How Does Employer of Record Work?

Hiring across borders sounds exciting, until paperwork, compliance rules, and payroll laws step in and slow everything down. That’s where an employer of record becomes incredibly useful. If you’ve been wondering how this model actually works or why many companies in Kenya and beyond are adopting it, here’s a simple breakdown.

What Is an Employer of Record?

An employer of record (EOR) is a third-party organisation that legally employs a worker on your behalf. Your company still supervises the day-to-day work, sets responsibilities, and manages performance, but the EOR handles all the legal and administrative headaches tied to hiring.

Think of it as hiring talent without having to set up a local entity, deal with complex onboarding processes, or navigate labour regulations in a country where you don’t have a registered presence. The EOR becomes the legal employer, freeing you to focus on results.

This model is especially helpful for companies expanding into new markets, startups hiring remote professionals, or employers who want a simple and compliant way to grow their teams without opening new offices.

How an Employer of Record Works

Here’s a clear, step-by-step look at how the EOR model functions:

1. Understanding Your Hiring Needs

You share the role, required skills, working hours, and expected responsibilities. This helps the EOR determine the right employment terms and ensure the arrangement fits local labour laws.

2. Drafting a Compliant Employment Contract

The EOR prepares an employment contract that aligns with the regulations of the country where the employee is based. This includes salary structure, leave days, probation period, and statutory obligations. The goal is to avoid any legal risks or penalties.

3. Onboarding and Setup

Once the employee accepts the offer, the EOR handles all onboarding paperwork. They also register the employee with statutory bodies and ensure they are correctly listed for payroll, insurance, and other mandatory deductions.

4. Payroll Processing and Statutory Payments

Payroll is one of the biggest responsibilities. The EOR manages:

• Monthly salary processing
• Tax deductions
• Social security contributions
• Mandatory insurance deductions
• End-of-year tax certificates

This ensures the employee gets paid on time and all government requirements are met.

5. Employee Support and HR Administration

The EOR helps with HR tasks such as contract amendments, leave tracking, confirmations, and handling basic employee queries. You still manage performance and daily work, but administrative tasks stay with the EOR.

6. Compliance and Legal Protection

The EOR makes sure every part of the employment relationship follows local employment laws, from the contract to termination. This protects your company from unexpected legal disputes or non-compliance issues.

7. Termination or Offboarding

If the contract ends, the EOR handles offboarding and ensures the process is lawful and respectful. They manage final pay, notice periods, and documentation.

Why Employers Use Employer of Record Services

Companies choose EOR services for several reasons, especially when time, cost, and legal compliance matter. Some of the top advantages include:

• Quick access to global talent without setting up new entities
• Reduced legal and compliance risks
• Lower hiring costs compared to full company registration
• Smooth payroll management across different countries
• Faster market entry when expanding
• Ability to test a new region before making big investments
• Flexible hiring models for remote or project-based teams

These benefits make EOR solutions attractive to employers who want efficiency and compliance in one package.

Employer of Record in Kenya: Why It Matters

For companies hiring remotely or entering the Kenyan market, an employer of record offers a simple and compliant way to onboard staff. It handles setup, payroll, and statutory requirements so your team, whether in Nairobi, Mombasa, or fully remote, is legally covered.

We provide dependable employer of record services for employers who want an easy, compliant hiring solution.