wekelijks dan wel gedurende ten minste twintig uren per maand" (for three consecutive months, weekly or at least twenty hours a month) - Burgerlijk Wetboek, article 7:610a.

If you get it wrong. Since 1 January 2025 the tax authority enforces again: "Sinds 1 januari 2025 geldt het handhavingsmoratorium niet meer" (the enforcement moratorium no longer applies since 1 January 2025), and it can impose correction orders and back assessments directly, with fines for intent or gross negligence from 2026 - Belastingdienst. A client that could have known the work was employment pays wage tax and national insurance at "het tarief van 52%↗" (a 52%↗ rate) with no contribution caps - Belastingdienst, plus tax interest.

What changed. Beyond the end of the moratorium, a new article 7:610aa will presume employment for work paid "van ten hoogste € 36↗,– per uur" (at most €36↗ an hour) - Staatsblad 2026, 158, in force from 31 December 2026 - Staatsblad 2026, 207, with the amount for its first year set by ministerial regulation. A company paying a Dutch contractor a modest hourly rate will soon start from a presumption of employment.

44 EOR providers name the Netherlands on their own sites: compare them with their fees.

Poland

The test. Employment is work "pod jego kierownictwem oraz w miejscu i czasie wyznaczonym przez pracodawcę" (under the employer's direction, at a place and time it sets) - Kodeks pracy, article 22. Such work is employment "bez względu na nazwę zawartej przez strony umowy" (whatever the parties call their contract), and replacing an employment contract with a civil-law one while keeping those conditions "nie jest dopuszczalne" (is not permitted) - Kodeks pracy, article 22. That covers the B2B contracts with self-employed developers that are common in Polish tech hiring when the work is directed like a job.

If you get it wrong. Concluding a civil-law contract where an employment contract is required is an offence fined from PLN 2,000↗ to PLN 60,000↗ - Kodeks pracy, article 281, double the previous range - Dziennik Ustaw 2026, item 473. The social insurer can add "dodatkową opłatę do wysokości 100 %↗ nieopłaconych składek" (an extra charge of up to 100%↗ of the unpaid contributions) - Social insurance act, article 24, and contribution debts run for "5↗ lat" (five years) from when they fell due - Social insurance act, article 24.

What changed. This is the biggest recent change in this guide. Since 8 July 2026 a regional labour inspector can decide, by administrative decision, that an employment relationship exists where a civil-law contract was signed for work that should have been employment, once an earlier order to fix it was ignored - Dziennik Ustaw 2026, item 473. From the day it is issued, the decision has the effects of employment "na gruncie przepisów prawa pracy, prawa podatkowego, ubezpieczeń społecznych i ubezpieczenia zdrowotnego" (under labour, tax, social insurance and health insurance law) - Dziennik Ustaw 2026, item 473. The inspectorate's checks now also reach businesses that use self-employed sole traders, "bez względu na podstawę świadczenia pracy" (whatever the legal basis of the work) - Państwowa Inspekcja Pracy. A hirer that voluntarily signs an employment contract within "12↗ miesięcy" (twelve months) of the change avoids the fine - Dziennik Ustaw 2026, item 473, which makes the second half of 2026 a natural moment to move Polish contractors onto an EOR.

41 EOR providers name Poland on their own sites: compare them with their fees.

Portugal

The test. An employment contract is one in which a person works for pay "no âmbito de organização e sob a autoridade" (within the organisation and under the authority) of another - Código do Trabalho, article 11. Article 12 then presumes employment when "algumas" (some) of five signs are present: the work is done at a place the client owns or sets, with the client's equipment, within start and end times the client sets, for a fixed sum paid periodically, or in a management role - Código do Trabalho, article 12. A remote developer paid the same invoice every month, on the client's laptop, already shows two of them. The practice of paying such people on self-employed receipts is known as falsos recibos verdes.

If you get it wrong. Work done "por forma aparentemente autónoma, em condições características de contrato de trabalho" (in an apparently autonomous form, under conditions typical of an employment contract) is a "contra-ordenação muito grave" (a very serious offence) by the employer - Código do Trabalho, article 12. Fines for a very serious offence run from "20↗ UC a 40↗ UC" for a negligent small company up to "300↗ UC a 600↗ UC" for an intentional one with a turnover of €10↗ million or more - Código do Trabalho, article 554, and the unit of account stays at €102↗ in 2026 - DGERT. The labour inspectorate gives the employer "10↗ dias" (ten days) to regularise the contract, and otherwise refers the case to the public prosecutor for a court action to recognise the employment relationship - Lei 107/2009, article 15-A.

What changed. The 2023 decent-work reform added a second presumption for digital platforms and tightened the first; it has applied since 1 May 2023 - Government of Portugal. A government bill to rewrite the Labour Code was rejected by Parliament at its first vote on 19 June 2026 - Assembleia da República, so the 2023 rules are the ones in force.

39 EOR providers name Portugal on their own sites: compare them with their fees.

Across the European Union: platform work

One European rule now sits on top of the national tests above. The Platform Work Directive provides that the relationship between a digital labour platform and a person working through it "shall be legally presumed to be an employment relationship where facts indicating direction and control, in accordance with national law, collective agreements or practice in force in the Member States and with consideration to the case-law of the Court of Justice, are found" - Platform Work Directive, Article 5. Member states must bring their rules into force "by 2 December 2026" - Platform Work Directive, Article 29.

The directive covers work organised through a platform's app or algorithm, such as delivery, ride-hailing or micro-task work, not an ordinary company hiring a freelancer directly. Its direction of travel is the point for a buyer: across the EU, the burden is moving toward the company to show that a person it directs is genuinely independent, which is exactly the burden the presumptions in Spain, the Netherlands and Portugal already place on it.

Brazil

The test. An employee is "toda pessoa física que prestar serviços de natureza não eventual a empregador, sob a dependência deste e mediante salário" (any individual who provides non-occasional services to an employer, under its dependence and for a wage) - CLT, article 3. Brazilian courts read that as four elements: personal service, regularity, subordination and pay. Arrangements meant to evade the labour code are void: "Serão nulos de pleno direito os atos praticados com o objetivo de desvirtuar, impedir ou fraudar a aplicação dos preceitos contidos na presente Consolidação" (acts aimed at distorting, preventing or defrauding the application of this code are null and void) - CLT, article 9. That rule is what courts use against pejotização, paying a worker through their own company (a PJ) for work that is employment. Since the 2017 reform, a properly formalised self-employed worker is not an employee "com ou sem exclusividade, de forma contínua ou não" (with or without exclusivity, continuously or not) - CLT, article 442-B, but the protection assumes the person is genuinely autonomous.

If you get it wrong. An employer keeping an unregistered employee is fined R$3,000↗ per employee, plus the same amount for each repeat offence - CLT, article 47. The worker is owed the monthly FGTS deposits of "8%↗ (oito por cento) da remuneração" (8%↗ of pay) - Law 8.036/1990, and on a dismissal without cause a further deposit of "quarenta por cento" (forty per cent) of everything deposited - Law 8.036/1990, while FGTS debt found by an inspection carries a fine of "30%↗ (trinta por cento)" - Law 8.036/1990. On top comes the employer's social security contribution of "vinte por cento sobre o total das remunerações" (twenty per cent of total pay) - Law 8.212/1991, article 22.

What changed. In April 2025 the Supreme Federal Court suspended every pejotização case in the country while it decides whether such contracts are lawful, which court judges alleged fraud and who carries the burden of proof - Supreme Federal Court. In June 2026 it let the labour courts of first and second instance hear those cases again, with the cases suspended once more after that stage until it rules - Supreme Federal Court. As of November 2026 it had not ruled, so the law on paying Brazilian workers through their own companies is genuinely unsettled, which is itself a reason not to build a team on it.

47 EOR providers name Brazil on their own sites: compare them with their fees.

Mexico

The test. A working relationship is "la prestación de un trabajo personal subordinado a una persona, mediante el pago de un salario" (the provision of personal, subordinated work to a person for a wage), "cualquiera que sea el acto que le dé origen" (whatever act gave rise to it) - Ley Federal del Trabajo. And the law presumes one: "Se presumen la existencia del contrato y de la relación de trabajo entre el que presta un trabajo personal y el que lo recibe" (a contract and a working relationship are presumed between whoever provides personal work and whoever receives it) - Ley Federal del Trabajo.

Mexico also restricts putting people at another company's disposal. Since the 2021 reform, "Queda prohibida la subcontratación de personal" (subcontracting of personnel is prohibited), meaning a company that "proporciona o pone a disposición trabajadores propios en beneficio de otra" (provides or puts its own workers at another's disposal) - Ley Federal del Trabajo. Only specialised services outside the client's own corporate purpose and main activity are allowed, from a provider registered with the labour ministry that renews its registration "cada tres años" (every three years) - Ley Federal del Trabajo. How those rules apply to an employer of record serving a foreign company with no Mexican entity is a question of interpretation the law does not answer directly, so ask any provider how its Mexican employment is structured and whether its entity is registered, and do the same for a contractor of record.

If you get it wrong. Prohibited subcontracting carries a fine of "2,000↗ a 50,000↗ veces la Unidad de Medida y Actualización" (2,000↗ to 50,000↗ times the unit of measure) - Ley Federal del Trabajo, and the same penalty applies to the company that benefits from it - Ley Federal del Trabajo. That unit is worth "$117.31↗ pesos mexicanos" a day from 1 February 2026 - Diario Oficial de la Federación. A company that contracts with a provider that fails its social security obligations is jointly liable for the workers used - Diario Oficial de la Federación, and payments for personnel subcontracting lose their tax deductibility for a Mexican taxpayer - Diario Oficial de la Federación.

What changed. Besides the 2021 subcontracting reform, a chapter on platform work published in December 2024 makes app-managed work that needs the worker's physical presence "una relación laboral subordinada" (a subordinated employment relationship) - Ley Federal del Trabajo.

46 EOR providers name Mexico on their own sites: compare them with their fees.

Argentina

The test. There is an employment contract, "cualquiera sea su forma o denominación" (whatever its form or name), whenever a person provides services to another "bajo la dependencia de ésta" (under its dependence) for pay - Ley de Contrato de Trabajo, as amended by Ley 27.802. Providing services "en situación de dependencia" (in a situation of dependence) makes an employment contract presumed - Ley de Contrato de Trabajo, but the presumption does not apply to contracts for works or professional services "y se emitan los recibos o facturas correspondientes" (where the corresponding receipts or invoices are issued) - Ley de Contrato de Trabajo. Sham contracts remain void: "Será nulo todo contrato por el cual las partes hayan procedido con simulación o fraude a la ley laboral" (any contract simulating or defrauding labour law is void) - Ley de Contrato de Trabajo.

If you get it wrong. The 2024 reform repealed the special fines that used to multiply the cost of unregistered employment - Ley 27.742. Since March 2026, a judge who finds unregistered employment must send the file to the federal revenue agency to collect the unpaid sums "con más las multas, recargos y accesorios" (plus the fines, surcharges and charges) - Ley de Contrato de Trabajo. Failing to register a worker is still a very serious administrative offence, fined at "cincuenta por ciento (50%↗) al dos mil por ciento (2.000%↗)" of the monthly minimum wage for each worker affected - Ley 25.212. And a worker dismissed without cause is owed "un (1↗) mes de sueldo por cada año de servicio" (one month's salary for each year of service) - Ley de Contrato de Trabajo.

What changed. Argentina has rewritten these rules twice in two years. The 2024 Ley Bases also let an independent worker work with "hasta otros tres (3↗) trabajadores independientes" (up to three other independent workers) without an employment relationship - Ley 27.742. The labour modernisation law published on 6 March 2026 replaced the definitions and the presumption again and opened a regime for employers to regularise unregistered jobs - Ley 27.802. Parts of that law have been challenged in court, so check the current position with a local adviser before relying on the invoicing exception.

41 EOR providers name Argentina on their own sites: compare them with their fees.

Colombia

The test. An employment contract exists when a person provides a personal service "bajo la continuada dependencia o subordinación de la segunda y mediante remuneración" (under the other's continued dependence or subordination, for pay) - Código Sustantivo del Trabajo, article 22. Once those elements are present, "se entiende que existe contrato de trabajo y no deja de serlo por razón del nombre que se le dé" (there is an employment contract, and it does not stop being one because of the name given to it) - Código Sustantivo del Trabajo, article 23. That is the contrato realidad doctrine. And the Code presumes it: "Se presume que toda relación de trabajo personal está regida por un contrato de trabajo" (every personal work relationship is presumed to be governed by an employment contract) - Código Sustantivo del Trabajo, article 24.

If you get it wrong. The social contributions agency (UGPP) proposes a sanction of "5%↗ del valor dejado de liquidar y pagar por cada mes o fracción de mes de retardo" (5%↗ of the unpaid amount for each month or part-month of delay), up to 100%↗ of the contribution - Ley 1607 de 2012, article 179, rising to 10%↗ a month and up to 200%↗ in its official assessment - Ley 1607 de 2012, article 179, on top of default interest. If wages and benefits are unpaid when the relationship ends, the employer owes one day's wage "por cada día de retardo, hasta por veinticuatro (24↗) meses" (for each day of delay, for up to twenty-four months) - Código Sustantivo del Trabajo, article 65.

What changed. The 2025 labour reform rewrote the subordination element, so that it entitles the employer to require compliance with orders "en cualquier momento, en cuanto al modo, tiempo o cantidad de trabajo" (at any time, as to the manner, time or quantity of work) - Código Sustantivo del Trabajo, article 23, and listed the "Primacía de la realidad sobre formalidades" (primacy of reality over formalities) among the Code's principles - Ley 2466 de 2025.

45 EOR providers name Colombia on their own sites: compare them with their fees.

Philippines

The test. Philippine courts apply "a two-tiered test: the four-fold test and the economic dependence test" - Supreme Court, Ditiangkin v. Lazada. The four-fold test looks at who selected and engaged the worker, who pays the wages, who can dismiss them and who controls their conduct, and the Supreme Court calls control "the most significant factor" - Supreme Court of the Philippines. The second tier asks "whether the worker is dependent on the alleged employer for his continued employment in that line of business" - Supreme Court, Ditiangkin v. Lazada.

The contract's wording does not decide it. Under the Labor Code, "The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer" - Labor Code. And when status is disputed, "the employer bears the burden to prove that the person whose service it pays for is an independent contractor and not a regular employee" - Supreme Court of the Philippines. For a company hiring a remote developer or support agent in Manila, whose work is the core of its business, those two rules together make the contractor route hard to defend.

If you get it wrong. A worker found to be a regular employee and let go is entitled "to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances" - Labor Code, which is what the Supreme Court ordered for the Lazada delivery riders in 2022. Failing to register employees with the Social Security System or remit their contributions carries "a fine of not less than Five thousand pesos (₱5,000.00↗) nor more than Twenty thousand pesos (₱20,000.00↗) and imprisonment for not less than six (6↗) years and one (1↗) day nor more than twelve (12↗) years" - Republic Act No. 11199. Late contributions add "a penalty thereon of two percent (2%↗) per month from the date the contribution falls due until paid" - Republic Act No. 11199.

What changed. In January 2024 the Supreme Court reaffirmed both tiers of the test and the employer's burden of proof, finding a gym chain's "independent" trainers to be regular employees - Supreme Court of the Philippines. A bill to give freelancers their own protections has been refiled in Congress, but it is not law.

54 EOR providers name the Philippines on their own sites: compare them with their fees.

5. What misclassification costs, added up

The country sections list each authority's own penalties, and they look very different on the page: a multiple of salary here, a fine in local units there, a criminal offence somewhere else. Underneath, a reclassification costs a company the same five kinds of money almost everywhere, and adding them up is the only honest way to compare the contractor route with an EOR.

First, the employer contributions that were never paid. This is the gap in Section 2's table: pension, health, unemployment and accident contributions on the person's pay, for every period the authority can still reach. It is usually the largest item, because it is a percentage of everything the person was paid, and because the reach-back periods run for years rather than months.

Second, the employee's side that was never withheld. Where the employer was obliged to withhold income tax and the employee's own contributions at source, an authority can often recover those from the employer too, sometimes at a reduced or fixed rate, sometimes in full. A company that paid gross invoices can find itself paying part of the same money twice: once to the contractor, and again to the authority.

Third, interest and penalties. Most of the systems in Section 4 add interest or a surcharge for late payment, and most add a penalty on top, scaled to the amount, to the number of workers or to whether the authority finds the arrangement deliberate. Several have a separate, heavier regime for concealed or undeclared employment, which is how a misclassified worker is often treated.

Fourth, what the worker can claim. A worker found to be an employee can claim what an employee would have had: paid leave, holiday pay, overtime, a 13th month salary where the law requires one, and above all the notice and severance that protect employees on termination. These claims typically surface when the relationship ends, which is exactly when a company is least prepared for them.

Fifth, the costs that are not money. In several countries the people responsible can face criminal liability, as the sections on Germany, France, Spain and the Philippines show, and French law adds penalties such as closing the business. An inspection opened for one worker also tends to look at every other contractor the company pays. And a person reclassified as your employee in a country where you have no entity raises the question of whether your company has a taxable presence there, which is a separate exposure covered in our permanent establishment guide.

The table below puts the countries side by side on the three things that decide the size of the bill: where the law starts from, what a reclassification makes the company pay back, and the heaviest penalty the sources in Section 4 state. Each figure links to the source that states it.

Two patterns stand out. The presumption countries are where the contractor route fails fastest: in Spain, the Netherlands, Portugal, Mexico, Colombia, the Philippines and California, and for federally regulated employers in Canada, the company starts the argument already behind and has to prove the person's independence. And the reach-back periods are long: four or five years of contributions is the norm, and longer for deliberate concealment, which means that a contractor arrangement that ran for a few years can cost several years of the employer's side of payroll in one assessment, on top of penalties and the worker's own claims.

Set that against the fee saving from Section 2. Choosing a median contractor platform over a median EOR saves a company the difference between $444 and $4,188 in fees a year, plus the employer contributions it does not pay. A reclassification recovers those contributions for every year it reaches, and then adds the penalties. For a role that is employment in substance, the contractor route does not avoid the employer's cost. It defers it, with interest.

6. When a contractor is the right call, role by role

Every test in Section 4 asks the same underlying question in different words: is this person running a business of their own, or working in yours? That makes the role, not the country, the first thing to score. The same role tends to land on the same side of the line in most of the countries above, because the factors the tests weigh (who controls how and when the work is done, whether the person is part of your organisation, whether they work for others, whether they carry any business risk, how long the arrangement runs) are properties of the role as you design it.

The table below scores common cross-border roles on those factors. "High" means the role, as it is usually set up, carries the features every test treats as employment; "Low" means a genuine contractor arrangement is normal for it. A specific contract can move a role either way: a designer who works only for you, on your schedule, inside your team, is not the low-risk designer in the table.

Two patterns in the table matter more than any single row. First, risk is mostly created after hiring, not at it: a contractor engaged for a defined project who is then given a company email, a manager, a standing weekly meeting and an open-ended stream of tickets has moved from the bottom of the table to the top without anyone signing anything new. The tests look at the relationship as it actually runs, so the contract you signed on day one protects you only as long as the work still looks like it.

Second, the high-risk roles are the roles companies most want. A company hiring abroad is usually hiring for its core work: engineers, support, sales. Those are the roles every test in Section 4 is built to catch, because they are where an employer gains the most from avoiding the employer's costs. If the role you are filling is one you would hire as an employee at home, the safe default abroad is an employee too, and an EOR is how you get one without an entity. To score a specific role in a couple of minutes, answer the questions in our contractor or employee check, which asks about exactly these signs and links the test of the country you choose.

7. The contractor of record: what it fixes and what it cannot

A contractor of record sits between the two ends of this guide, and it is sold as a way to keep the contractor price while handing someone else the risk. It does real work. The provider engages the contractor under its own agreement, usually checks that a contractor arrangement fits the role and the country before it accepts it, pays the contractor and collects the invoices, and in most offers promises to indemnify you if the arrangement is challenged. For a genuine contractor role in an unfamiliar country, that is worth the median $199 a month many companies pay for it.

What it cannot do is change the facts the tests in Section 4 examine. Every one of those tests looks at the reality of the work, not at whose name is on the contract. If the person works full time, under your direction, inside your team, the relationship is employment whoever holds the paperwork, and an authority can treat it as such. In some countries the question then becomes whether the provider or your company is the employer; in others, putting a third party between a company and a person who works under its direction is itself regulated or restricted, as Mexico's rules on subcontracting in Section 4 show. An indemnity moves money after a finding. It does not prevent the finding, it is only as good as the provider's balance sheet and the contract's caps and exclusions, and it does not cover the cost to your team of an employee relationship unwinding in the middle of a project.

So read the indemnity before you rely on it. The questions that matter are concrete: what it covers (back contributions, penalties, the worker's own claims, legal costs), what voids it (most require you to follow the provider's rules on how you manage the contractor, which usually means not managing them like an employee), whether it is capped, and which countries it excludes. Remote advertises engages and pays the contractor directly, with uncapped indemnity↗; most others describe their cover in general terms on the public page and put the detail in the contract. Our contractor of record comparison lists every service we track with its price and what it says it takes on, in its own words.

The honest use of a contractor of record is narrow and useful: a genuine contractor role, in a country where you cannot judge the local test yourself, where you want someone who can. For a role in the "High" rows of Section 6, the price difference between a contractor of record and an EOR is the wrong thing to optimise. The median contractor-of-record fee of $199 and the median EOR fee of $349 differ by far less than the employer contributions a reclassification would recover.

8. Moving a contractor onto an employer of record

Most companies reach this guide with a contractor already working for them, often for months, and a growing sense that the arrangement has drifted toward employment. Converting that person to an employee through an EOR is routine, usually takes a few weeks, and needs no entity. It does not erase the past: the period the person already worked as a contractor stays what it was, and if it was employment in substance, the exposure for that period remains. Converting ends the exposure going forward, which is the part you control.

Price the conversion from the budget backwards. A contractor's invoice already includes what they pay for themselves; an employee's cost to you is gross salary plus the employer contributions plus the EOR fee. If the budget is the contractor's current annual invoice, the gross salary it supports is roughly that budget divided by one plus the country's contribution rate, less the fee. In Poland, where employer contributions are ~20.8%↗, a gross salary of $60,000↗ costs $72,480 before the EOR fee; in Brazil, at ~36%↗, the same salary costs $81,600. Then add the statutory extras that are not in the contribution rate: paid annual leave, a 13th month salary where the law requires one, notice and severance on termination. Our country pages list each of these with its source.

Then run the switch in order. First, check which EOR providers actually employ in the person's country, and how: our country pages list every provider whose own site names the country, and whether it uses its own entity there. Second, ask two or three for quotes on the real salary, through Get matched or directly; fees differ by country more than the starting prices suggest, and some providers take a security deposit (our deposits and fees comparison shows which). Third, agree the new employment terms with the person before the provider issues the contract: the salary, the start date, the probation rules, and how their current contract ends. Fourth, end the contractor agreement on its own terms, on the day before employment starts, so there is no overlap and no gap.

Tell the person what changes for them. They gain paid leave, statutory benefits, social security in their own name and protection on termination; they lose the freedom to set their own hours and take other clients, and their take-home pay will usually be lower than their invoice because their own employee contributions and tax are now withheld at source. A conversion that is explained as "the same money, now as an employee" will disappoint; one explained honestly is usually welcomed, because the protections are real.

9. A decision checklist

Work through these in order for each person you plan to hire abroad, or answer them in our contractor or employee check. The first "yes" in the first group settles it.

Signs the role is employment in substance (use an EOR or your own entity):

• The person will work mainly or only for you, on an open-ended basis.
• You will set their hours, priorities and methods, and review their work as a manager would.
• They will be part of your team: your email, your tools, your meetings, your org chart.
• They will represent you to customers or partners in their country, or negotiate for you.
• The role is one you would fill with an employee at home.

Signs a contractor arrangement can be genuine (contractor, or a contractor of record):

• The work is a defined deliverable or a limited number of hours, priced as such.
• The person has other clients, their own business registration and their own tools.
• They decide how and when the work is done, and could send someone else to do it.
• They carry business risk: a fixed price they can lose money on, their own costs.

Before you sign either way:

• Check the country's own test in Section 4; a few countries presume employment and put the burden on you to disprove it.
• Check whether the role creates a tax presence for your company; that question is separate from employment and an EOR does not settle it (our permanent establishment guide).
• Price the full year, not the monthly fee: contributions, statutory extras and the fee (Section 2 and our cost calculator).
• Revisit every contractor relationship at least once a year. Most misclassification is drift, not design.

10. The bottom line

The contractor route is not a loophole and the EOR route is not a luxury. They are answers to different questions. A contractor is the right answer when the person is genuinely in business for themselves and you are buying a result from them. An employee, through an EOR where you have no entity, is the right answer when the person will do your core work, under your direction, for as long as you need them, which is what most companies hiring abroad are actually doing.

The numbers make the stakes plain. The fee gap between the routes is small: a median of $37 a month for a contractor platform, $199 for a contractor of record, $349 for an EOR. The cost gap that matters is the employer's contributions, from ~8%↗ to ~42.5%↗ of salary across the countries above, and every authority in Section 4 can recover it, with interest and penalties, when it decides a contractor was an employee. Choose the route the law allows for the role first; compare prices only among the routes that are left.

When the answer is an employee, Get matched ranks the EOR providers that employ in your country for your hire, and our country pages show every provider that lists it, with fees and terms linked to each provider's own site.

Frequently asked questions

Is it legal to hire an independent contractor in another country?

Yes. Every country in this guide allows genuine independent contractors, and a company abroad can engage one directly or through a platform. What the law regulates is not the contract's label but the relationship it describes: if the person works like an employee, the law of the country where they work can treat them as one, whatever the contract says. Section 4 sets out how each country draws that line.

What is the difference between an EOR and a contractor of record?

An employer of record employs the person under a local employment contract and pays the employer contributions, so the person is an employee and there is nothing to reclassify. A contractor of record engages the person as a contractor under its own agreement and usually indemnifies you if that is challenged, but the person remains a contractor, so the classification risk still exists; it has been moved, not removed. EOR fees run a median of $349 a month and contractor-of-record fees a median of $199 among the providers we track that publish them.

Does a contractor's own business registration protect me?

It helps less than people expect. A registration shows the person is in business, which every test weighs, but the tests in Section 4 look at how the relationship actually works: who directs the work, whether the person is part of your organisation, whether they work for others. In several countries a registered self-employed person can still be found to be an employee when those facts point to employment.

How long can someone work for me as a contractor?

There is no safe period. Duration is one factor among several in most tests, and a long, exclusive, open-ended arrangement points toward employment; a short one does not make an employment relationship into a contract for services. The practical rule is to review each contractor relationship at least once a year against the checklist in Section 9.

If a contractor is reclassified, who pays?

In the first two routes, your company: the contract is yours, so the back contributions, penalties and any claims the worker brings are yours. With a contractor of record, the provider may pay under its indemnity, subject to the contract's terms, caps and exclusions, but the finding still concerns work done for you. With an EOR there is no contractor relationship to reclassify.

Is an EOR always more expensive than a contractor?

On the monthly fee and the employer contributions, yes: an employee costs you gross salary plus contributions plus the EOR fee, while a contractor costs their invoice plus a platform fee. But a contractor's invoice usually includes what they pay for their own contributions, leave and downtime, and the comparison that matters is the one that includes the cost of a reclassification for a role the law treats as employment. For a genuine contractor role, a contractor is cheaper. For a role that is employment in substance, the contractor route is a deferred bill.

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This guide reflects the law and the published prices as read in November 2026. Classification law changes, courts revise their tests, and providers change their prices and terms; check the current rules for your country with a local adviser, and the current terms with any provider, before you hire.