An Employer of Record (EOR) handles the full legal and administrative responsibilities of employing workers on behalf of a company. This includes payroll, taxes, benefits, and compliance with local labor laws. The EOR becomes the official employer, which is particularly useful for companies hiring internationally or managing a contingent workforce without setting up a local entity. While the EOR is the formal employer, the client company still directs the workers' daily activities and responsibilities.
In contrast, an Agent of Record (AOR) is typically focused on managing independent contractors or freelancers. The AOR acts as a third-party intermediary between the contractor and the company, primarily handling the contractor's compliance, contracts, and payment processes. However, unlike an EOR, the AOR does not assume full employment responsibilities and is often used when companies want to engage contractors while ensuring proper legal and tax compliance without making them full employees.