An Employer of Record (EOR) is a provider whose local entity becomes the legal employer of your staff. It issues the contract, sponsors the visa, runs payroll and social insurance, and invoices you each month. You direct the day-to-day work. The alternative is to set up your own entity: a mainland or free-zone company in the UAE, or a foreign-owned company licensed by the Ministry of Investment in Saudi Arabia.
When an EOR is usually the better fit
- You’re testing a market with one to ten hires and might pull back within 18 months.
- You need someone on the ground within weeks, not the months it can take to license an entity, open a bank account and register with every authority.
- Your local team doesn’t sell or sign contracts locally. They do engineering, support, partnerships or business development.
- You want one invoice that covers payroll, GOSI or GPSSA, medical insurance and visas.
When your own entity wins
- Headcount and cost. EOR fees are typically charged per employee per month. Past a certain headcount, the fixed cost of an entity and in-house or outsourced payroll is lower. Model it for your own numbers.
- Local revenue. Invoicing local customers, bidding for government work or holding licences requires your own commercial registration.
- Saudization and Emiratisation. If you’ll eventually need nationals on your own payroll, for government contracts or regional headquarters status, it can help to build the quota inside your own entity early.
- Control. Equity plans, bespoke benefits and your own policies are easier to run when you are the employer.
What to check in an EOR contract
- Whose entity, and is it owned? Some EORs own their local entity; others subcontract to a local partner. Ask which applies in each country you need.
- End-of-service liability. Gratuity accrues every month. Make sure the fee or a deposit covers it, and that the contract says what happens to the accrued amount if you move the employee to your own entity. Estimate it with the UAE or Saudi calculators.
- Deposit and notice. Most EORs ask for a deposit of one to three months’ employment cost. Check the termination notice period on both sides.
- Visa and medical costs. Find out whether they’re included, passed through at cost or marked up.
- Termination support. Who handles a dispute at the labour court or MOHRE? Who pays any award?
- IP assignment. The employment contract must assign intellectual property onward to you. A clean chain matters at your next funding round.
Compare providers in the EOR directory, and see each country guide for the contribution rates that will appear on your invoice.
Frequently asked questions
Can an Employer of Record sponsor visas in Saudi Arabia and the UAE?
Yes, as the legal employer, the EOR's local entity sponsors the work visa and residence permit (iqama in Saudi Arabia, Emirates ID and residence visa in the UAE). Check how many visas the EOR's entity can still issue, and how long processing takes, before you commit to a start date.
Does an EOR employee count toward my Saudization quota?
The employee is on the EOR's payroll, so they count toward the EOR entity's Nitaqat band, not yours. If you later open your own Saudi entity and transfer staff, you'll need your own Saudization plan from day one.
Is using an EOR legal for long-term hires?
EOR arrangements are widely used in the GCC. Some activities still require a local licence, such as selling to the government, signing contracts locally or holding stock. An EOR employs your people; it does not let your foreign company trade in the country.