What Is an Employer of Record?
An Employer of Record is a professional services company that employs workers on behalf of a client. The Employer of Record becomes the legal employer in the country where the worker is based, while the client company directs the employee’s day-to-day work.
Employer of Record services allow businesses to hire talent in countries where they do not have a local legal entity, helping them manage local employment compliance, payroll, and HR without the cost and complexity of setting up infrastructure.
Types of Employer of Record
- Single-country Employer of Record – Operates in one jurisdiction (e.g. a Canada-only provider like Bridgewater TI)
- Regional Employer of Record – Covers multiple countries within a region (e.g. Europe, South America, APAC)
- Global Employer of Record – Offers coverage across dozens of countries through owned entities or partner networks.
Regardless of scope, an Employer of Record always serves as the legal employer in the worker’s country of residence.
What Does An Employer Of Record Do?
- An Employer of Record is responsible for:
- Issuing compliant employment contracts
- Confirming right-to-work status and legal eligibility
- Running payroll, including tax and social security deductions
- Maintaining statutory records (name, ID, address, payroll data)
- Remitting payments to tax authorities
- Providing statutory and optional private benefits
- Complying with local labour standards and regulations
The client company retains control over the employee’s day-to-day role, workload, and performance while the Employer of Record manages the backend compliance and employment infrastructure.
- When to Use an Employer of Record
- Employer of Record services are most commonly used when:
- A company wants to hire a small number of employees in a country
- The business wants to test a market or hire quickly without full incorporation
- The company doesn’t want the cost or complexity of managing compliance in-house
- There’s a short-term or project-based need to employ locally
How Much Does An Employer Of Record Cost?
Employer of Record providers typically charge a monthly fee per employee, which includes payroll, HR support, and compliance coverage.
Typical range: $250 – $800 USD per employee, per month
Pricing depends on:
- Local labour law complexity
- Operational overheads
- Service delivery model (high-touch vs. automated)
- Technology stack maturity
- Market position (established vs. new entrant)
Some newer providers enter the market with penetrative pricing to gain market share quickly. However, as the Employer of Record relationship is sticky (due to legal employment and payroll infrastructure), pricing often increases over time once clients are onboarded.
A Brief History Of The Employer Of Record Model
- The concept of the Employer of Record model has its roots in the United States in the 1980s, where the Professional Employer Organization (PEO) model first emerged.
- PEOs enabled small and medium businesses to outsource HR, payroll, and especially complex private benefits administration by acting as a “co‑employer.” This allowed businesses to access better benefit rates and reduce administrative burden.
- In Canada, one of the early examples of the Employer of Record model came from On Payroll Canada (now Bridgewater TI). The founder noticed demand from U.S. companies wanting to hire one to three employees in Canada without the overhead of incorporation.
- This led to the development of a service where On Payroll Canada would legally employ the individuals, manage payroll and compliance, and allow the U.S.-based client to retain day-to-day control — effectively pioneering the single-country Employer of Record model.
- By the early 2010s, the market expanded rapidly, with providers offering multi-country and global Employer of Record services, responding to the rise of remote work, distributed teams, and international hiring strategies.
- In 2020, the world felt the full impact of the COVID‑19 pandemic, which fundamentally changed how work was viewed and performed.
- Remote work, once considered a privilege, became the mainstream as millions of people were forced to work from home. The rise of video communication tools moved from futuristic to fully normalized almost overnight, and this shift accelerated the adoption of the Employer of Record model worldwide.
- What had once been a niche solution for international hiring became a globally recognized, mainstream strategy for deploying employees across borders.
- Since then, the Employer of Record model has continued to grow in both scale and legitimacy, and for many companies, it is now seen as the first and most efficient route to global expansion.
Why It Matters
An Employer of Record provides companies with a fast, compliant, and lower-risk way to employ internationally, without the need to incorporate or manage local employment laws.
For many businesses, especially those hiring in Canada for the first time, partnering with a Canadian Employer of Record like Bridgewater TI is the smartest and simplest way to build a team.
Canada EOR. We Make It Easy.
Hiring in Canada doesn’t have to be complicated.
With Bridgewater Talent Integration’s Canada EOR services, you can hire quickly, stay compliant, and grow with confidence.
Let our experts handle compliance while you focus on scaling your business. Find out more about at Canada.ca