How do you hire international employees with an employer of record?

To hire international employees with an employer of record, a company contracts an EoR provider to become the legal employer of its chosen workers in a target country. The EoR handles payroll, contracts, tax compliance, and HR administration while the client company retains full control over day-to-day work and performance management. This article unpacks how the model works, when to use it, and what to look for in a provider.

What does an employer of record actually do?

An employer of record is a third-party organisation that legally employs workers on behalf of another company. The EoR assumes full legal responsibility for employment contracts, payroll processing, tax withholding, social contributions, and statutory benefits in the country where the worker is based. The client company directs the work; the EoR owns the legal relationship.

In practice, this means the EoR registers as the employer with local authorities, processes salaries in compliance with local tax law, manages leave administration, and ensures employment contracts meet national legal standards. For international hires, the EoR also manages work permits and visa sponsorship where required, acting as an IND-recognised sponsor in countries such as the Netherlands.

The distinction that matters most for global hiring is this: the EoR removes the need to establish a local legal entity. A company can hire a developer in Amsterdam, a sales representative in Rotterdam, or an entire product team in the Netherlands without ever incorporating a Dutch business. The operational relationship stays with the client; the legal and administrative burden transfers to the EoR.

When should a company use an employer of record?

A company should use an employer of record when it needs to hire employees in a country where it has no registered legal entity, or when it wants to avoid the cost and complexity of setting one up. It is also the right tool when speed matters, when compliance risk is high, or when the hiring need may not justify a permanent local presence.

The most common scenarios where an EoR delivers clear value include:

  • Market entry without entity setup: Testing a new market by placing a sales professional or managing director on the ground before committing to full company formation
  • Relocating key talent: Moving a team member or founder to a new country to lead local operations, where employment must be legally established before work can begin
  • Hiring non-EU talent: Engaging skilled professionals from outside the European Union who require work permit sponsorship from a recognised employer
  • Avoiding freelancer misclassification: Converting ongoing contractor relationships into compliant employment, particularly relevant following stricter enforcement of Dutch self-employment rules from 2025 onwards
  • Scaling without HR infrastructure: Growing companies that lack internal HR capacity and need employment handled externally while they focus on operations

The EoR model is not limited to large multinationals. Early-stage startups, scale-ups, and SMEs all use it to access talent in markets where they have no footprint, without taking on the administrative overhead that permanent entity setup demands.

How does the hiring process work through an employer of record?

The process of hiring international employees through an employer of record follows a straightforward sequence: the client identifies the candidate, the EoR onboards them as a legal employee, and work begins. The EoR structures the employment contract, processes payroll from day one, and manages all ongoing HR administration throughout the engagement.

In more detail, the steps typically run as follows:

  1. Candidate identification: The client selects the person they want to hire, either through their own sourcing or via the EoR provider’s recruitment services
  2. Contract preparation: The EoR drafts an employment contract compliant with local labour law, covering salary, benefits, notice periods, and statutory entitlements
  3. Work permit and visa handling: For non-EU nationals, the EoR manages the permit application as a recognised sponsor with the relevant immigration authority
  4. Onboarding and payroll setup: The employee is registered with local tax and social security authorities; payroll runs from the agreed start date
  5. Ongoing HR administration: The EoR handles payslips, leave requests, sick leave, contract extensions, and any changes to employment terms

A well-structured EoR can get employees working within days rather than the months it would take to establish a local entity. For companies entering the Dutch market, this speed advantage is significant when a competitor may already be operating locally.

What’s the difference between an employer of record and a PEO?

The key difference is legal structure. An employer of record becomes the actual legal employer of the worker in the target country, which means no local entity is required from the client. A professional employer organisation (PEO) operates as a co-employer alongside the client, which typically requires the client to have its own registered entity in that country already.

In a PEO arrangement, the client and the PEO share employer responsibilities, with the PEO managing HR and payroll administration. This works well for companies already established locally that want to outsource HR functions. The EoR model, by contrast, is specifically designed for companies that have no local presence and need the EoR to hold the full legal employer status.

For international expansion into the Netherlands or other European markets, the EoR structure is almost always the relevant choice. It requires no prior entity, no local registration by the client, and no co-employment arrangement. The EoR carries the full legal responsibility, which also means it absorbs the associated compliance and payroll liability.

What are the compliance risks of hiring internationally without an EoR?

Hiring internationally without an employer of record exposes a company to significant legal and financial risk. The most serious risks include operating without a legally recognised entity in the target country, misclassifying employees as independent contractors, failing to meet local tax and social contribution obligations, and breaching employment law on contracts, benefits, or termination procedures.

In the Netherlands specifically, these risks have become more acute. Since 2025, Dutch tax authorities have enforced stricter rules on bogus self-employment. A company that engages a freelancer who effectively works as an employee, particularly one with fewer than three clients, can be deemed the legal employer by the Dutch tax office. The financial penalties for this misclassification apply to both parties.

Beyond misclassification, companies hiring across borders without local legal expertise frequently underestimate the complexity of Dutch employment law, which governs notice periods, dismissal procedures, probationary periods, and mandatory benefits such as pension contributions and holiday allowances. Non-compliance in any of these areas creates liability that can exceed the cost of proper employment setup many times over.

Work permit violations carry their own category of risk. Employing a non-EU national without the correct visa and sponsor recognition is a criminal offence in the Netherlands, not merely an administrative oversight. The EoR model eliminates this exposure by ensuring the employing entity is already registered and recognised as a sponsor.

How do you choose the right employer of record provider?

The right employer of record provider combines legal authority in the target country, demonstrable compliance credentials, and the operational capacity to handle your specific hiring scenario. Certification, local expertise, and transparency on costs are the three factors that separate reliable providers from those that create more risk than they resolve.

When evaluating EoR providers, prioritise the following:

  • Certification and compliance standing: In the Netherlands, NEN 4400-1 certification is the recognised quality mark for temporary employment agencies. GDPR compliance is non-negotiable for any provider handling employee data across borders
  • IND recognition for work permit sponsorship: If you are hiring non-EU nationals, the provider must be a recognised sponsor with the Dutch immigration authority (IND). Not all EoR providers hold this status
  • Transparency on employment structure: Understand whether the provider operates under the ABU collective labour agreement or outside it, as this affects social premiums, mandatory benefits, and overall cost
  • Speed and scalability: A capable EoR should be able to onboard employees within days, not weeks, and scale with your needs whether you are hiring one person or an entire team
  • Integrated services: Providers that combine EoR with direct recruitment, relocation support, and access to legal and accounting partners reduce the number of vendors you need to manage
  • Communication quality: For international businesses, English-language contracts and bilingual account management are practical necessities, not optional extras

Cost transparency matters as well. Reputable providers will walk you through the full cost of employment in the target country, including social premiums and statutory contributions, so you can compare it accurately against the cost of hiring independently. A provider that cannot or will not do this is not one to trust with your legal employer status.

How Blue Lynx helps you hire international employees

Blue Lynx’s Employer of Record service is built for international companies that need to hire compliantly in the Netherlands without establishing a local entity. With over 37 years of experience in Dutch and international recruitment, Blue Lynx brings the legal authority, certification, and operational infrastructure the model requires. Key features of the service include:

  • Full payroll management, tax compliance, and social premium administration
  • NEN 4400-1 certified and fully GDPR-compliant operations
  • IND-recognised sponsorship for non-EU work permits and highly skilled migrant visas
  • English-language contracts and bilingual account management
  • Optional direct recruitment support from a database of 40,000+ active candidates
  • Access to vetted partners in legal, accounting, relocation, and IT
  • Onboarding within days, not months

Whether you are relocating a managing director, building a development team, or converting a contractor relationship into compliant employment, the structure is in place to move quickly and correctly. Contact Blue Lynx to discuss your hiring requirements and receive a competitive EoR proposal.

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