Cleobase

Global hiring through an Employer-of-Record (EoR) partner has become an essential strategy for companies expanding internationally. While EoRs simplify payroll, compliance, and benefits, many clients report frustration with opaque billing, unexpected charges, and confusing invoices.

This guide will help you identify hidden costs, understand "normal" charges, and ask the right questions to ensure full transparency before signing a contract.

Most Common EoR Pricing Components

1. EoR Service Fee

Most providers charge a monthly fee for their services, typically structured in one of two ways:

Flat Fees: A fixed rate per employee (e.g., $300–$1,000+ USD/month).
Percentage of Payroll: A commission based on gross salary (commonly 8–20%).

2. Statutory Employer Costs & Benefits

When hiring abroad, you must pay contributions on top of the gross salary. These include social security, pensions, health insurance, and unemployment insurance.

A major transparency issue is whether the advertised price includes these mandatory costs. Many EoRs market a low "service fee" but treat statutory contributions as "pass-through" costs billed separately. While these are technically the employer's obligation, they can drastically impact your budget if not communicated clearly.

Example (High Burden): In France or Germany, employer contributions can add 30–40% to the gross salary.
Example (Moderate Burden): In India, contributions like Provident Fund and Gratuity are usually under 15%, but still represent a significant add-on.

3. Onboarding & Setup Fees

Don't assume the monthly rate covers everything from day one. Many providers charge one-time fees for contract generation, local registrations, or background checks.

Pro Tip: Negotiating these fees is often possible, especially if you are onboarding multiple employees at once.
Ask: "Are there one-time setup charges per hire or per country? If you advertise 'no setup fees,' does that apply to every new employee?"

4. Termination & Offboarding Fees

In countries with strong labor protections (e.g., France, Brazil, or India), offboarding is costlier due to legal payouts. You should expect to pay actual statutory costs (like severance), but be wary of excessive "processing fees" charged by the EoR for the administrative work of termination.

5. Currency Exchange (FX) Costs

Many EoRs charge a markup (2% to 10%) on foreign exchange transactions when paying employees in local currencies. To avoid monthly fluctuations:

Best Practice: Agree on a conversion rate baseline at the start of the contract based on annual trends. This ensures predictable invoicing for the duration of the contract.

6. Security Deposits & Retainers

Most EoRs require a security deposit to hedge against the risk of unpaid wages or severance. This is usually calculated based on notice periods and local labor laws. While refundable, it increases your initial cash outlay.

Ask: "What is the required upfront deposit, how is it calculated, and what are the specific terms for its return?"

Why Do Billing Surprises Happen?

If these costs are standard, why aren't they always clear? Usually, it comes down to four factors:

Sales Focus on Simplicity: Reps often emphasize a "simple flat rate" to close deals, burying the complex "extra" charges in the fine print.
Variable Country Costs: Because statutory taxes and FX rates fluctuate, some EoRs avoid giving "all-in" quotes. However, a good provider should still provide a reliable estimate.
Intentional Opaqueness: Some providers hide margins in FX markups or "administration fees" on bonuses, hoping the client won't notice the discrepancy.
The Knowledge Gap: Founders may not be aware of local nuances like 13th-month bonuses or gratuity funds. A transparent EoR will educate you on these local requirements rather than letting you discover them on your first invoice.

How to Protect Your Company from Billing Surprises

Demand Itemized Quotes: A reputable EoR must provide a line-item breakdown for every cost, from taxes to service fees.
Benchmark Against Market Data: If a fee seems too low, they are likely making up the margin elsewhere.
Insert Transparency Clauses: Ensure your contract mandates clear line-item billing and defines the FX rates to be used.
Perform Quarterly Reviews: Have your finance team audit invoices against the contract terms every three months to catch "fee creep."

Conclusion

Billing transparency is not just good practice. It's essential for budgeting, trust, and strategic planning when working with an Employer-of-Record provider. By understanding common cost components, recognizing where transparency breaks down, and asking the right questions early, you can avoid surprise invoices and ensure fair treatment.

The good news is that industry standards are improving. Many leading EoR providers now recognize that long-term relationships depend on upfront honesty. They offer clear, country-specific cost breakdowns and tools such as calculators or sample invoices to help clients plan.

If you find a provider that operates this way, you're far less likely to encounter an "Oh, by the way, there's an extra charge for that" moment a few months into the relationship.