Hiring internationally with an Employer of Record (EOR) can feel like a shortcut—but the contract you sign isn’t just paperwork. It defines responsibilities, legal protections, and the fine line between staying compliant and exposing your company to unnecessary risk.
So, what does an EOR contract actually include? And how is it different from hiring directly or working with freelancers? Here’s what you need to know.
What Is an EOR Contract?
An EOR contract is a triangular agreement between three parties:
- You (the client company)
- The EOR provider (like Omnipresent)
- The employee you want to hire internationally
The EOR becomes the legal employer of record for the employee, while you manage their day-to-day work. The contract defines how this relationship functions—who’s responsible for what, how risks are handled, and what protections are in place for all sides.
Unlike traditional employment contracts, EOR agreements add a legal buffer: they shift local compliance, payroll, and employment obligations to the EOR.
What’s Included in an EOR Agreement?
Here’s what you’ll typically find in a compliant, well-structured EOR contract:
Jurisdiction & Governing Law
The contract specifies which country’s laws apply—typically, the employee’s country of residence. This impacts everything from taxes to termination rights.
IP Protection & NDAs
Most contracts include clauses that assign all work-related IP to your company. NDAs (non-disclosure agreements) may be embedded or separate, ensuring confidentiality across borders.
Compensation & Payroll Terms
This includes the gross salary, pay schedule, currency, and any bonus or benefit structures. It also outlines how the EOR handles local taxes and deductions.
Leave Entitlements & Benefits
From paid vacation and sick leave to maternity policies and pension plans, these are defined based on local labor laws, not your home country’s policies.
Termination Conditions
This section is crucial. It explains how either party can end the employment, including mandatory notice periods, severance rules, and documentation needed for lawful termination.
Data Privacy & Compliance
Especially important in GDPR or similar jurisdictions, this outlines how employee data is processed and protected.
What You're Still Responsible For
Even with an EOR handling legal employment, your team still plays a key role in the working relationship:
- Defining the role and compensation: You decide the job title, scope of responsibilities, and salary before the EOR drafts a contract.
- Managing tasks and performance: You're responsible for assigning work, tracking outcomes, and conducting performance reviews.
- Providing tools and onboarding resources: Whether it's a laptop, Slack access, or onboarding documentation, that still comes from you.
- Budgeting for salary increases or bonuses: The EOR processes changes, but you make the call and fund them.
EOR Contracts vs Contractor Agreements
Many companies switch from contractors to EOR hires when they want:
- More control over hours and deliverables
- Lower misclassification risk
- Ability to offer benefits and career growth
Red Flags to Watch for in EOR Contracts
Most EORs are solid, but contracts vary. These warning signs are worth checking before signing:
- No IP transfer clauses: Without this, any work created could legally belong to the employee, not your company.
- Vague or one-sided termination terms: Look for clear exit terms aligned with the labor laws in the employee’s country.
- No clear data protection standards: If hiring in Europe or Brazil, you’ll want GDPR—or LGPD-compliant clauses.
- Inflexible service models: Contracts should allow for renegotiation or changes in scope as your business evolves.
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