Expanding into new international markets can be exciting, but it comes with complex employment, legal, and payroll obligations. For many companies, the question is how to hire talent abroad without establishing a local legal entity. One solution that has gained popularity is the Employer of Record (EOR).
What is an employer of record?
An employer of record is a third-party organisation that legally employs workers on your behalf in another country while you retain full operational control. You remain responsible for day-to-day management, strategic direction, salary structures, and benefits, while the EOR assumes full responsibility for employment compliance, payroll administration, and local HR obligations.
For example, a UK company can hire in the Netherlands without setting up a Dutch subsidiary. Dutch employment law requires locally compliant contracts, mandatory holiday allowance, social security contributions, and proper payroll registration. Without a local entity, companies cannot directly employ staff or run local payroll. An employer of record bridges this gap by becoming the legal employer in the Netherlands while your employee works exclusively for you and remains fully integrated in your team.
Options for Companies Expanding Without a Local Entity
When companies explore international hiring without a local entity, they typically consider three models:
1. Setting up a local subsidiary
Creating a local entity gives complete control over your team. However, it requires company registration, tax filings, bank accounts, and appointing local directors, a process that often takes several months. It also increases fixed costs, even if you hire just one employee. This approach suits long-term, large-scale expansion rather than early-stage market entry.
2. Hiring independent contractors
Engaging contractors can be a flexible option for project-based work, but it carries significant risk. Misclassification is common in Europe: if authorities determine a contractor is actually an employee, the company may face back taxes, fines, and social security contributions. Contractors are therefore rarely a compliant solution for a stable workforce. That’s why an employer of record may be the best solution.
3. Using an Employer of Record
An employer of record provides a structured employment solution that allows you to hire internationally without establishing a local entity. The EOR ensures:
- Locally compliant employment contracts and onboarding
- Payroll processing, tax reporting, and social security contributions
- Statutory benefits administration
- Ongoing labour law compliance
Because the employer of record is the legal employer, your company avoids many risks associated with permanent establishment while retaining full operational control over your team.
Expanding your business with Octagon and our focus on compliance
Compliance is embedded in everything we do, including into our employer of record services. We ensure alignment with local employment legislation, proper documentation, accurate payroll and tax reporting, and adherence to statutory requirements, including collective agreements where applicable. This reduces the risk of employee misclassification, regulatory penalties, and non-compliant termination procedures, safeguarding both your company’s finances and its reputation.
At the same time, with us as your employer of record, you retain full operational and strategic control. You make all decisions regarding hiring, compensation, benefits, working arrangements, and performance management, while we implement them seamlessly and compliantly. The result is a partnership that combines legal certainty, administrative efficiency, and workforce stability, allowing your business to grow in new markets without unnecessary risk or operational burden.
More Than Contracts and Payroll: What Octagon Professionals Delivers
At Octagon Professionals, we do far more than simply issue contracts or process salaries. We provide a comprehensive, end-to-end employment solution with our employer of record services. This allows companies to expand internationally with confidence, while ensuring full compliance with local labour laws and regulations. Our support covers the entire employment lifecycle, from onboarding and employee integration to ongoing HR administration, payroll, benefits, and statutory obligations.
This ensures that every aspect of employment is professionally managed, accurate, and legally sound, giving your team a structured and consistent experience.
With Octagon Professionals as your partner, you gain a compliant, efficient, and fully managed employment solution. All this while retaining full control over your team. We simplify international expansion, reduce risk, and provide the legal and operational certainty you need to focus on growing your business with confidence.
