Everything You Need to Know about the Cost of Employee of Record Services

Understanding the cost of using an employer of record (EOR) is key to smart business planning. Companies expanding their teams internationally often turn to EORs to manage compliance and payroll, and integrating a global HR system can streamline these processes across multiple countries. But how much does this service cost? This article breaks down the elements that influence EOR pricing and helps you set expectations for working with these providers.

Employer of Record Cost & Pricing Models

The cost of an Employer of Record (EOR) for international employees can vary depending on several factors, including:

• Country: Different countries have different labour laws, minimum wages, and tax regulations, which can affect the overall cost of using an EOR.
• Number of employees: Hiring more employees through an EOR can often reduce the per-employee cost.
• Benefits package: The type and level of employee benefits also influences the overall cost.
• EOR provider: Each provider may have its own pricing structure and fee schedule.

The cost of an EOR for international hires typically ranges from 5% to 10% of the employee’s gross salary. This includes fees for payroll processing, tax compliance, benefits administration, and other HR services.

Understanding the Cost Variations Among EOR Providers

It is important to note that this is only a rough estimate, and actual costs may vary depending on your project's specific requirements. Higher-cost EOR providers usually charge more due to the breadth of their services. 

These may include: 

• Quicker onboarding processes
• Local legal expertise
• Bespoke benefits packages
• Dedicated account manager

These providers often operate their infrastructure across multiple countries, allowing them to manage complex employment scenarios without relying on third parties. Such capabilities often result in higher costs. Therefore, it is essential to compare EOR providers carefully before deciding.

An Overview of EOR Fee Structures: From Fixed Rates to Custom Plans

Let us examine several common EOR pricing models.

Per-Employee/Per-Contractor Pricing

In this model, EORs bill clients for each employee or independent contractor under their administration. Charges may be based on a percentage of salary or a fixed rate per individual.

EOR Fee as a Percentage of Employee Salary

Many EOR services charge a percentage of each employee’s salary. This structure is straightforward to forecast, correlating directly with the number of employees. 

It is particularly suitable for industries with stable workforce requirements, such as:

• Government
• Education
• Healthcare
• Utilities
• Manufacturing
• Transportation

One potential drawback is that this model may discourage increasing headcount or offering salary increments due to the proportional rise in EOR costs. Typically, the fee ranges between 5% and 10% of a full-time employee’s salary.

Calculation Example

If an EOR provider charges 8% for three employees with the following salaries:

• Employee A: US$ 5,000
• Employee B: US$ 4,000
• Employee C: US$ 7,000

The EOR charge would be:
(5,000 × 0.08) + (4,000 × 0.08) + (7,000 × 0.08) = US $1,280

Fixed Rate Per Employee

In this model, EORs apply a standard monthly fee per employee, regardless of salary. This approach offers greater cost transparency, consistency, and control for organisations with smaller or fluctuating workforce sizes.

Leading providers such as Papaya Global, Deel, and Remote typically charge between US$ 599 and $1,000 per employee per month, depending on: 

• Role
• Location
• Specific requirements

Other providers may fall outside this range.

Fixed Pricing Model

Distinct from the flat rate per employee, this model involves a predetermined lump sum for a set number of employees and services. It is ideal for companies with predictable workforce needs and offers more control over HR spending.

Depending on workforce size, scope of service, and regional complexity, fees can range from several thousand to hundreds of thousands of dollars.

Custom Pricing

This model allows EORs to offer highly customised solutions bespoke to a client’s specific operational needs. It enables businesses to invest only in services that meet your priorities and strategic goals.

Custom pricing also facilitates closer collaboration between client and provider. It often involves more time and resource commitment during negotiation. There is also a risk of becoming overly dependent on one provider, which could complicate future transitions.

Without standardised pricing benchmarks, predicting long-term costs may be more difficult.

Related Reading

• Global Payroll Services
• Payroll Outsourcing Companies
• Employer of Record Meaning
• Paying International Contractors
• Remote EOR

Factors Affecting Employer Of Record Costs

Employer of Record (EOR) pricing depends on several factors influencing the total cost.

This section outlines the main factors that affect EOR pricing.

1. Company Size

The number of employees in your workforce directly affects the cost of EOR services. As the number of employees increases, managing payroll, compliance, and administration becomes more complex.

EOR fees are usually charged as a monthly rate per employee. For larger organisations, this usually results in a higher overall cost. EOR pricing is typically scalable, making it suitable for small and large organisations. 

How EOR Pricing Scales with Workforce Size

EORs often use tiered pricing based on the number of employees and the level of service provided. For example, a small organisation with 1–5 employees might pay $300 per employee. As the number of employees increases to 6–10, the per-person rate may drop to $280.

This approach makes EOR services suitable for organisations of varying sizes. Larger organisations, although requiring more work, can benefit from tiered pricing. As the workforce grows, the average cost per employee may decrease, offering savings through economies of scale.

• Small companies: Tend to pay lower fees due to simpler administrative requirements and fewer employees.
• Large companies: Benefit from lower per-person costs through scalable pricing and economies of scale.

2. Industry or Job Complexity

The type of industry your business operates in or the complexity of specific job roles can significantly influence the cost of EOR services. Positions requiring specialised skills or knowledge of industry regulations may lead to higher EOR costs due to the added administrative and compliance requirements involved in supporting such roles.

Impact of Industry Type and Job Complexity on EOR Pricing

• Standard Roles: Roles in less complex industries typically attract lower EOR fees.
• Specialised Industries: Sectors such as construction or manufacturing, which are often highly regulated, may require additional expertise and incur higher costs.
• Specific Job Requirements: Roles with complex compliance obligations or highly technical skill sets may increase EOR fees.

3. Geographical Location

The geographical location of your workforce is also an essential factor in EOR pricing. Different regions have varying: 

• Labour laws
• Tax structures
• Compliance requirements

These elements represent overheads that EOR providers must account for when setting their fees.

• Developed countries: Typically involve higher fees due to complex regulations and higher employment costs.
• Emerging markets: May incur lower EOR fees due to simpler regulatory environments and lower employment costs.
• Political and economic stability: Regions with greater political or economic uncertainty may result in higher EOR costs due to associated risk considerations.

4. Length and Volume of Service

The duration and scale of your organisational projects can significantly affect EOR pricing. Short-term projects or occasional use of EOR services may result in pricing that is different from long-term arrangements. Assessing the project duration and the number of employees involved can help align EOR costs with your organisation’s budget and needs.

To receive an accurate cost estimate, you’ll need to specify your organisation’s headcount and the length of the agreement with the EOR.

• Short-term projects: May attract higher fees due to set-up and administrative costs.
• Long-term, high-volume projects: May qualify for discounted rates or lower per-employee fees due to economies of scale.

5. Compliance Requirements

Ensuring that your business complies with local labour laws and regulations is key to what EOR services provide. The complexity of legal and regulatory requirements across different regions and industries can affect overall costs.

• Standard compliance: Businesses with straightforward employee regulations usually face lower EOR fees.
• Complex compliance needs: Companies in highly regulated sectors or with specific legal requirements may incur higher EOR costs.

6. Additional Services

In addition to payroll and compliance support, EOR providers may offer services such as: 

• Employee benefits administration
• Immigration support
• Tax advice
• Recruitment
• HR consultancy

Assessing how these additional services align with your organisation’s needs is important, as they can affect the overall cost.

• Visas and work permits: Some EOR providers assist with immigration processes, such as securing work permits or residency visas, for an additional fee.
• HR support and benefits administration: Additional costs may be incurred for services beyond core payroll and employee management, such as policy development or benefits planning.

What’s Included in the Cost of EOR Services

Understanding the cost of Employer of Record (EOR) services requires a clear view of what contributes to the overall fee. 

Below, we outline the main elements that make up the pricing structure.

1. Set-up Fees

This is usually a one-off charge covering the: 

• Initial administrative work
• Legal agreements
• Compliance arrangements

The fee may vary depending on your organisation’s size and the scope of services required.

2. Security Deposit

The security deposit is a financial safeguard for the EOR provider, the client, and the employee. It is typically equivalent to one or two months of the employee’s salary and is intended to cover potential liabilities, such as late payment of invoices or termination-related costs. The deposit is generally held for the duration of the contract and returned at the end of the agreement.

3. Employee’s Salary

This core cost includes the employee’s base salary, bonuses, and any statutory benefits. The EOR manages payroll processing, tax deductions, and social security contributions on your organisation’s behalf. Total cost may vary based on the employee’s: 

• Role
• Location
• Level of experience

4. Currency Exchange Fees

If your organisation employs remote teams across different countries, the EOR provider may charge additional fees for currency conversion.

5. EOR Service Fee

This fee covers the EOR’s services, such as: 

• Payroll administration
• Compliance management
• HR support
• Risk handling

It may be charged as a flat rate per employee or calculated as a percentage of the employee’s salary.

6. Exit Costs

Ending an EOR agreement or an employee contract may involve costs such as: 

• Severance
• Final payroll processing
• Other exit-related expenses

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Whether you're managing a growing team of 25 or coordinating 500+ employees across multiple countries, Cercli provides the localised expertise and streamlined processes that MENA businesses need to scale confidently and manage remote teams effectively. Explore an HR platform designed to support how you do business in the Middle East. Schedule a demonstration today to speak with our team about our global HR system.

Benefits of Partnering with an Employer of Record

Employer of Record (EOR) services have seen increased uptake recently. The EOR market was valued at $1.9 billion in 2023 and is projected to exceed $3.7 billion by 2030. This growth reflects the EOR model’s effectiveness across various industries. Selecting the right provider can offer clear operational and financial advantages.

Working with an Employer of Record can simplify workforce management for businesses operating across international markets. For companies considering expansion into new regions, an EOR streamlines the process by removing the need to establish local legal entities. This makes exploring opportunities in the different areas easier while fully complying with local laws.

An EOR also supports greater workforce flexibility. Whether supporting short-term projects or team expansion, an EOR enables hiring talent from different locations without local infrastructure. This reduces geographical barriers and helps your business respond more easily to changing workforce requirements.

Reducing Operational Costs and Enhancing Compliance Through EOR Services

Another advantage of using EOR services is cost efficiency. Outsourcing payroll and benefits management reduces overhead and removes the need for costly legal setups in multiple jurisdictions. A streamlined process can improve the candidate experience and support your organisation’s reputation among skilled professionals.

EOR services play an essential role in maintaining regulatory compliance. An EOR stays informed about changes in labour laws and ensures that payroll, tax, and related responsibilities are managed accurately to help avoid penalties or legal issues.

With these responsibilities handled by an EOR, your business can focus on growth and optimising workforce strategy.

Comparing Employer of Record Services and Local Entity Set-Up

Cost is a key consideration when deciding between partnering with an Employer of Record (EOR) or setting up a local entity during international expansion. Both options support hiring talent in new markets, but their cost structures differ significantly.

Employer of Record (EOR): Simple and Low-Commitment

An EOR usually charges a monthly fee per employee, covering: 

• Salary
• Statutory benefits
• Administration

This approach provides a transparent cost structure. There are no upfront set-up fees, and the EOR manages: 

• Payroll
• Tax filings
• Compliance

Weighing EOR Simplicity Against Long-Term Entity Costs

An EOR offers a practical solution for businesses looking to explore a new market or make initial hires without large capital commitments. It removes the need for legal entity set-up, ongoing maintenance, and hiring local legal or HR teams.

‍Typical costs:

• Monthly service fee
• No legal incorporation, audit, or closure costs
• Limited internal resources needed

Over time, the cumulative service fees may exceed the one-off and ongoing costs associated with a local entity, especially as your headcount grows.

Local Entity: Higher Initial Costs, Greater Long-Term Control

Setting up a local entity involves a notable initial investment. Expenses may include: 

• Legal and accounting fees
• Registration
• Office set-up
• Local consultants
• Hiring internal HR
• Compliance teams

Ongoing expenses may include: 

• Annual audits
• Tax filings
• Benefits management
• Payroll systems

Over time, a local entity can become more economical, as there are no per-employee service fees. If the team size increases, this may result in savings.

Comparing Long-Term Value: EOR vs Local Entity Investment

Typical costs:

• Legal and administrative set-up fees
• Ongoing compliance and operational costs
• Internal HR, payroll, and legal support

Although the initial costs are higher, having a local entity gives businesses greater control and may lead to more substantial financial returns over time. An EOR is often simpler and less resource-intensive for early expansion or smaller teams. If your goals include long-term presence and larger teams, investing in a local entity may offer better financial outcomes over time.

HR Solutions Tailored to MENA Business Need

Transform your HR operations with Cercli, which is aligned with the UAE’s vision for business excellence. It is the only platform built specifically for MENA businesses that unifies workforce management needs in one powerful system. Manage your entire team, whether local or global (Cercli supports payments in 150+ countries), with our comprehensive solution that handles multi-currency payroll, leave management, onboarding, and compliance documentation tailored to the unique requirements of the MENA region.

Whether you're managing a growing team of 25 or coordinating 500+ employees across multiple countries, Cercli provides the localised expertise and streamlined processes that MENA businesses need to scale confidently and manage remote teams effectively. Explore an HR platform designed to support how you do business in the Middle East. Schedule a demonstration today to speak with our team about our global HR system.

Related Reading

• Global Payroll Compliance
• How to Pay International Contractors
• How to Hire International Employees
• How to Pay International Employees
• Multi-Country Payroll Outsourcing

Choosing an Employer of Record That Suits Your Budget

Now that you have a clearer understanding of the factors influencing the final cost of an EOR service, the next step is to identify which provider best suits your needs.

Here’s a four-step process to help guide your decision:

1. Set A Practical Budget

Review your organisation’s financial position and set a budget that reflects the scale of support you require. This will help avoid overspending and rule out options that exceed your budget.

2. Request Quotes From Multiple EOR Providers

Obtain detailed quotes to compare pricing structures, any hidden fees, and the scope of services offered. Reviewing a range of quotes upfront helps you make more informed decisions.

3. Compare Costs By Location

Review EOR costs in each market where you intend to expand if hiring internationally. EOR service costs can vary significantly between countries, depending on the complexity of local employment laws.

4. Consider Broader Value Beyond Cost

Consider the value an EOR can offer, such as local regulatory expertise, ease of integration with your existing systems, and the quality of ongoing support. These aspects may justify a higher cost if they contribute meaningfully to your operations.

Related Reading

• Best Way to Pay International Contractors‍
• Hiring International Contractors‍
• Hiring Remote Employees in Other Countries
• Payroll BPO
• Payroll for International Employees
• How to Pay Remote Employees

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