How an Employer of Record affects you as an employee: Everything you need to know

My first job working remotely was a case of fortuitousness. I had brunch with someone visiting town and casually mentioned I was looking into making better use of my journalism degree. The day after, my brunch date ended up offering me a job at their US-based company. I didn’t have to move for the job and could do it from my couch at home. However, I would have to register my own company, send an invoice once a month, and take care of my taxes.

Back then, remote work wasn’t a hot topic; no one talked about international remote employment, so I didn’t question that setup for a second. Instead, I looked for a lawyer and an accountant, paid for them to do everything necessary, and kept my worries of messing up the monthly admin private. I was already anxious because the job was a big leap in my career, in a field I knew very little about.

The worry eventually subsided, only to reappear again when I decided to take my remote job with me when I moved to Ireland. Registering a company would be much more expensive and require even more work each month, so I opted for an arguably easier setup as a sole trader. It was only later that I realised it came with a caveat – I needed to have multiple clients and issue multiple invoices instead of just one. ‘If you don’t, the Irish government may view you as an employee of the US company, which can lead to reclassification and additional employer tax obligations,’ my Irish accountant told me.

I never raised this issue with my “employer” and went to solve the problem myself. I started doing some freelance work on the side, on top of a full-time job. Eventually, I left that job, but the experience has stayed with me and was one of the biggest drivers for me to join Boundless.

As more people began working across borders during the pandemic, companies needed clearer ways to structure international working relationships while staying aligned with local requirements.

In this article, I want to take you through the nuts and bolts of that solution for international employment that has what is known as an Employer of Record at its core.

Whatever your circumstance, this article will help you understand what it will mean to you as an employee, how it will affect you month to month, and why it’s not anything to worry about (unlike doing your own taxes). Keep in mind that different Employer of Record providers may solve this slightly differently, so the tactics you will read below are from Boundless’s perspective.

An Employer of Record (EOR) is a third-party organisation that legally employs workers on behalf of another company. It manages payroll, taxes, contracts, and compliance with local labour laws, while the company oversees the employee’s role and responsibilities.

Companies use an Employer of Record when hiring internationally without setting up a local entity. The EOR becomes the legal employer in the country, ensuring all employment obligations are handled correctly.

In practical terms, this looks different across countries. In the UK, an Employer of Record manages payroll through PAYE and ensures compliance with HMRC requirements. In Ireland, it involves handling employer contributions, statutory benefits, and local employment obligations.

Hiring internationally introduces operational and legal complexity. Each country has its own rules around employment contracts, payroll, taxes, benefits, and terminations.

Setting up a local entity to manage this is often time-consuming and expensive, especially for a small number of hires. Using contractors may seem simpler, but it requires careful classification and may shift certain administrative responsibilities to the individual. Some companies use an Agent of Record (AOR) to bring more structure and consistency to contractor engagements.

An Employer of Record provides a compliant alternative. It enables companies to hire globally while ensuring local employment laws are followed correctly.

The Employer of Record becomes the legal employer in the employee’s country and manages all employment-related obligations, including:

• Drafting and maintaining compliant employment contracts
• Running local payroll and tax filings
• Managing statutory benefits and contributions
• Ensuring compliance with local labour laws
• Handling onboarding and offboarding requirements

At the same time, the company the employee works for continues to manage their role, responsibilities, and day-to-day experience.

Employees hired through an Employer of Record receive full legal employment in their country. This includes statutory protections such as social security, paid leave, pension contributions, and other local benefits.

They are employed compliantly, paid correctly, and protected under local labour laws, while still working for an international company.

After your employer decides to use Boundless’s services, we will invite you to our platform to create a profile and provide a few necessary personal details. You are given access to the app through your personal email. We do this purposefully, so even after you no longer work for the same company, you will still have access to your data and documents. Afterwards, you sign your employment contract, and you are good to go.

You sign an employment contract with both Boundless and the company you work for, which is now our client. The agreement, which is compliant with local regulations and often bilingual, outlines all employment basics. Your role, salary, responsibilities, statutory time off, a probation period, severance pay, notice period, etc.

The agreement will be permanent unless the country’s regulations are such that it needs to be a fixed-term agreement. That doesn’t mean that your employment is fixed-term; it often means that a follow-up contract will be signed after the initial fixed term expires. Regardless of the timeline, the employment contract carries all the employment rights you are entitled to and can serve any external purposes (mortgages, bank loans, rental agreements, etc.).

You do your work, and Boundless carries on with all of the behind-the-scenes HR and tax work that would be happening anyway. Every month, our payroll team carefully calculates your gross to net salary, applying all relevant taxes and allowances, as well as anything that may have changed since the previous month. We directly pay you your net salary, and we file and pay your taxes to your country’s tax authority.

We also prepare your payslip, which you can access through the Boundless platform. It’s an important document, just like your contract, which you may need for a mortgage application, for example.

Unless you live in a country where employees are expected to file their taxes at the end of the year, Boundless will file all year-end tax documents for you, just like any other employer would.

There is a limited but legally required amount of personal information that you need to provide to your employer so that you can be compliantly employed. As your legal employer, Boundless is responsible for collecting and storing that data. Amongst other things, this includes your name, address, date of birth, bank details, tax details, marital status (for relevant tax breaks) and your work permit/visa if you live in a country where you need one.

You fill out the information on the app yourself (not through email, which we highly discourage, as email is not a secure form of communication). Boundless is built on AWS, all data is hosted in Ireland, and is regulated by the EU GDPR data protection.

While time off is a legal right you have, granted to you through your legal employment status, requesting it is something you do with the company you work for. As our client, we advise them on the local regulations and statutory limits for all forms of leave (holiday, maternity, parental, force majeure or any other form of leave).

From then on, the company decides whether to extend any of the periods and what the internal process for requesting time off is, which they then communicate to you. If you are unsure what the policies of the organisation you work for are, the best thing is to check the internal handbook or ask someone from the HR/People Ops department. You can also ask us, and we will be happy to advise you on the statutory terms.

Similarly, with expenses or reimbursements, this is something that you clear with the company you work for first. After they have approved that, they will let us know that some costs will be added to your salary in the following month’s payroll. It’s then our responsibility to ensure that the additional reimbursement sum is added to your net salary and not taxed (unless it falls under a benefit-in-kind tax regulation).

You get all the statutory benefits that are mandated by your government automatically. Depending on the country you reside in, that is usually a mix of social security, time off, flexible working, training, etc.

Then there are the fringe benefits, and global employee benefits also known as perks or benefits in kind, which the company you work for extends voluntarily. These will either be provided through selected local suppliers or as a monetary stipend. You may have to choose from a pool of options or find your vendor in the latter case. For example, if the company has a well-being budget, you might use it with your choice of studios and activities. You may not realise that while the cost of benefits-in-kind is covered, you still have to pay income and other relevant taxes on it in most countries. This is the case regardless of whether Boundless is involved in your employment or not.

Year on year, many legislative and tax changes happen in every country. There may be new laws around time off, a percentage change for pension contribution or a slight increase in income tax. None of these changes is anything you should worry about; it all falls under Boundless’s responsibility to monitor and account for.

We work with local legal experts who update us on all legislative and tax changes multiple times a year. The only changes you need to inform us of are significant life events, such as marriage, a newborn child, or something else that may impact your payroll (because of existing tax breaks or allowances).

That will be determined by the circumstances of the employment loss. Is it a resignation, collective or individual redundancy, or a dismissal? Employment law outlines many end-of-employment aspects, and since you are legally employed, your employment is ruled by them. For example, in Ireland, employees who are made redundant are entitled to two weeks of pay for every year of service, plus a bonus week. So if an Irish employee is made redundant, they will receive redundancy pay according to their tenure. On the other hand, if that Ireland-based employee resigns, they need to give a specific notice, again, depending on their service length. Notice periods, in fact, are something almost every country’s employment legislation has.

Notice periods had always been part of the jobs I had held before that first remote job, so when I resigned from it, I assumed I would work one there as well. It would allow me to finish up on my projects and say goodbye to collaborators I had worked with. What I learned instead is that when your working relationship comes with a contractor status, all assumptions fly out the window. My boss accepted my resignation, declaring that my ‘engagement’ was ending from the next day. He was within his rights to do so, as I was working as an independent contractor. In the US, employment can also follow at-will principles, which can differ from expectations in other countries. The mismatch in expectations meant my income ended immediately.