What is the difference between AOR and EOR?

An AOR contracts and pays an independent contractor you already selected and keeps the compliance documentation. An EOR becomes the legal employer of an employee you already selected and carries payroll, statutory benefits and severance. The deciding factor is whether the work is genuinely independent, not which one is cheaper.

Is an AOR legal in Latin America?

Yes, where the underlying relationship is genuinely independent. Latin American authorities apply a substance test covering supervision, schedule, exclusivity and duration. A properly documented AOR arrangement over independent project work is defensible; the same arrangement over a supervised full-time role is not.

Can we start with AOR and convert to EOR later?

Yes, and it is a common sequence when a pilot becomes permanent. The conversion should happen as soon as the role becomes supervised and ongoing, because exposure accrues retroactively while the wrong structure is in place. SILA can convert without changing the worker's take-home pay.

Who carries the risk if a contractor is reclassified?

Primarily the entity that engaged and paid the worker, but in several Latin American markets the end client can be joined to the claim on a joint or subsidiary liability basis. This is why the structure decision should be made on the facts of the role rather than on invoicing convenience.

Does an AOR or EOR find candidates for us?

No. Both models assume you already selected the person. If you still need sourcing and screening, you need staffing for employees or contract staffing for contractors. SILA can do the sourcing and hold the employment or contractor engagement under one agreement.

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AOR vs EOR, all of Latin America

AOR vs EOR in Latin America

The AOR versus EOR decision is a risk decision, not a price decision. Latin American labor authorities look at supervision, exclusivity, schedule and duration, not at the label on the contract. SILA takes the same view and tells you which structure the facts support before you sign.

SILA does not stop at advice or hand off the next step. We design the route, execute it across the region and remain accountable as the workforce scales or the model changes.

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What is AOR vs EOR?

An Agent of Record (AOR) contracts and pays an independent contractor you already selected. An Employer of Record (EOR) becomes the legal employer of an employee you already selected. Use an AOR only when the work is genuinely independent and project-scoped. Use an EOR when the role is full-time, supervised and ongoing, which is how most Latin American labor authorities will read it.

SILA is the LATAM Workforce Operating Partner for this work: one team owns the market decision, workforce launch, local execution and next stage of scale.

What each model actually is

AOR: contracts, onboards and pays an independent contractor, and holds the compliance documentation trail.
EOR: signs the local employment contract, runs payroll, pays statutory contributions and provisions severance.
Neither model recruits. If you still need to find the person, that is staffing or contract staffing.
Both remove the need for you to open a local entity.

How to tell which one the role you are hiring for requires

Your managers set the hours and direct daily work: employment, so EOR.
The worker is full-time, long-running and exclusive to you: employment, so EOR.
The work is a defined deliverable with the worker's own tools and methods: contractor, so AOR.
The worker invoices several clients and controls their own schedule: contractor, so AOR.
You are unsure: assume employment. Reclassification is retroactive across Latin America.

What misclassification actually costs

A reclassified contractor is treated as having been an employee from day one. The exposure is back social security contributions, unpaid statutory benefits including 13th-month payments and vacation, severance calculated on full tenure, interest and penalties. In several markets the client company, not only the paying entity, is joined to the claim.

Converting contractors to employees without disruption

Review current engagements against the local independence tests, market by market.
Rank the population by exposure: tenure, exclusivity and level of supervision.
Move high-exposure workers to EOR employment on terms that hold take-home pay steady.
Keep genuinely independent specialists under a clean contractor engagement through AOR.
Consolidate both populations onto one invoice and one accountable operating lead.

AOR and EOR side by side

Question	AOR	EOR
Worker type	Independent contractor	Employee
Who selected the worker	You did	You did
Legal relationship	Services agreement	Local employment contract
Statutory benefits	Not applicable	Full statutory package
Severance provisioning	None	Provisioned monthly
Best fit	Project-scoped, independent work	Full-time supervised roles
Main risk	Reclassification if the facts say employment	Higher landed cost than a contractor rate

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