Before signing an EOR contract, ask a provider at least six questions: which services are included, how the collaboration works, which countries are covered, how compliance is ensured, what the total costs are, and how offboarding works. These questions protect your company from unexpected costs, legal risks, and operational problems. Below you will find a concrete answer to each question that helps you compare and choose the right EOR provider.
Which services are standard under an EOR contract?
An EOR contract typically includes drafting locally valid employment contracts, full payroll processing with correct tax and social contribution payments, management of mandatory employment conditions, and support during onboarding and offboarding. These are the core services that every serious provider delivers.
Ask the provider for a written overview of exactly what is included in the base package. In practice, a complete EOR service package includes the following:
- Drafting and managing employment agreements under local law
- Monthly payroll processing, including withholding of payroll taxes and payment of social contributions
- Management of vacation days, sick leave, and pension schemes
- Onboarding of the employee in accordance with local legislation
- Support with work and residence permits for non-EU employees
- Ongoing compliance with changes in local employment law
Pay specific attention to whether immigration services are included. In the Netherlands, EOR providers often work together with a recognized sponsor or are themselves a recognized sponsor with the IND, which is essential if you want to hire highly skilled migrants. The application for the 30% ruling is also offered as standard by many Dutch EOR parties. Services outside the base package, such as additional insurance or legal advice in disputes, are invoiced separately.
How does the collaboration between the EOR provider and your company work?
In an EOR arrangement, your company remains responsible for day-to-day management, the content of the work, and the employee’s performance. The EOR is the formal legal employer and handles everything related to the employment relationship. There is therefore a clear division of responsibilities.
Ask the provider how communication works in practice. Concrete points to discuss:
- Who is your dedicated contact person at the EOR provider?
- Through which system or platform are payroll data and contract changes communicated?
- What is the response time for questions or changes?
- How are salary changes or role changes processed and within what timeframe?
A good EOR provider has a clear onboarding process in which your company knows exactly what information needs to be provided and when. Also ask about the average lead time from application to the first working day. In most cases, an EOR can have an employee operational within a few days to weeks, which is considerably faster than setting up a legal entity yourself in a new country, which can take six to twelve months.
Which countries and legal entities does the EOR provider cover?
Not every EOR provider is active in all countries. Some providers have their own legal entities per country, while others work through a network of local partners. This distinction is important because it directly affects the quality of compliance and the speed of service delivery.
Ask the provider explicitly whether they have their own entity in the desired country or work with a third party. Having your own entity generally offers more control and direct accountability. With a partner network, it is wise to ask who that local partner is and what guarantees exist regarding quality and compliance.
Also check whether the provider has experience with the specific employment law context of the country where you want to hire someone. For the Netherlands, for example, the provider must be familiar with rules around continued salary payment during illness, reintegration obligations, and the chain rule for temporary contracts. General knowledge of employment law is not sufficient; country-specific expertise is a requirement.
How does the provider handle local employment law compliance?
An EOR provider bears formal responsibility for compliance with local employment and tax legislation. This means that if there is a compliance error, the risk of fines lies with the EOR, not with your company. That is one of the core advantages of the EOR arrangement.
Ask how the provider keeps track of changes in local legislation and how quickly these are processed in contracts and payroll administration. Also ask the following questions:
- How are changes in minimum wages or social contributions handled?
- Does the provider have an internal legal team or does it work with external advisors?
- What happens if an employee disputes that their employment conditions are correct?
- How is the risk of a permanent establishment managed for your company?
The risk of a permanent establishment is a real concern. If an employee works structurally and for an extended period in another country without the right legal structure, this can lead to tax liability for your company in that country. A good EOR provider understands this risk and has concrete measures to mitigate it.
What are the total costs and what hidden costs can arise?
EOR providers typically charge a monthly fee per employee, on top of the gross salary and employer costs. This fee varies considerably per provider and country. Hidden costs are often found in one-time setup or onboarding fees, costs for permit applications, and additional charges for supplementary services.
Always ask for a complete cost overview before signing an EOR contract. Items you need to ask about:
- What is the monthly management fee and is it a fixed amount or a percentage of the salary?
- Are there one-time setup costs or onboarding costs?
- What do permit applications for highly skilled migrants cost and who bears those costs?
- Are there costs associated with terminating the contract or offboarding an employee?
- How are exchange rate risks handled when salaries are paid in a different currency?
Transparency about costs is an indicator of reliability. A provider who is not willing to provide a complete overview, or who only discloses costs later in the process, is a warning sign. Compare providers based on total costs per employee per year, not just on the monthly management fee.
How does termination of the contract or offboarding of an employee work?
The termination of an EOR employment relationship always follows the local employment law rules of the country where the employee works. The EOR is responsible for correctly executing the dismissal process, including any notice periods, severance payments, and statutory obligations.
This is a part of the EOR contract that companies often underestimate. Ask the provider:
- What are the notice periods in the countries where you are active?
- What compensation is legally required upon dismissal, and who bears those costs?
- How is dismissal for underperformance or business economic reasons handled?
- What is the procedure if you as the client want to terminate the contract with the EOR?
- Can the employee join your company directly after offboarding?
In the Netherlands, strict rules apply regarding continued salary payment during illness, reintegration obligations, and dismissal procedures through the UWV or the cantonal court. An EOR provider active in the Netherlands must fully master these procedures. Also ask about the practical lead time of an offboarding process, so you know what to take into account when planning your workforce.
How Eastwing helps you choose the right EOR provider
Eastwing helps companies and HR teams that work with international employees navigate the complexity of international employment. Whether you want to hire your first employee abroad, onboard a highly skilled migrant, or assess whether an EOR is the right solution for your situation: Eastwing offers practical guidance without the detour of legal jargon.
What Eastwing can do for you:
- Assess whether an EOR arrangement fits your specific situation
- Help with formulating the right questions for EOR providers
- Support with immigration processes and permit applications for international employees
- Guidance with the 30% ruling and other tax schemes for expats
- Advising on compliance with remote working across borders
Do you want to know which questions to ask before signing an EOR contract, or would you like to discuss your specific situation? Get in touch with Eastwing for a no-obligation conversation.
Frequently Asked Questions
Is an EOR arrangement also suitable for hiring a single employee abroad?
Yes, an EOR is particularly well-suited for hiring one or a few employees in a country where you do not yet have a legal entity. You avoid the costs and lead time of setting up a local entity, while your employee is fully legally and compliantly employed. Once you structurally grow to multiple employees in a country, it may still become interesting to set up your own entity — a good EOR provider will proactively think along with you about this.
What are the most common mistakes companies make when choosing an EOR provider?
The most common mistake is choosing based on the lowest monthly management fee, without comparing the total costs per employee per year. Other common mistakes are: not asking follow-up questions about country-specific expertise, assuming that immigration services are included as standard, and underestimating the offboarding process until it is too late. Always take the time to compare providers based on a complete cost overview and substantive expertise, not just on price.
How do I know whether an EOR provider truly has country-specific expertise in the Netherlands, and not just general knowledge?
Ask targeted questions about Netherlands-specific regulations, such as the chain rule for temporary contracts, the continued salary payment obligation during illness (up to a maximum of two years), reintegration obligations through the UWV, and how the 30% ruling works. A provider with genuine expertise answers these questions directly and concretely, without needing to refer you elsewhere. Also ask whether they are a recognized sponsor with the IND, which is a strong indicator of demonstrable experience with the Dutch immigration and employment law landscape.
Can my company be held liable if the EOR provider makes a compliance error?
In principle, the formal legal responsibility for compliance lies with the EOR provider, which is after all the legal employer. Nevertheless, it is wise to explicitly record in the contract how liability for errors is divided and whether the provider has professional liability insurance. Also check whether there are clear agreements about how and how quickly the provider informs you of changes in legislation that affect your employees.
What happens if I want to hire the employee directly myself after a period of time, without the EOR?
Most EOR providers allow this, but sometimes charge a so-called conversion fee for it. This is a fee for transferring the employer role from the EOR to your own entity. Ask about this explicitly in advance and have it included in the contract, including the amount of the fee and the conditions. If you expect to eventually want to set up your own entity or take over the employee directly, this is an important negotiating point before you sign.
How long does it take on average for an employee to become operational through an EOR arrangement?
In most cases, an EOR can have an employee fully operational within two to four weeks, depending on the country and whether a work permit is required. For EU citizens in the Netherlands this generally goes quickly; for non-EU employees who need a highly skilled migrant permit, you should account for a lead time of several weeks to months, depending on the IND processing time. Always ask the provider for realistic lead times for your specific situation, so you can align your planning accordingly.
Is an EOR the same as payrolling, and what is the difference?
No, an EOR and payrolling are not the same, although they may seem similar at first glance. With payrolling in the Netherlands, the payroll company is the formal employer, but the employee is entitled to the same employment conditions as employees who are directly employed by you (the so-called ‘verloning’). An EOR operates internationally and takes on full employer responsibility including local compliance, employment contracts, and tax payments in the relevant country. An EOR is therefore a broader and more complete solution for cross-border employment.
