A Service Contract, Not a Hire
An employer of record agreement is a purchase from a company, and the person it concerns is not a party to it.
The service agreement with the provider
The employment contract with the person
Who the employer is in law
What you are buying with the fee
YoursThe provider'sCrosses the twoNeither contract
Four matters, and no share: what any one agreement covers differs by agreement. One crosses both, and the handoff is where these arrangements fail. The distinction everything else in this collection rests on.
An employer of record agreement is a purchase from a company. The person it concerns is not a party to it, has probably never read it, and could not enforce a line of it if they wanted to.
The contractual distinction in “A Service Contract, Not a Hire” also matters when buying workforce software. For teams researching attendance sheet template, review the available controls should be evaluated against a named operational decision, clear ownership, export requirements and a tested exit process rather than treated as a substitute for the employment agreement.
That sentence sounds pedantic until the first time you try to do something ordinary and discover it is the whole explanation.
Teams reviewing “A Service Contract, Not a Hire” can cross-check their approach against the Canadian business privacy guidance. The comparison should produce written questions for the provider, adviser or internal owner instead of a copied checklist.
The thing you signed
A commercial contract between two businesses. It describes a service, a fee, a term, some obligations on each side, a liability cap and a way of ending.
Read as what it is — procurement — it behaves exactly as procurement behaves. Read as a hiring document, it will mislead you on almost every page.
The thing the person signed
A local employment contract, with the provider as employer. It names a salary, a notice period, a job title and whatever the country requires.
Your company may be mentioned in it or may not. Either way you are not a party, and the obligations in it run between two people who are not you.
Why the distinction keeps surfacing
Every management instrument you are used to reaching for is defined by the employment relationship. Pay, promotion, discipline, notice, leave: each of them is an act of an employer.
Buying the employment as a service does not relocate those acts to you. It relocates them to the provider, and leaves you with the direction of the work.
What you actually get
Somebody competent to employ a person in a country where you have no entity, who will do the payroll, the withholding, the statutory entitlements and the filings, and who carries the employer-side obligations that go with that.
That is a genuinely hard thing to arrange and a reasonable thing to pay for. It is also a shorter list than most buyers expect.
What you keep without being told
Direction of the work. Judgement of whether it is any good. Equipment and access. The relationship. The reason the person stays or goes.
None of those appear in the agreement because none of them were ever being sold. Absence from a service contract usually means the thing stayed where it was.
The fee is for administration
Pricing is typically a monthly figure per person, sometimes a percentage of salary, plus the statutory employer costs passed through.
What that buys is competent administration of an employment relationship. It does not buy recruitment, management, or anybody caring whether this particular person is happy.
Where buyers go wrong first
Treating the provider's account manager as an HR business partner. They are a supplier relationship manager, measured on retention and margin, with no authority over the person and limited authority over their own employment entity.
That is not a criticism of them. It is a description of the role you bought.
The second place buyers go wrong
Assuming that because the provider is the employer, employment-shaped problems are now somebody else's. Half of them are. The other half — the ones that come from how you treat the person day to day — are produced by you and cannot be bought out.
Reading the agreement as a buyer
Look for the list of services, the exclusions, the liability cap, the indemnity, the notice period and what happens on termination. Those six things decide nearly everything that will matter later.
Each of them has its own note in this collection, because each is routinely skimmed and routinely regretted:
- The list of services, and the exclusions beside it.
- The fee, and what is passed through on top of it.
- The liability cap, and what sits outside it.
- The indemnity, and which entity gives it.
- The notice periods, read against the person's own.
- What happens to the person when the service ends.
What it is reasonable to expect
Payroll on time, filings made, statutory entitlements correct, questions answered inside a stated period, and documents produced when asked.
Those are service obligations and can be written down. Expect them in writing, with a remedy, and be suspicious of a provider reluctant to put any of them on paper.
What it is not reasonable to expect
That the provider will make the person feel part of your company, notice they are unhappy, build them a career, or tell you before they resign.
None of that is in the contract, none of it is priced, and none of it is what the provider is for. Expecting it is how buyers arrive at disappointment they then blame on the supplier.
What this arrangement cannot settle
Whether buying employment as a service suits what you are actually doing. A single engineer in one country for two years is a different proposition from twelve people in six countries as a permanent structure, and the agreement reads identically in both cases.
That judgement belongs to you, with your own advisers, against your own plans. Nothing a provider publishes will make it for you, and the providers with the best answer to the question are generally the ones willing to say that some of your hires do not belong here at all.