EOR.net.au
The short version
Think of an Employer of Record (EOR) as a legal and administrative wrapper around an employee. The worker is on the EOR's books, so the EOR is responsible for the employment contract, wages, superannuation, PAYG withholding, workers' compensation insurance and the records Australian law requires. Your business is the "host": you decide what the person works on, who they report to and how their performance is judged.
In return you pay the EOR the full cost of employment (salary plus on-costs) and a service fee, usually a fixed amount per employee per month.
Who does what
The EOR handles
- The written employment contract and Fair Work Information Statement
- Payroll, payslips and Single Touch Payroll reporting to the ATO
- PAYG withholding, superannuation and payroll tax
- Workers' compensation insurance in the relevant state or territory
- Leave accruals, record-keeping and termination pay
- Applying the correct modern award or agreement
You handle
- Finding and choosing the person
- Setting their role, goals and daily tasks
- Management, feedback and performance reviews
- Providing equipment, systems and a safe way of working
- Approving leave and expenses through the EOR's process
- Deciding (with the EOR) if the role should end
Because the EOR is the legal employer, decisions about pay changes, discipline and dismissal have to go through it. A good EOR will move quickly but will not let a host skip steps that the Fair Work Act requires.
Why businesses use one
The most common reasons are speed and simplicity. Setting up a local company, registering for payroll tax and workers' compensation, choosing a payroll system and learning the award system takes time and specialist help. An EOR already has all of this in place, so a new hire can often start within days.
- Overseas companies testing the Australian market before registering a local entity.
- Australian businesses hiring in a state where they have no presence, or hiring for a project with a fixed end date.
- Teams converting contractors who are really working like employees and want to remove misclassification risk.
- Start-ups that want proper employment terms without building an HR and payroll function yet.
What an EOR does not do
An EOR is not a recruitment agency, although some offer recruitment as an extra. It does not manage the person's work and it cannot make an unsafe workplace safe on its own. Work health and safety duties are shared: the host controls the work environment, so the host has duties too.
An EOR also does not remove the need to treat people fairly. If a role ends badly, the EOR will be the respondent to an unfair dismissal claim, but your conduct as host will be part of the evidence.
Is it legal in Australia?
Yes. Australian law does not use the term "Employer of Record", but the arrangement is a familiar one: one business employs a worker and supplies their services to another. That puts EOR arrangements close to labour hire, which brings two points worth checking.
- Labour hire licensing. Victoria, Queensland, South Australia and the ACT run labour hire licensing schemes. Depending on how the arrangement is structured, an EOR supplying workers to hosts in those places may need a licence, and hosts can face penalties for using an unlicensed provider. Ask any provider which licences it holds.
- Same job, same pay. The Fair Work Commission can make a regulated labour hire arrangement order requiring a labour hire employee to be paid at least what the host would pay its own employee under the host's enterprise agreement. This mostly matters to larger hosts with an enterprise agreement. Small business hosts with fewer than 15 employees are excluded.
EOR, PEO and labour hire: the names
In the United States a Professional Employer Organisation (PEO) "co-employs" staff alongside the client, which still needs its own entity. That model is uncommon in Australia. Here you will mostly see EOR, labour hire and on-hire used for similar arrangements, with EOR usually meaning white-collar roles where the host recruits the person itself. See EOR vs PEO vs contractor for a side-by-side comparison.
When an EOR is the wrong choice
An EOR suits small teams and uncertain timelines. Once you have a stable team of 10 to 20 or more people in Australia, the monthly fees often add up to more than running your own entity and payroll. Many businesses use an EOR to start, then move staff across to their own company once the market is proven. Check that your EOR contract allows this without large transfer fees.
Frequently asked questions
Is the employee mine or the EOR's?
Legally the employee belongs to the EOR, which signs the contract and pays them. Practically they work in your team and you direct their work.
Can an EOR employ someone anywhere in Australia?
Most EORs can employ in every state and territory. Check that the provider holds workers' compensation insurance and any labour hire licence needed in the state where your hire will work.
Who owns the work the employee creates?
The employment contract should assign intellectual property created in the job to the EOR, which then assigns it to you under your service agreement. Check both documents.
