Transitioning from a locally registered legal entity to an Employer of Record (EOR) model is a strategic decision for global companies seeking to reduce overhead, simplify compliance, and maintain international talent. While the move offers operational flexibility, it also involves important legal, financial, and employee-related considerations.
This guide breaks down the process into three key stages: planning the transition and closing the entity, executing the employee migration, and supporting employees post-onboarding. With clear guidance on each step, you’ll be equipped to make a confident and compliant transition to the EOR model.
How to transition from an entity to an EOR
Step 1: Close the entity
Ensure your entity is fully and compliantly shut down before initiating the EOR transition.
Action | Description |
Initial entity assessment | Review your entity’s legal structure, financials, and obligations to understand the requirements of winding down operations. |
Notify regulatory authorities | Inform tax, licensing, and regulatory bodies about your plan to dissolve the entity. Ensure deregistration where necessary. |
Employee management strategy | Determine the best approach for transitioning employees based on local labor laws – either via direct transfer or offboarding and re-onboarding. |
Financial settlements | Finalize payroll, clear debts, close accounts, and submit final tax filings. |
Step 2: Plan for the transition
Address these key considerations before moving employees to the EOR model.
Action | Description |
Contractual obligations | Review and, if needed, terminate or transfer contracts with vendors, landlords, or clients. |
Leave balance handling | Decide whether leave balances should be paid out or transferred to the EOR. In either case, employee consent and compliance are key. |
Severance and legacy start dates | Maintain continuity of employment for severance and tenure-based benefits by recognizing original hire dates where possible. |
Benefits and insurance | Ensure the new EOR-provided benefits meet local statutory requirements and closely match the previous coverage. |
Visa considerations | Determine whether existing visas can be transferred or if new ones need to be issued under the EOR entity. |
Contract reviews and updates | Create new locally compliant contracts between the employee and the EOR. Update clauses to reflect changes in job title or structure. |
Job title compliance | Adjust job titles where necessary. Note that titles such as CEO, Founder, or President cannot be hired through an EOR. |
Step 3: Execute the employee migration
Review the essential tasks involved in legally and efficiently onboarding employees to the EOR.
Action | Description |
Tri-party agreements | Where allowed by law, a tri-party agreement (you, the employee, and the EOR) may simplify the transfer process. |
Transition timeline and Gantt chart | Work with your EOR to develop a detailed project timeline covering document collection, onboarding, and activation. |
Dedicated support during onboarding | Ensure employees receive clear communication and hands-on support from a success manager throughout the transition. |
Document collection and verification | Collect all mandatory documentation such as IDs, tax details, and existing employment records ahead of onboarding. |
Step 4: Provide post-activation support
Ensure continuity and satisfaction with these post-transition support measures for your team.
Action | Description |
Employee satisfaction surveys | Collect feedback from employees on the transition process to identify concerns and improve future transitions. |
Support coverage across regions | Ensure your EOR offers 24/7 support across all regions (APAC, EMEA, NAMER) via email and chat. |
Service Level Agreements (SLAs) | Clarify response and resolution times for issues ranging from minor bugs to critical outages. |
Compliance monitoring and updates | Partner with an EOR that proactively monitors changing labor laws and updates policies accordingly to keep you compliant. |
Ongoing client support | Benefit from a dedicated customer success manager in your time zone, and access HR/legal/tax support as needed. |
Ready to make the switch?
Multiplier helps you simplify your move from an entity-based model to a flexible, compliant global employment structure. From legal and HR advisory to smooth employee onboarding and post-transition support, we’re with you every step of the way. Book a demo to get started
