# Employer of Record agreement > Machine-readable page from EOR Overview (https://eoroverview.com/), an independent research platform for Employer of Record services. > Canonical page: https://eoroverview.com/glossary/employer-of-record-agreement/ > Methodology: how providers are researched, scored and compared is documented at https://eoroverview.com/methodology/. > Disclosure: EOR Overview is free to use. We may earn a referral fee from some providers; this never affects a rating or ranking position (https://eoroverview.com/disclosure/). An Employer of Record agreement is the commercial contract between a company and its EOR provider. It sets out fees, liability, and service scope, and is separate from the employment contract the EOR signs with the worker it employs on the company's behalf. ## Explanation What an Employer of Record agreement is An Employer of Record agreement (also called an EOR service agreement or client services agreement) is the contract a company signs with an employer of record provider. It governs the business relationship: what the provider will do, what it costs, who is liable if something goes wrong, and how either side can exit. It does not employ anyone. It is a services contract, structured much like any vendor agreement. This is easy to confuse with the employment contract, because both documents exist because of the same arrangement. But they have different parties, different governing law, and different purposes. A company that only reads one of the two has not read the deal. The two contracts and how they relate Every EOR arrangement runs on two separate contracts signed at different times, between different parties, often under different law. The EOR agreement is signed once, up front, between the company and the provider. The employment contract is signed separately for each worker, between the provider (as the legal employer) and that worker, under the law of the worker's country. AspectEOR agreementLocal employment contract PartiesClient company and EOR providerEOR provider (as legal employer) and the worker Governing lawUsually the provider's or client's chosen jurisdictionThe worker's country of employment, mandatorily What it coversFees, service scope, liability, data handling, termination of the service relationshipPay, benefits, working hours, statutory protections, local notice terms Who can end itClient and provider, per the notice terms in the services agreementWorker and provider (as employer), per local labor law Ending the EOR agreement does not automatically end the employment contract, and vice versa. If a company terminates its provider relationship, the provider is still bound to the worker under local law until that employment is separately and lawfully ended. See employment contracts for how the worker-facing document is structured. Clauses that matter An EOR agreement is long, but a small number of clauses carry most of the commercial and legal risk. The checklist below is what to read closely before anything else in the document. ClauseWhy it mattersWhat good looks like Scope of servicesDefines what the provider actually does versus what the client must still handle (performance management, day-to-day direction, equipment)A specific list, not a vague reference to "employment services" Fees and pass-through costsThe headline fee rarely covers everything; statutory contributions, benefits, and one-off costs are often billed separatelyA full breakdown of what is included versus billed as a pass-through, with no undefined "administrative fees" Liability and indemnitiesDetermines who pays if a misclassification claim, tax penalty, or wrongful termination claim arisesClear indemnity from the provider for compliance failures caused by its own errors, with carve-outs for client instructions that created the risk IP assignmentWork product created by the employee needs to flow to the client, not sit with the provider or remain ambiguousAn explicit assignment clause naming the client as the beneficiary, mirrored in the employment contract Data protectionEmployee personal data passes through the provider's systems and often across bordersNamed data processing terms, storage locations, and breach notification commitments Termination and noticeSets how much runway either side has to exit the services relationship, separate from the worker's own notice periodA notice period long enough to transition employees without a compliance gap Transfer of employeesCovers what happens to employees if the client switches providers or brings employment in-house laterA defined transfer-out process with cooperation obligations, not silence on the point Non-solicitationSome agreements restrict the client from hiring the provider's staff or vice versa outside the arrangementNarrow scope, limited duration, no restriction on hiring the client's own EOR-employed workers directly Governing lawDetermines which court or arbitration forum resolves a dispute between client and providerA jurisdiction both parties can realistically litigate or arbitrate in, stated plainly What to negotiate before signing The commercial terms most worth pushing on before signature are the ones that are expensive or slow to fix afterward: liability allocation, fee transparency, and exit terms. A company that signs first and reads later has given up its only real point of influence. - Liability allocation. Push for the provider to carry liability for its own compliance errors (payroll tax filings, statutory registrations) and to name any carve-outs explicitly, rather than a blanket indemnity that sounds broad but excludes the failures most likely to happen. - Fee transparency. Ask for a full quote that separates the base fee from statutory contributions, benefits administration, and one-off costs like onboarding or offboarding. See employer of record cost for how these components typically break down. - Exit and transfer terms. Confirm what happens to employees if the relationship ends, how much notice is required, and whether the provider will cooperate with a transfer to another provider or to a direct entity. - Data handling. Confirm where employee data is stored and whether it moves across borders, and get commitments on breach notification timing in writing. - Service level commitments. Ask what happens if payroll runs late or a statutory filing misses a deadline. A services agreement without any consequence for provider error puts all the risk on the client. Red flags A handful of contract patterns should prompt more questions before signing, not after. - No named indemnity for provider error. If the agreement is silent on what happens when the provider misses a statutory deadline or misfiles a registration, the client is exposed by default. - Vague or bundled fees. Contracts that quote a single flat number with no breakdown of what is included often hide pass-through costs that surface later as line items. - No transfer-out clause. If the agreement says nothing about what happens to employees when the client leaves, that gap becomes a real problem the day the client wants to switch providers. - Broad non-solicitation on the client's own workers. A clause restricting the client from directly hiring the very employees the provider employs on its behalf is worth pushing back on hard. - Unclear data processing terms. Silence on where employee data lives or how breaches are handled is a compliance gap, not a minor omission. - Governing law in a forum neither party can use. A dispute clause pointing to a jurisdiction impractical for either side to litigate in is a red flag disguised as boilerplate. Providers publishing pricing and coverage details on EOR Overview's provider directory can be compared on published entry prices, but contract terms like the ones above are rarely published and need to be requested directly. Frequently asked questions Who actually signs each contract, and when? The client and the provider sign the EOR agreement once, up front, usually before any employee is placed. Each employment contract is signed later and separately, between the provider and that individual worker, timed to that person's start date rather than to the master agreement. If a company switches providers, does the worker sign a new employment contract? Generally yes. Because the employment contract is with the outgoing provider as legal employer, moving a worker to a new provider means ending that contract and issuing a new one with the incoming provider, even though the worker's day-to-day role with the client may not change at all. Does a longer notice period in the EOR agreement protect the employee too? Not directly. The notice period in the services agreement governs when the client-provider relationship can end. The worker's own protections come from local labor law and the employment contract, which can require different, often longer, notice regardless of what the services agreement says. Why do EOR agreements rarely get published or compared publicly? Fee structures and headline pricing are sometimes published, but liability terms, indemnities, and transfer provisions are negotiated per client and rarely disclosed. That is why a comparison based on published price alone will miss most of the contractual risk sitting in the agreement itself.