What Is an Employer of Record (EOR) and When Do You Need One?
Expanding your team across borders is exciting—but it can also be a legal and administrative maze. From compliance risks to contract issues, hiring talent in a country where you don’t have a legal entity can quickly become overwhelming.
That’s where an Employer of Record (EOR) comes in.
At Sabio Advisory, we help global companies build teams in the Philippines quickly and compliantly—without the need to set up a local company. This blog will walk you through what an EOR is, when to use one, and why it’s the smart choice for scaling businesses.
What Is an Employer of Record (EOR)?
An Employer of Record is a third-party provider that legally employs workers on your behalf in a different country. The EOR handles everything related to employment—contracts, payroll, benefits, taxes, and compliance—so you can focus on managing the day-to-day work and performance of your team.
Think of it as “employment-as-a-service” for global teams.
EOR vs. Setting Up a Local Entity
| Factor | Using an EOR (like Sabio) | Setting Up a Local Entity |
| Setup Time | 1–2 weeks | 3–6 months or more |
| Legal Complexity | Handled by EOR | Must hire lawyers, accountants |
| Cost | Pay per employee + service fee | Incorporation + ongoing admin costs |
| Flexibility | Hire 1 or 100 with ease | Better for long-term, large-scale ops |
| Exit Risk | Low—can offboard easily | Winding down a company is costly |
If you need speed, flexibility, and compliance, an EOR is often the smarter first step.
When Should You Consider Using an EOR?
Using an EOR is ideal when:
✅ You want to test a new market (e.g. hire one or two people in the Philippines) without committing to setting up a company
✅ You need to hire quickly but want to stay fully compliant
✅ You’re hiring remote employees or contractors and want to convert them to full-time without legal exposure
✅ You want to offer benefits and job security to your team, but don’t have a legal presence locally
✅ You need to streamline hiring in a country with unfamiliar labor laws
Why Not Just Hire Directly as a Contractor?
Hiring freelancers or “independent contractors” directly may seem easier—but it comes with legal and reputational risks:
- 🚩 Misclassification: If your contractor works full-time hours, follows your instructions, and is economically dependent on you—they may legally qualify as an employee under Philippine law.
- 🚩 Liability for Benefits & Taxes: If audited, you may be held liable for unpaid benefits like 13th-month pay, social security, and even back wages.
- 🚩 No Protection for the Worker: Contractors have no labor law protection, which affects retention and morale.
An EOR protects you and your talent.
How Sabio Advisory Makes It Easy
At Sabio Advisory, we act as the legal employer in the Philippines on your behalf. You manage your team’s output—we handle the rest:
- Legally compliant hiring
- Contracts, onboarding, and payroll administration
- Government registration (SSS, PhilHealth, Pag-IBIG)
- HMO and benefits management
- Optional workspace and add-ons available
- Transparent pricing (cost + VAT + fixed service fee)
You get peace of mind and local expertise—your team gets job security and a great experience.
Final Thoughts
Hiring overseas shouldn’t feel risky. With the right partner, it can be one of the most strategic moves for your business.
An Employer of Record like Sabio Advisory allows you to hire smarter, faster, and fully compliant—so you can scale with confidence.
📩 Ready to explore hiring in the Philippines? Reach out to us at consultants@sabio-advisory.com or visit www.sabio-advisory.com to learn more.
