How does the employment relationship work with an EOR?

With an EOR, the third-party service becomes the official legal employer of record for the employees, which means they handle employment contracts, payroll, taxes, and compliance with local employment laws. However, the client company retains full operational control, including directing daily tasks, setting goals, and managing performance. The EOR provides HR support and ensures legal employment obligations are met, while the client company focuses on business management. This separation limits the client’s employment liability while maintaining workforce control.