Employer of Record (EOR): flexible international employment, but with Belgian limitations

What is an EOR?

An EOR is an external service provider that acts as the legal employer of workers in a foreign country, while those workers are, in practice, managed by another company. The EOR assumes the formal employer obligations, such as payroll administration, contract management, social security filings and tax compliance.

Operational management, instructions and day-to-day supervision remain with the client company. This allows businesses to employ staff in countries where they are not registered as an employer or do not have a local presence.

For companies looking to hire international talent quickly and flexibly without the cost and administrative burden of setting up a local legal entity, this model offers an efficient solution.

EOR as a driver of cross-border employment

The EOR model is experiencing strong global growth. Demand for flexible workforce solutions is increasing, as is the need for international employment without complex legal structures.

Companies increasingly rely on EOR providers when they want to employ workers in countries where they do not yet have a legal presence. The model allows businesses to hire staff in compliance with local legislation without having to wait months for registrations, permits or the establishment of a local entity.

Its speed and simplicity make the EOR model particularly attractive for companies expanding internationally, operating on a project basis or needing to respond quickly to market opportunities.

EOR in Belgium: a legal vacuum

Although EOR services are becoming increasingly important worldwide, the Belgian legal framework remains underdeveloped. There is currently no legal framework recognising or regulating EOR structures. As a result, there is a lack of legal certainty for both EOR providers and employers wishing to use the model.

The federal coalition agreement of the De Wever government announced plans to introduce legislation on EOR arrangements. However, this has not yet resulted in concrete regulation. For now, these policy intentions remain without legal implementation.

This cautious approach is no coincidence. Belgian labour law faces a structural issue when it comes to EOR models: the link between legal employment and actual managerial authority.

Managerial authority as the core issue

Belgian labour law is based on a strict principle: the party authorised to give instructions and exercise authority must also be the legal employer.

This principle of managerial authority forms the basis of the prohibition on the unlawful hiring-out of employees. A worker may not, in practice, be placed under the authority of a company other than their legal employer, unless a specific legal exception applies, such as temporary agency work.

This is exactly where the issue arises within an EOR structure:

• formal employer: the EOR provider;

• actual authority: the company using the employee’s services.

Under Belgian law, this is considered a form of prohibited employee lending because day-to-day employer authority is transferred to a party that is not the legal employer.

The consequences of non-compliance can be significant:

• social security corrections and administrative sanctions;

• criminal prosecution;

• civil liability;

• reputational damage.

This makes the use of the EOR model in Belgium particularly risky when the structure does not fall within a legal exception.

Conclusion

Worldwide, the EOR model is becoming an important solution for fast and flexible international employment. In Belgium, however, it conflicts with the prohibition on employee lending and the principle that legal and actual employer authority cannot be separated.

As a result, Belgium remains a complex environment for EOR services. Clear and modern legislation is needed to provide businesses with legal certainty and to keep pace with the international market.