How Much Does an Employer of Record Cost?

An Employer of Record (EOR) is an outsourcing service whereby a third-party organization such as Recruitgo is engaged by a company (the Client) to hire, pay the salary and take responsibility for all formal employment tasks of employees on their behalf.

When you’re looking to hire globally, an EOR is often referred to as one of the most appropriate solutions. But one aspect that is confusing across the board is the cost of using this service. EOR pricing depends on several factors, from the employee’s location to the level of service you need.

This guide breaks down how EOR costs are structured, what factors influence the price, and what you can expect to pay, so you can budget accurately for your global expansion.

Most Common EOR Service Pricing Models

EOR providers typically use one of three main pricing structures, with some variation. Understanding the pros and cons of each is key to finding a service that is both fair and cost-effective for your business.

A. Fixed Per Employee Pricing

This is a common model where you pay a single flat fee per employee, every month, regardless of their salary. The fee can range from around $199 to over $1,000 per month, depending on the country and service scope. Many global EOR providers use this model because of its simplicity.

Its main advantage is that it’s predictable – you know exactly how much the EOR service will cost for each employee every month. This makes budgeting straightforward. However, this model has a significant downside, especially for companies hiring across different economic regions. 

The EOR fee is often standardized based on high-cost countries like the US or UK. For instance, a global EOR might charge a flat fee of over $500 per month. That fee might seem reasonable if you’re hiring an engineer in Germany, but it makes little financial sense if you’re hiring a team member in the Philippines whose monthly salary is $800. In that case, the EOR fee would be a massive percentage of the employee’s actual salary.

For this reason, a fixed-fee model is often not cost-effective for entry-level positions, part-time staff, or for hiring in countries with lower salary scales.

B. Percentage of Employee Payroll Pricing

In this model, the fee is a percentage of the employee’s gross salary, typically ranging from 10% to 25%.

The key advantage here is fairness and scalability. The EOR fee is directly proportional to the employee’s actual compensation. This makes it a much more logical and cost-effective solution when hiring in countries with varied salary scales.

For example, if you are hiring a Virtual Assistant (VA) in the Philippines, the average salary for this role is USD 500-800 depending on experience. In this case, you will probably pay approximately USD 100 or less for working with an EOR partner that charges around 10%.

With this model, you’re not paying a high U.S. or Australia centric fee for an employee in Southeast Asia. Instead, you’re paying a fee that makes sense for hiring in that specific market.

However, you do need to watch out for the percentage your EOR partner might be charging and whether it makes sense or not.

C. Tiered Pricing

This structure offers different packages based on the level of service provided. For example, a “basic” tier might cover only payroll and compliance, while a “premium” tier could include full HR support, recruitment services, and more. This allows for better customization based on your specific needs

Key Factors Influencing Employer of Record Costs

The price of an EOR service is directly tied to the complexity and cost of employing someone in a specific country. Here are main factors that will affect your final price.

Geographic Location

EORs can help you expand globally by enabling you to hire remote staff in specific locations. However, each country is a unique landscape when it comes to labor laws, tax regulations, and compliance. Some locations have more complex systems which demand more resources from the EOR provider. Naturally, this added complexity can translate to a higher EOR cost for those specific regions.

Geographic location also influences cost of living. Cost of living directly affects minimum wage. It’s the reason why outsourcing and EORs are popular in countries like the Philippines, Vietnam, and Indonesia because of lower minimum wage. While most outsourced roles such as in IT and finance are paid above minimum wage, it is still 50-70% cheaper compared to hiring a freelancer from the US, UK, or Australia.

Lastly, foreign exchange rates are also a factor affected by your staff’s geographic location. If you’re an employer from the U.S., Australia, or Europe, your currency would have more purchasing power in Southeast Asia than hiring within your locale. 

Employee Salary

Many EOR providers structure their fees as a percentage of the employee’s gross salary. This means, if you’re hiring for a high-paying role in managerial positions, your EOR fee for that individual will also be high. Your remote staff’s salary forms the base on which all mandatory contributions and taxes are calculated. 

It’s worth noting that even with a flat-fee EOR model, employee salary still indirectly influences overall cost. A flat fee might cover the EOR’s core administrative services, but the actual total cost of employment will always include the employee’s base salary plus all statutory benefits and employer contributions mandated by local laws. 

Thankfully, RecruitGo’s EOR fee has a US$250 cap for employees in Vietnam, the Philippines, and Indonesia, per individual. Regardless of their salary, this is the EOR cost per employee (on top of their monthly salary) when you hire with RecruitGo. 

Number of Employees

Undoubtedly, the number of employees you hire can also affect employer of record cost.  As your global workforce grows, so does the administrative scope for payroll, compliance, and general HR management. Most EOR providers charge either on a “per employee” basis which means, the more staff you employ, the more expensive the EOR cost will be. 

Scope of EOR Services Required

EOR pricing is also affected by the range of HR services needed for your organization. You can opt for the essential ‘starter pack’ that typically covers core functions like payroll processing, ensuring compliance, and managing employment contracts. Or, you can go for a more comprehensive solution that includes a wider array of HR support, such as benefits administration, full-scale HR guidance, recruitment assistance, and even legal support.

Some EOR providers also have custom services and add-ons depending on your needs. This includes immigration support, specialized payroll cycles, unique reporting needs, or even employee training programs. Keep in mind, if you’re looking to offer additional employee benefits like healthcare or performance bonuses, those will generally come at an additional cost. 

A Look at RecruitGo’s EOR Pricing

To provide a fair and logical pricing structure, RecruitGo uses a percentage-based model for its EOR services. This approach directly addresses the issue of paying high, flat fees in lower-cost markets. Your fee is always proportional to the employee’s actual salary, making it a more transparent and cost-effective solution for hiring in countries like Vietnam, Indonesia, and the Philippines.

Our pricing is broken down into two simple components:

1. The Monthly Service Fee

Our EOR service fee is a straightforward 10% of the employee’s total gross payroll. Crucially, we have a maximum cap of USD 250 per month. This means that even for your highest-paid employees, your EOR fee will never exceed that amount. This single fee covers everything:

• Drafting a locally compliant employment contract.
• Registering your employee with all mandatory government agencies (like SSS, PhilHealth, etc.).
• Managing all monthly payroll, tax withholding, and social contributions.
• Ongoing HR and compliance support.

2. The One-Time Security Deposit

We require a refundable security deposit at the start of our partnership. This is equal to one month’s gross salary plus one month’s EOR fee. This deposit is only used to cover the employee’s final payroll when their employment ends, ensuring a smooth and compliant off-boarding process.

How Our Pricing Works in Practice

Let’s say you hire a software engineer in the Philippines with a gross salary of USD 1,000 per month with a project-based contract, you would have the following breakdown: 

This straightforward model ensures there are no hidden costs, allowing you to budget effectively while giving you access to a complete and compliant employment solution in any of our markets.

Make Your Next Global Hire with Recruitgo

Understanding EOR costs goes beyond the perspective of monthly fees. The real value for employers lies in aspects such as local compliance wherever their team is, risk mitigation, and operational freedom. It allows you to build your global team without the cost and complexity of setting up local entities.

RecruitGo simplifies global hiring through our EOR, payroll, and benefits platform. You can easily hire remote employees in other countries where you don’t have a legal entity, that too with 50-70% lower costs and transparent pricing.

If you’d like a tailored quote for your hiring needs, our local experts are here to help.

Talk to our team to get a detailed cost estimate for your global hiring plans. Fill out the form below.

FAQs About Employer of Record Cost

An EOR monthly fee generally covers all core employment administration. This includes payroll processing, tax management, compliance monitoring with local labor laws, handling statutory benefits like provident fund contributions and state insurance, contract drafting, and HR support for onboarding and offboarding.

The EOR fee is for the service of managing employment. The actual costs of the employee’s salary, employer-side payroll taxes, and statutory contributions are passed through to you, the client. The EOR calculates these amounts, ensures they are correct, and remits them to the authorities on your behalf, but you are responsible for funding them.

The cost of living, average salary levels, complexity of labor laws, and mandatory employer contribution rates differ greatly from one country to another. Therefore, the EOR service fee will generally vary depending on the country where your employee is located.

This depends on the provider. With RecruitGo, access to our digital HR platform is bundled into your service fee, so there are no separate technology charges. You should always clarify this with any potential EOR partner.