What is an EOR?
Why rely on an EOR?
Impact of Belgian Employee Lending Act
What are the options for EORs?
EORs act as service providers
Consequences of violating the Employee Lending Act


Since the covid-19 pandemic, hybrid working models have become the "new normal". Although this development has undoubtedly triggered challenges for employers, it has also created opportunities. The pool of candidates for filling an open vacancy has expanded substantially as nothing impedes an employer from "crossing the border" to find the most suitable employee-candidate and vice versa.

Besides the social security and tax consequences that such a setup might trigger, foreign employers are suddenly also faced with employment legislation that they are not familiar with. To overcome this situation, foreign employers are increasingly relying on the services of an employer of record (EOR).

While doing so is legally permitted in many countries, EORs active in Belgium as well as the employers relying on the services of such an EOR should be aware of the restrictions under the Belgian Employee Lending Act.(1)

What is an EOR?

An EOR is a concept that is not legally defined in Belgium. In general, an EOR is understood as a company that takes up the role of the legal employer on behalf of a client. The EOR ensures compliance with any and all relevant employment, immigration, tax and social security obligations on the client's behalf.

An individual enters an employment contract with the EOR (the legal employer or the registered employer) but executes work in favour of the client (the factual employer). The EOR takes care of all administrative paperwork, the payment of the employee's salary, the payment of social security contributions and tax withholding, among other things. In exchange, the client pays a fee to the EOR.

Why rely on an EOR?

There are multiple reasons why a (typically foreign) employer relies on a locally established EOR. It might be, for example, that a current employee relocates from the country where the employer is based to a foreign country. An employer who is keen to retain such an employee may then choose to rely on an EOR. The same applies when an employer finds a suitable candidate for a job in a foreign country.

In such a scenario, foreign employers often call upon the services of an EOR in countries where a local (corporate) presence is required to employ employees. In Belgium, no such requirement applies. There is no need for a foreign employer to establish a legal entity, a branch or a rep office before employing employees on Belgian territory.

Another important reason why foreign employers rely on an EOR is because the EOR takes over all administrative formalities and obligations triggered by employment on Belgian territory. The foreign employer does not need to register with the Belgian tax and social security administrations and is not responsible for a smooth payroll process. Even more importantly, the foreign employer does not have to invest in becoming familiar with the often complex and stringent rules of Belgian employment law.

At first sight, using an EOR seems to have only advantages for an employer: why invest time and money in developing local Belgian employment law expertise if this can simply be avoided by the intervention of an EOR who also takes over the role of the local HR manager?

Impact of Belgian Employee Lending Act

Under the Belgian Employee Lending Act, "employee lending" is defined as the situation in which an employer allows a third-party user to use the services of one or more of its employees in which the authority normally vested in the employer is (partly) exercised by such a third-party user.

Apart from some exceptions, the Employee Lending Act prohibits a user from giving any instructions that qualify as "exercising part of the authority vested in the employer". Whether an employer's authority is being (partly) exercised by a third-party user will in practice appear from a number of factual elements, such as:

  • the fact that the employee must obtain approval from the user to take holidays;
  • the obligation for the employee to report any absences to the user;
  • the fact that the user has the opportunity to impose disciplinary penalties upon the employee; and
  • the user's decision-making power to decide on salary increases.

When an EOR puts an individual at the disposal of a client (ie, a foreign employer), this foreign employer may not treat such an individual as its own employee and exercise employer's authority. This restriction raises questions about how an EOR can set up a valid staffing solution on Belgian territory.

What are the options for EORs?

The EOR obtains a recognition as an "interim agency". Interim work covers the situation in which a company calls upon the services of a recognised interim agency. The interim agency puts a temporary interim worker, who is formally employed by the interim agency, at its client's disposal.

Interim work is an exception to the general employee lending prohibition as the user is legally allowed to exercise part of the employer's authority vested in the employer. However, it is worth noting that the use of an interim worker is only permitted for a limited number of reasons as set out by law (the temporary replacement of a permanent employee, a temporary increase in work, the performance of exceptional work and on the basis of "inflow").

Therefore, an EOR could consider positioning itself on the Belgian market as an interim agency. To do so, the EOR first has to go through an administrative procedure and meet certain requirements to obtain recognition as an interim agency.

EORs act as service providers

The way in which the legal prohibition on employee lending is often dealt with is by entering into a service agreement between an EOR as the service provider and a third-party user, who is in need of certain services, as the service user. The scope of such a service agreement is to provide a certain and actual service.

Such a service agreement must be in writing and must clearly list in detail the exact instructions that the third-party user can give to the employee(s) of the service provider. Such instructions can only be of a functional and operational nature and are thus related to the way the services need to be supplied. Instructions regarding wellbeing at work (health and safety) are always allowed.

The actual implementation of the written service agreement must be fully consistent with the service agreement's express written provisions.

Even then, the essential employer's authority should always remain with the service provider.

Consequences of violating Employee Lending Act

A violation of the general employee lending prohibition or a violation of the rules applying to interim agencies and their users may trigger substantial risks and liabilities, both from a civil law as well as a criminal law perspective.

For further information on this topic please contact Emma Van Caenegem at ALTIUS by telephone (+32 2 426 1414) or email ([email protected]). The ALTIUS website can be accessed at


(1) Employee Lending Act of 24 July 1987.