Kaoutar Makrache , Payroll & Compliance Lead, Cercli

May 18, 2025

What Does Employer of Record Mean in the UAE?

Managing payroll for employees across different countries can be a real headache. Other laws, currencies, and tax systems make it tough to get it right. Global payroll services take the stress out of this process, helping businesses pay their international employees accurately and on time.

This article will explore how these solutions work and why they are essential for companies with a global HR system and workforce. We'll also touch on the role of Employer of Record services in worldwide payroll and their pros and cons for businesses.

What Does Employer of Record Mean?

An Employer of Record (EOR) is a service that allows businesses to legally hire employees in other countries without establishing a local legal entity. The EOR becomes the worker's legal employer, responsible for complying with local employment laws and managing the administrative tasks associated with hiring.

Key Responsibilities of an Employer of Record (EOR)

While the EOR handles legal and operational requirements, such as drafting employment contracts, registering employees with local authorities, managing benefits, and ensuring statutory compliance, the hiring business remains responsible for the day-to-day direction of the employee. The employee is part of the hiring company's team and follows their assigned tasks and performance expectations.

EOR services can also include payroll processing, employee onboarding and offboarding, tax withholding and reporting, and assistance with visa or work permit requirements (depending on the country).

EOR Models and Global Expansion Trends

It's important to understand that not all EOR providers operate similarly. Some own and manage their legal entities in each country, while others act through local partners or combine both approaches. A provider's structure may affect the level of control, cost, and compliance assurance it can offer.

The Employer of Record model has become an increasingly common choice for companies looking to expand internationally while avoiding the time and expense of setting up subsidiaries. As of 2023, the global EOR market was estimated to be worth around US$4.42 billion and is expected to continue growing in the years ahead.

What are the Benefits and Risks of Using an EOR?

You’ll have a better shot at landing talent because an EOR knows how to connect your job to desired candidates. They have the intelligence on employee compensation and benefits, market trends, competitive employment contract terms, and the local nuances that make an attractive deal. This is great for fast growth companies, or companies that want to test a market before launching in it.

Faster Onboarding for International Employees

Welcoming a new person to the team is exciting, but onboarding can be time-consuming for HR. This is particularly true if you hire internationally because every country's processes can differ. You must create locally compliant employment contracts, collect country-specific documents, and add them to a local payroll system.

Fortunately, an EOR can do all that for you. They’re responsible for compliance with onboarding. An EOR will help you hire without legal complexities, saving you money and time. This makes the process quicker and smoother, and avoids you from having to navigate legal complexities. That way, you can focus on integrating your new hires into the team so they can hit the ground running.

Hiring with an EOR is significantly faster because of the following reasons:

They provide pre-approved, compliant contracts.
They handle local document collection and registrations.
End-to-end payroll is managed for you, with no additional fees.

Peace of Mind

An EOR takes the guesswork out of global labour laws, so you can rest assured your business is operating under the best practices of every different country. Whether it’s a complex global payroll requirement or an unfamiliar 30-page tax document, your EOR has you covered.

Time and Money Savings

With the air-tight system of an EOR, reduce the need for specialised in-house teams, and avoid costly legal fees (or even fines) for the foreign country you’re hiring in.

By taking over repetitive administrative tasks like payroll, compliance, and benefits processing, EORs allow HR teams to concentrate on crafting initiatives that improve employee engagement and retention. They also reduce the need for in-house specialists or additional technology investments, cutting overhead costs and streamlining processes.

Tax Filing & Compliance

EORs ensure that taxes are calculated and filed correctly according to local regulations, sparing HR teams from navigating intricate tax codes across different jurisdictions.

A quality EOR ensures you understand what’s required in each hiring country. They tell you about upcoming changes affecting your international team members and can help you plan for new hiring markets.

Happy employees

EORs uphold their duties to your staff to a T. That means accurate and on-time payment and delivery of employee benefits, addressing concerns promptly, and ensuring clarity and contentment toward their role, all of which make an international employee happy for the long haul.

Cons of EORs

As any responsible global employer does, you want to be aware of the benefits and potential risks. Some are inherent to employing abroad, but others can be avoided by partnering with a competent EOR solution.

Inherent risks that you won’t want to overlook include:

Insufficient flexibility

Under many countries' regulations, the EOR model may impose tenure limits, employment contract obligations, and restrictions on the tasks a seconded worker can perform. That can negatively impact your workforce’s overall utilisation.

Operational limitations

Operating through an EOR can restrict business operations and affect project management, resource allocation, and employee communication. This could damage your team's agility.

EOR Risks: Data Protection & Employee Management

Moving forward with a less experienced EOR also poses risks to the employer of record. Two of the most pressing concerns include:

Data protection and legal disputes

You're putting a lot of trust into a third party to manage sensitive employee data. Be sure that your EOR has robust data protection measures in place. Otherwise, you may end up at risk of data breaches or regulatory non-compliance.

Poor employee management

Some EORs boast rapid setup times but rush employee onboarding to a fault. That leaves the door open to the risk of leaving out crucial details. They may also neglect other key HR tasks that can erode trust and deter future candidates.

Weigh the Employer of Record pros and cons while selecting your EOR. Partner with an EOR you trust to uphold your organisation’s reputation and legal stature abroad.

Purpose-Built HR Solutions for MENA Businesses

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 localized expertise and streamlined processes that MENA businesses need to scale confidently and manage remote teams effectively. Experience the only HR platform truly designed for how you do business in the Middle East. Schedule a demonstration today to speak with our team about our global HR system.

EOR vs. PEO vs. Staffing Agency: What’s The Difference?

When expanding internationally, businesses often encounter unfamiliar labour laws and payroll regulations. This can create barriers to hiring talent in new markets. Companies can partner with third-party HR solutions like employers of record (EORs), professional employer organisations (PEOs), and staffing agencies to overcome these challenges.

While these services share some similarities, they also have key differences that affect how they operate and the level of support they provide. This article breaks down the distinctions between EORs, PEOs, and staffing agencies so you can determine which solution is best for your global workforce needs.

EORs vs PEOs: Understanding the Legal Employer Relationship

The primary difference between an EOR and a PEO is their legal relationship with employees. An EOR becomes the official employer of your workforce, handling all employment-related functions such as:

Payroll
Benefits
Compliance
Risk management

Your company manages day-to-day operations, but the EOR assumes full legal responsibility for employment.

Legal Employer and Control Differences

In contrast, a PEO enters into a co-employment arrangement with your business. Your company remains the legal employer while the PEO oversees HR functions like payroll and benefits. With PEOs, the client must have a legal entity in the country where employees work, whereas EORs enable companies to hire internationally without establishing a local office.

EORs and PEOs help businesses manage global payroll and compliance, but their distinct legal structures impact how they operate and the level of control each party has.

EORs vs Staffing Agencies: Employment Scope and Management

EORs and staffing agencies differ mainly in the scope of employment and who manages the workers. An EOR takes full legal responsibility for your employees, managing payroll, compliance, and benefits. Your company directs the day-to-day work, but the EOR ensures all legal obligations are met.

On the other hand, staffing agencies recruit and deploy workers for specific roles or projects. The workers remain employed by the agency, not your business. You manage their work while they’re on assignment, but the staffing firm handles payroll, benefits, and compliance.

Temporary vs Long-Term Global Hiring

Staffing agencies are ideal for temporary workforce needs, while EORs are better suited for companies looking to hire and directly manage employees in new markets. Both solutions help businesses quickly access global talent, but their employment models and long-term workforce management strategies differ.

How to Choose the Right Employer of Record?

The first thing you need to check is the EOR's pricing structure. You'll want transparency and clarity so you can stay within your budget. The total cost could be impacted by several factors, including:

How many workers will fall under the EOR umbrella
Which EOR services would you like to use
Prospective EOR's pricing structure

EORs may charge a fixed monthly fee per employee or take out a percentage of payroll plus applicable taxes. Regardless of the structure, EORs often charge administrative fees, setup fees, onboarding charges, taxes, or termination fees in addition to their initial quotes. Ask your prospective EOR for the total cost of working with them before signing a contract.

By hiring through Cercli’s EOR, you don't have to worry about additional or hidden transaction fees. With compliant contracts included, and the ability to hire in 150+ countries in the local currencies, Cercli supports all of your hiring needs.

Security: How does the EOR secure confidential information?

Because you'll have to share confidential information with your EOR and data protection is sometimes enshrined in law (e.g., General Data Protection Regulation (GDPR) in the European Union (EU)), you have to check what security measures are currently in place.

How would your prospective global EOR secure client information?
Are they SOC 2 compliant and GDPR compliant?

Accuracy: How Accurate are the EOR's Calculations of Your Labour Burden?

Anytime you employ someone, you incur a cost. Often called payroll or labor burden, this cost goes beyond the salary you give your employee and usually includes:

Legally required employee benefits (e.g., paid time off and retirement)
Health insurance
Employee taxes
Other social contributions

These labor burdens vary from state to state and country to country. An EOR will understand these variations and will be able to provide you with an accurate calculation of your labor burden. You need to see this to keep to your distributed workforce budget.

Coverage: Does the EOR Cover the Markets You Need?

Ensure your partner EOR covers the markets you're interested in and, more importantly, has the expertise and knowledge to maximise local opportunities and minimise risks. An inexperienced EOR can cost you time and money and could increase your risk of non-compliance with local labor regulations.

Support: How Good is the EOR's Customer Service?

You'll want to work with a responsive EOR that knows how to handle potential issues that may arise during your relationship with them. If you're partnering with them as part of your global expansion process, they should cover multiple time zones and, where needed, offer assistance in different languages.

Success: What is the EOR's Track Record?

Verify the social proof of your prospective employer of record to confirm that they have the expertise, transparency, and responsiveness.

What do other people say about them?
Are they happy with the EOR's services?

Read through testimonials from both current and former clients. Why are people working with them, and why did they stop?

Currency: Does the EOR Work with Multiple Currencies?

Finally, you'll likely want to work with an EOR that can manage multiple currencies at a minimum cost, despite the volatility of foreign exchange markets. To mitigate the impact of currency fluctuations, you must work with an international EOR offering a transparent pricing structure for foreign exchange transactions.

How Much Does an Employer of Record Service Cost?

Employer of record services can cost quite a bit depending on your provider, and a few factors. First, the number of employees you’re hiring. More employees usually mean higher costs, but it can also mean better rates per employee. Second, the countries where your employees are based. Some countries have higher compliance costs that can increase your EOR fees.

Generally, you’re looking at a per-employee, per-month fee that’s often more affordable than setting up local offices or managing internal teams overseas. Some providers offer cheaper options for hiring contractors, which can simplify things even more.

Book a Demo to Speak with Our Team about Our Global HR System

The Middle East and North Africa (MENA) region presents unique challenges for businesses looking to manage global payroll and human resources (HR) operations. With a diverse range of labour laws, cultural norms, and economic conditions, navigating workforce management can be complex.

Cercli’s platform is built to address these challenges head-on. By unifying local and international HR processes into one system, Cercli eliminates the fragmentation that often leads to compliance risks and operational inefficiencies.

Our solution is tailored specifically for MENA businesses, so you can confidently manage your team from anywhere.

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What Does Employer of Record Mean in the UAE?

What Does Employer of Record Mean?