What is the difference between an EOR and a PEO?

An EOR becomes the sole legal employer and does not require you to have a local entity. A PEO is a co-employment arrangement: you remain the legal employer and must already have an entity in that country, while the PEO administers HR, payroll and benefits. If you have no entity abroad, you need an EOR, not a PEO.

Is using an employer of record legal?

Yes. EOR is an established employment arrangement in most Latin American markets, provided the EOR is properly registered as an employer in-country, the employment contract meets local statutory terms, and the arrangement is not being used to disguise what is really an independent-contractor or misclassified relationship.

How much does an EOR cost?

Budget the gross local salary plus statutory employer burden of 10% to 75% of gross depending on the country, plus the EOR fee, which is a fixed monthly amount per employee or a percentage of gross salary. The number to plan against is the landed monthly cost per seat, not the fee alone.

How fast can an EOR hire someone?

If you already have the person identified, a compliant start takes 5 to 10 business days. If you still need to find the candidate, add 2 to 4 weeks of search for a professional role.

When does SILA build and operate a local entity for us?

Around 12 to 20 permanent employees in one country with a multi-year horizon, the economics favor a dedicated entity. SILA builds, staffs and operates that entity, transfers the employment when ready, and stays on for payroll, compliance and recruiting so you never change partners.

Does an EOR find candidates for me?

Not by default. An EOR employs the person you selected. If you do not have the candidate yet, you need recruitment or staffing alongside the EOR, ideally from one partner so the handoff does not stall.

Definition

What is an employer of record?

Q: What does EOR mean?

EOR stands for employer of record. It is a third-party company that legally employs a worker on your behalf in a country where you have no legal entity, taking on payroll, taxes, benefits and employment liability while you direct the day-to-day work.

An employer of record (EOR) is a company that becomes the legal employer of a worker on your behalf in a country where you have no legal entity. The EOR holds the employment contract, runs local payroll, withholds taxes, provides statutory benefits and carries employment liability. You still choose the person, direct the daily work and can end the engagement. In practice an EOR lets you onboard an identified employee compliantly in a new country in days instead of the months it takes to incorporate.

Produced by SILA Workforce Intelligence · Reviewed by SILA LATAM Delivery Practice · Updated 2026-08-21

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In one line

An EOR is how you legally employ someone in a country where your company does not exist.

Also written as: EOR, employer-of-record, international EOR, global employment organization
Time to a compliant start: 5 to 10 business days when the person is already identified
Typical cost shape: Gross salary + 10% to 75% statutory burden + EOR fee

The big picture

The real question is not what an EOR is, it is what it fixes

Companies reaching for an EOR face the same gap: the work is ready, the person is ready, and the legal ability to employ them is not. An EOR removes that blocker, and with it eight problems that arrive together.

You found the right person, in the wrong country

You can employ them legally in days without incorporating anything. The hire stops depending on a legal project.

Opening an entity would take 3 to 9 months

The EOR is already registered as an employer in-country, so the entity question moves from blocker to a later decision.

You are paying people abroad as contractors

Misclassification is the single most expensive LATAM mistake: back taxes, severance, benefits and labor-court exposure. An EOR converts them to real employees.

Nobody on your team knows local labor law

Notice, severance, 13th month, vacation, profit sharing and registrations are the EOR's obligation, not a spreadsheet you maintain.

Payroll, taxes and benefits are stitched across vendors

One employer, one invoice, one point of accountability per person instead of a local accountant plus a broker plus a bank.

You cannot forecast the real cost of a hire

You get one landed monthly cost per seat: gross salary, statutory burden, accruals and fee, before you commit.

You need to be able to exit cleanly

Ending an engagement or a country is a termination the EOR administers, not a company you have to dissolve.

Growth stalls between countries

The same contract structure works across 20+ active LATAM delivery markets, so market two and market three are not new projects.

Read together, those eight are one problem: hiring abroad forces you to become an employer in a country you do not operate in. An EOR is how you skip that, keep the person, and keep the option to open your own entity later when the headcount justifies it.

What an employer of record actually does

Signs the local employment contract

In the local language and format, with the statutory terms that country requires.

Runs in-country payroll

Gross-to-net calculation, tax withholding, social security and pension contributions, payslips.

Files and pays employer taxes

Employer burden runs 10% to 75% of gross salary depending on the country.

Provides statutory benefits

Vacation, 13th month or aguinaldo where applicable, severance accruals, mandatory health coverage.

Carries employment liability

Termination process, notice, severance calculation and labor-authority exposure sit with the EOR.

Handles onboarding and offboarding

Background steps, registrations, equipment agreements, final settlements.

What an EOR does not do

•Find or recruit the candidate for you (that is staffing or recruitment).
•Supervise the work or own the deliverable (that is an SOW or managed team).
•Replace a local entity forever if you plan to scale past 15 to 25 people in one country.
•Legalize a misclassified contractor arrangement retroactively.

EOR vs PEO vs staffing vs your own entity

The fastest way to pick is to ask what you are actually missing: the legal employer, the person, the supervision, or a permanent local presence.

Model	Who is the legal employer	Local entity required	Finds the talent	Time to live	Best when
Employer of Record (EOR)	The EOR is the legal employer	No local entity needed	No, you bring the person	5 to 10 business days	Hiring 1 to 20 employees in a country where you have no entity
PEO (co-employment)	Shared: you keep the legal employer role	Yes, you must already have an entity	No	2 to 4 weeks	You have an entity and want HR, payroll and benefits administration off your plate
Staffing / staff augmentation	The staffing firm employs the worker	No	Yes, sourcing is the core service	2 to 4 weeks to placement	You need the talent found, screened and delivered, not just employed
AOR / contractor of record	Nobody, the worker is an independent contractor	No	No	2 to 5 business days	Genuinely independent, project-based contractors only
Own local entity	You are the legal employer	You incorporate it	No	3 to 9 months	20+ people in one country, long horizon, permanent presence

The single most common mistake: buying a PEO when you have no entity abroad. A PEO co-employs inside an entity you already own. With no entity, only an EOR can employ the person. Go deeper in EOR vs staffing vs payroll , read what is a PEO or take the head-to-head: EOR vs PEO.

What an EOR costs

Compare landed monthly cost per seat, not fees. Four components decide the number.

Gross salary

What the employee earns locally, set by market band, not by your US pay scale.

Statutory employer burden

Mandatory employer contributions on top of gross salary. 10% to 75% depending on the country.

EOR fee

Either a fixed monthly amount per employee or a percentage of gross salary.

Accruals and one-offs

13th month, vacation provisioning, severance reserve, onboarding and equipment.

Country-by-country salary bands and statutory burden are published free in the LATAM Workforce Index.

Employer of record by country

Employment rules, burden and notice periods differ sharply by market. Start with the country you are hiring in.

Regional overview: Employer of record in Latin America.

Employer of record FAQ

Not sure if you need an EOR?

Tell us the country and the role. We come back with the model that fits, the landed monthly cost per seat and a confirmed start date.