EOR vs Outsourced Payroll: Knowing the Difference Before You Make the Call
Written By: Siyacela Ntsevu
In the world of workforce management—especially across the diverse African continent—one of the most common missteps we see at Employ Africa is clients approaching us for payroll services in a country where they don’t actually have a legal entity. That’s like trying to drive a car without a licence—technically possible but not legal or advisable.
Often, what these clients really need is not a payroll solution, but an Employer of Record (EOR). Both EOR and outsourced payroll are powerful solutions, but they serve very different business needs. Understanding this difference is crucial, especially when expanding across borders.
Let’s break it down clearly.
WHAT IS AN EMPLOYER OF RECORD (EOR)?
Definition
An Employer of Record (EOR) is a third-party organisation—like Employ Africa—that legally employs your workforce on your behalf. We take on all the employer responsibilities in a specific country so you don’t have to establish your own entity there.
Who Needs This Service?
- Companies looking to expand into new markets without setting up a local entity.
- Project-based businesses operating across multiple African countries.
- Organisations hiring remote employees in jurisdictions where they have no legal presence.
- Start-ups and multinationals needing a low-risk, cost-effective entry strategy into African markets.
What It Entails with Employ Africa
- Compliant employee onboarding
- Employment contracts tailored to local labour law
- Payroll and tax compliance (statutory deductions, net payments, payslips)
- HR and industrial relations support (contract queries, extensions, etc.)
- Labour and tax law guidance
Think of it as your business passport to Africa—legal, compliant, and stress-free.
Key Benefits
- No need for a local entity
- Rapid market entry
- Mitigated compliance risk
- Full local HR support
- Flexible, scalable workforce management
An example that comes to mind is that of an Oil and Gas firm from a European country needed staff in Angola but had no presence there. They approached us for payroll. We said, “Mate, you need EOR.” We now employ their team, pay them, file taxes, and answer their HR queries—while the client focuses on coding.
WHAT IS OUTSOURCED PAYROLL?
Definition
Outsourced payroll means you already have a legal entity in a country, but prefer to hand over the technical and administrative aspects of payroll processing to a specialist provider—like us.
Who Needs This Service?
- Larger corporations with legal presence across multiple jurisdictions.
- Businesses looking to streamline their payroll operations, reduce internal admin and avoid tax submission errors.
- Companies wanting access to cutting-edge payroll technology and compliance expertise.
What It Entails with Employ Africa
- Payroll implementation & setup
- Parallel runs for accuracy
- Monthly payroll processing
- Statutory submissions (e.g. PAYE, UIF)
- Annual returns (e.g. EMP501, IRP5)
- Net salary payments
- Third-party provider admin (e.g. pension, garnishees)
Key Benefits
- Payroll accuracy and compliance
- Tech-driven reporting & automation
- Cost-effective and scalable
- Peace of mind for HR teams
In short, it’s ideal for companies who’ve already put down roots, but want to stop pulling their hair out every time SARS or NSSF knocks.
A Few Things to Note
- We’re based in South Africa, but we’re not boxed in by it. Employ Africa delivers EOR and payroll services in over 40 countries across Africa, supported by a global client service team.
- Tech & Security Matter. Our payroll and HR solutions are backed by ISO-certified technology platforms (ISO 9001:2015 | ISO27001:2013). In other words, your data is as safe as a lion in a fenced reserve.
- The Big Misconception. Clients often assume “I need payroll” when they don’t have a local company set up. No legal entity = no employer status = you need EOR.
- Size Matters.
- EOR is perfect for companies testing new markets or managing employees abroad.
- Outsourced Payroll shines when managing large, complex multi-country payrolls.
- We Offer Both—Beautifully. Employ Africa is uniquely positioned to advise and deliver the right model (or a hybrid of both). We’re not selling you a service, we’re offering a solution that works.
So the next time you’re planning to hire in Nigeria, Kenya, or Madagascar, ask yourself: “Do I have an entity there?”
If the answer is no, call us for EOR.
If the answer is yes, outsource that payroll to the experts.
Either way, we’ve got you covered—from Cape Town to Cairo.
And remember: in Africa, local know-how isn’t a luxury—it’s a necessity. That’s where we shine.
