Employer of Record vs. Staffing Agency

Businesses looking to hire talent globally often consider two options: an Employer of Record vs. staffing agency. While both solutions help companies find and manage employees, they serve different purposes. Understanding the key differences can help businesses decide which approach is best for their hiring needs, particularly when expanding into new markets like Latin America.

What Is an Employer of Record (EOR)?

An Employer of Record (EOR) is a service provider that legally employs workers on behalf of a company. This means that while the company manages the employee's day-to-day work, the EOR handles payroll, tax compliance, benefits, and legal employment requirements. Businesses use an EOR when they want to hire internationally without setting up a legal entity in a foreign country.

What Is a Staffing Agency?

A staffing agency helps companies find and place workers, often for temporary or contract-based roles. These agencies specialize in talent acquisition and recruitment, sourcing qualified candidates based on a company’s needs. However, staffing agencies typically do not take on the legal employer responsibilities unless they provide an additional payroll service.

Key Differences Between an EOR and a Staffing Agency

1. Employment Responsibility

An EOR acts as the legal employer, managing payroll, taxes, and compliance. A staffing agency focuses on recruitment and may offer short-term staffing solutions without taking on full employer responsibilities.

2. Hiring Scope

Staffing agencies typically fill short-term or project-based roles, while an EOR is used for long-term employment in a foreign country.

3. Compliance and Risk Management

An EOR ensures compliance with labor laws, tax regulations, and employment contracts in the worker’s country. Staffing agencies may assist with recruitment but do not always handle legal compliance.

4. Business Expansion and Market Entry

For companies looking to expand into a new country, an EOR enables them to legally hire and operate without establishing a legal entity. A staffing agency, on the other hand, is more suitable for companies needing short-term workers without making a long-term commitment.

When to Choose an Employer of Record vs. Staffing Agency

When an EOR Is the Right Choice

• Companies looking to hire full-time employees in a foreign country without setting up a legal entity

• Businesses that need to ensure compliance with local labor laws and tax regulations

• Organizations expanding into new markets and hiring remote teams

When a Staffing Agency Is the Right Choice

• Companies that need temporary, contract, or project-based workers

• Businesses looking for rapid talent acquisition without taking on long-term employment commitments

• Organizations that already have legal entities in the hiring country but need recruitment assistance

How Workmate Combines EOR and Staffing Services

Workmate offers a unique solution by combining EOR and staffing services to help businesses hire in Latin America. We source top-tier talent and handle the legal employment process through our EOR services. This means companies can find the right talent while ensuring full compliance with labor laws, payroll, and tax regulations.

Businesses that want to expand into Latin America can benefit from a streamlined process that includes both talent acquisition and EOR support, allowing them to scale their teams quickly and efficiently.

For companies looking to scale, Workmate provides the best of both worlds—sourcing top talent and ensuring seamless employment compliance. Schedule a call today to learn how we can help you build and manage your team in Latin America.