4 Frequently Asked Questions About EOR Services in Latin America

As more companies expand their teams into Latin America, the Employer of Record (EOR) model has become a valuable tool for hiring local talent faster and in full compliance with local regulations. While the concept is growing in popularity, many businesses still have questions—especially those considering this approach for the first time.

Here are five common questions that help clarify how EORs work in Latin America and why they matter.

1. What exactly does an EOR do?

An Employer of Record becomes the legal employer of a worker on behalf of another company. The EOR handles contracts, payroll, social security contributions, and labor law compliance, while the client company manages the employee’s day-to-day tasks. It’s a turnkey solution for legal and fast hiring abroad.

2. Is it legal to hire through an EOR in Latin America?

Yes. The EOR model is fully legal, as long as the provider is incorporated in the country where the hire takes place and operates under local regulations. In countries like Costa Rica, Mexico, Colombia, and Argentina, EORs allow international companies to remain compliant

3. How is an EOR different from an outsourcing provider?

   
   

Though they may seem similar, EORs and outsourcing serve different functions. Outsourcing delegates a business process or service (like customer support or IT) to a third party. An EOR, on the other hand, does not manage tasks—it enables legal employment of workers who report directly to the client company, while the EOR handles the legal framework.

4. Can I transition EOR-hired employees to my own payroll later on?

Yes. Many companies choose EOR as a temporary solution to launch operations quickly while completing the formal process of registering a legal entity. This approach allows hiring without administrative delays. Once the business is established locally, employees can be transitioned to the internal payroll—always in full compliance with labor law and with the proper legal support.

An EOR is more than an administrative shortcut—it’s a strategic entry point that offers legal security, flexibility, and speed. In Latin America, where labor regulations vary widely from country to country, partnering with a knowledgeable local expert makes a real difference.

Have questions about how an EOR model could work for your business?

Let’s talk. Our team can guide you through the best approach to expand into Latin America safely and efficiently.