Debunking common myths about Employer of Record (EOR) services

Are you looking to expand beyond borders but overwhelmed by conflicting information on the best route to do so? Mauve Group has almost 30 years’ experience in compliantly employing overseas workers. Contact us today to find out more.

• Employer of Record (EORs) provide a legally compliant, flexible way to hire global talent without opening foreign entities.
• Businesses retain control of EOR employees’ day-to-day work while the EOR manages legal, tax, and HR compliance.
• Common myths such as high cost, loss of control, or legal risk are based on outdated or incorrect information.

As businesses expand across borders or adopt remote-first models, Employer of Record (EOR) services have become an increasingly popular way to compliantly hire international talent.

However, despite their growing use in the UK, the US, and beyond, myths and misconceptions continue to cause confusion and obscure the true value and function of EORs.

From legality concerns to confusion around employee control, these myths can needlessly deter companies from exploring a solution that could simplify global employment significantly and elevate their operations to new heights.

In this article, we debunk 10 of the most common myths about EOR services. Let’s dive in.

For more information on Employer of Record, visit our Ultimate guide to Employer of Record.

Myth 1: EOR services are only for large multinational corporations

Truth: While large companies certainly benefit from EORs, small and medium-sized enterprises (SMEs) are among the fastest-growing users. EORs provide a cost-effective way for start-ups to access talent overseas or explore new markets without setting up a local legal entity.

Example: A Manchester-based tech start-up looking to hire a software engineer in New York could compliantly employ the worker using EOR. This would save the cost and complexity of establishing a US entity.

Visit our Success Stories to see client testimonials from a range of organisations Mauve has supported.

Myth 2: EORs are illegal or operate in a legal grey area

Truth: EORs operate within established legal frameworks and are widely recognised in both the UK and US. In fact, their compliance expertise is often what makes them so valuable. EORs ensure adherence to employment laws, tax regulations, and worker protections in the relevant jurisdiction.

Example: In the UK, EORs work within HMRC regulations to manage PAYE, NICs, and statutory entitlements. In the US, they comply with IRS requirements and state-level employment laws.

Read about our Legal and Compliance team.

Myth 3: You lose control over your employees

Truth: This is, perhaps, the most persistent myth. Although the EOR is the legal employer on paper, the client company retains day-to-day control over the employee’s work, responsibilities, schedule, and performance.

Example: A Boston-based SaaS firm hiring a Sweden-based marketing manager via an EOR can still manage workloads, set KPIs, and conduct performance reviews, just as they would with direct employees.

Read about how our EOR solution leaves your worker management in your hands.

Myth 4: EORs only handle payroll

Truth: EORs offer comprehensive employment support, including employment contracts, benefits administration, tax filings, visa sponsorships (where applicable), onboarding, offboarding, and compliance monitoring.

Example: A Bristol-based design agency hiring San Francisco-based contractor can rely on the EOR to handle local benefits like 401(k) contributions or state-mandated paid leave in California.

Read about the scope of our EOR service.

Myth 5: Using an Employer of Record is more expensive than setting up an entity

Truth: Setting up a foreign entity involves legal fees, tax compliance, ongoing reporting, and HR infrastructure. These costs quickly add up – especially if hiring just a few people abroad. EORs offer a faster, more affordable alternative, often on a monthly per-employee fee basis.

Example: A Brighton-based business expanding to the US may spend upwards of £20,000 on incorporation and ongoing compliance. Using an EOR avoids these overheads, offering a more agile entry strategy.

Discover a comprehensive cost comparison.

Myth 6: EORs are only suitable for short-term employment

Truth: EORs are just as effective for long-term, permanent roles as they are for short-term contracts. They provide a flexible structure that supports both interim and ongoing employment.

Example: A French marketing agency hiring a full-time UK designer through an EOR can retain them indefinitely, while ensuring all UK employment rights are upheld.

Learn how our EOR service supports projects of any length.

Myth 7: Employees won’t feel part of your company

Truth: Employee engagement and company culture depend more on management, communication, and inclusion than on contractual structures. Many companies successfully integrate EOR-hired employees into their teams with no noticeable difference.

Example: A remote-first Madrid fintech uses an EOR to hire in the US and includes those team members in weekly all-hands meetings, virtual socials, and Slack channels, fostering strong cultural alignment.

Read about Mauve workers’ experiences via our Trustpilot page.

Myth 8: Employer of Records can’t offer competitive benefits

Truth: Reputable EORs provide regionally competitive benefits that meet or exceed statutory minimums. Some even offer enhanced packages tailored to industry norms.

Example: In the UK, benefits may include private medical insurance or enhanced parental leave. In the US, EORs may offer dental, vision, and retirement savings plans, adapting to state-level regulations and employee expectations.

Discover Mauve’s comprehensive benefits service.

Myth 9: EORs are the same as staffing agencies

Truth: While staffing agencies typically supply temporary or contract workers, EORs serve as the legal employer for workers whom the client company manages directly. EORs focus on compliance and infrastructure, not recruitment or labour supply.

Example: A Nottingham-based firm may use a staffing agency for warehouse temps, but an EOR to employ a remote software engineer in India long-term.

Understand the ins and outs of our EOR solution by reading our Ultimate guide to Employer of Record.

Myth 10: You don’t need an EOR if hiring remote contractors

Truth: Engaging independent contractors without understanding worker classification laws is risky. Misclassification can result in fines, back taxes, and legal disputes. EORs help avoid this by ensuring proper employee classification where needed.

Example: The IRS in the US and HMRC in the UK both investigate worker misclassification. A US firm hiring a UK worker as a "contractor" may unknowingly breach IR35 laws. An EOR can help avoid this by legally employing the worker with the correct structure.

Mauve can support the seamless engagement of independent contractors and advise on worker classification to mitigate compliance risk.

Why Mauve is the right Employer of Record for you

Mauve began in a small office in Italy in the 1990s. Since then, we’ve been driving flexible working and simplifying global expansion for everyone, from SMEs and NGOs to educational institutions and global corporations.

Our team of experts leverage decades of experience to support global growth, streamline global hiring practices, and ensure compliance with global standards.

For more information on the benefits of going global and how Mauve can help, check out our guide.

To find out how our team can help you to expand globally, contact our team today.