As startups and businesses expand beyond borders, managing global teams becomes more complex, especially when it comes to handling payroll and compliance.
Two common solutions often come up: Employer of Record (EOR) and Payroll Providers.
Both help businesses pay employees, but their roles, scope, and legal implications differ significantly.
Employer of Record vs Payroll Provider?
If you’ve ever wondered which one your company really needs, this guide breaks it down clearly, and helps you decide which works best for your stage of growth.
What Is an Employer of Record (EOR)?
An Employer of Record (EOR) is a third-party organization that legally employs workers on your behalf in another country.
When you hire through an EOR, the EOR becomes the legal employer of record for those workers, handling all the employment-related tasks while you manage their daily work and performance.
An EOR typically handles:
- Drafting and signing compliant employment contracts
- Managing payroll, taxes, and benefits
- Ensuring local labor law compliance
- Handling employee onboarding and offboarding
- Managing statutory contributions, insurance, and HR documentation
In other words, an EOR removes the need for your company to set up a legal entity in a foreign country. You can hire full-time employees anywhere, quickly and compliantly.
For example, Betternship helps international startups hire vetted tech and non-tech talent in Africa without worrying about legal setup or local compliance.
What Is a Payroll Provider?
A Payroll Provider helps companies manage the administrative side of paying their employees, but that’s where their responsibility ends.
Payroll providers process salary payments, calculate deductions, and file payroll taxes.
However, they don’t act as the legal employer of your workers. This means the company remains fully responsible for compliance, benefits, contracts, and legal obligations.
A payroll provider typically handles:
- Payroll calculation and disbursement
- Tax and social contribution filing
- Payslips and reporting
- Limited HR support (in some cases)
Payroll providers are ideal for businesses that already have a legal entity in the country where their employees work.
If your business is already registered locally and only needs help running payroll, a payroll provider may be enough.
Key Differences: EOR vs Payroll Provider
| Feature | Employer of Record (EOR) | Payroll Provider |
| Legal Employer | Yes | ❌ No |
| Compliance Management | Full | ⚠️ Limited |
| Best For | Companies hiring internationally without a local entity | Companies with a local entity |
| Employment Contracts | Managed by EOR | ❌ Managed by company |
| Payroll, Taxes, & Benefits | Full scope | ⚠️ Payroll only |
| Risk & Liability | Handled by EOR | ❌ Handled by company |
The key distinction lies in who holds legal responsibility.
With an EOR, you delegate all legal employment obligations. With a Payroll Provider, you retain them.
📘 Read next: How to Hire and Pay Employees in Africa (2025/2026 Guide)
Which Should You Go For?
Your choice depends entirely on your company’s setup and goals.
If you already operate legally in the country where your employees are based, a Payroll Provider may be sufficient. It simplifies salary processing and ensures your employees get paid accurately and on time.
However, if you’re expanding into a new region and don’t have a registered entity there, an Employer of Record is the smarter option. It allows you to:
- Hire full-time employees legally without opening a local office
- Comply with tax and labor laws automatically
- Scale globally within days instead of months
For startups hiring in Africa, Betternship acts as your EOR partner, managing contracts, payroll, and compliance while you focus on building your team.
We’re already doing it successfully for companies like Vume, a gaming company hiring African tech talent through Betternship’s EOR service.
How Betternship Simplifies Hiring in Africa
At Betternship, we help startups and businesses expand globally without the administrative burden of setting up local entities.
Here’s how our EOR service works for international hiring:
- We onboard your selected talent in Nigeria or across Africa.
- Betternship becomes their legal employer, ensuring full compliance with local laws.
- We manage payroll, taxes, and statutory benefits while you retain operational control.
- You grow your global team, fast, safe, and stress-free.
Learn more on our How It Works page or Request a Callback to get started.
FAQs: Employer of Record vs Payroll Provider
- Is an Employer of Record the same as a Payroll Provider?
No. A Payroll Provider only manages salary payments, while an Employer of Record (EOR) acts as the legal employer, handling compliance, benefits, and contracts.
- When should I use an Employer of Record?
Use an EOR when hiring in countries where you don’t have a legal entity. It ensures full compliance with local labor laws and simplifies onboarding.
- When is a Payroll Provider enough?
If you already have a registered entity in the country and only need payroll management, a Payroll Provider is usually sufficient.
- Can Betternship act as both an EOR and a Payroll Provider?
Yes. Betternship primarily serves as an EOR in Africa, but can also manage payroll for companies that already have entities and need local payroll support.
Conclusion
Both Employer of Record and Payroll Providers play important roles in managing a global workforce, but they’re designed for different stages of growth.
At Betternship, we make global hiring simple. Whether you’re looking to expand into Africa or onboard remote talent seamlessly, we’ll help you do it legally, efficiently, and confidently.
Request a callback today to start building your global team.
💼 You can also post a job for free on Betternship