Most companies using an Employer of Record assume termination is the EOR's problem to handle. Hand over the instruction, step back and let the process run. It is a reasonable assumption, but also wrong, and the consequences tend to be expensive. 

Here is what your business is actually responsible for when an employment relationship ends through an EOR, and how to make sure you are on the right side of it. 

The Setup: Who Owns What 

An EOR arrangement has three parties. You (the company), the employee, and the EOR sitting in between as the legal employer. The EOR holds the contract, runs payroll, and manages statutory obligations in whatever country the employee is based, while you direct the work. 

When it comes to ending that relationship, the EOR handles the mechanics. But the decision to terminate comes from you, and that distinction matters more than most people realise. 

Employment law in most countries doesn't care about the structure of your commercial arrangement. If the grounds for dismissal were thin, the documentation was missing, or the process was skipped, the liability traces back to whoever made the call. Courts are not interested in organisation charts. 

What You Are Actually Responsible For 

Notice periods

Every country sets a minimum, but many contracts go further. Telling an EOR to end someone's employment on the spot, without notice or pay in lieu, is not decisive management, it is a breach of contract. In Germany, notice periods scale with tenure and can reach up to seven months. In France, collective agreements can extend them even further.

Severance

In many countries, severance is not a goodwill gesture. It is a legal entitlement, and it is calculated whether you have budgeted for it or not. Spain's Workers' Statute sets severance at 20 days' salary per year of service for objective dismissals. In the Netherlands, almost every termination triggers a transition payment, regardless of the reason the employment ended. The EOR will process it, but the cost is yours. 

Documentation

This is where performance-based terminations tend to fall apart. Written warnings, a performance improvement plan, records of conversations and timelines. These are not judt bureaucratic overhead, in most jurisdictions they are a legal requirement before a dismissal can be considered fair. An Employment Tribunal in the UK will not ask where your headquarters is, it will ask whether the process was followed. 

Grounds for termination

You cannot instruct an EOR to let someone go without a valid, documented reason. Wrongful termination and constructive dismissal claims do not evaporate because a third party was nominally the employer. In France, every dismissal follows a formal procedure: a preliminary meeting, a mandatory reflection period, a written letter stating specific grounds. Miss a step and the whole thing is challengeable. 

Why the Country Always Changes the Calculation 

There is no standard playbook for international termination. The rules shift considerably depending on where the employee is based, and the gaps between jurisdictions can catch even experienced HR teams off guard. 

Three scenarios that play out more often than they should: 

A US company tells their EOR to let go of a sales hire in Spain, two weeks' notice, effective immediately. In Spain, that dismissal would almost certainly be classified as unfair, triggering compensation of 33 days' salary per year of service plus back pay for the notice period that was not properly served. 

A growing business in London restructures and asks their EOR to make a developer in Germany redundant. Without following Germany's Kündigungsschutzgesetz, the Protection Against Dismissal Act, which applies once a company has more than ten employees, the termination can be legally challenged and the employee may be entitled to reinstatement. 

A founder instructs their EOR to terminate a remote hire in the Netherlands for underperformance, no written warnings, no PIP. Dutch employment law requires either UWV permission or a court order before most terminations can proceed. Without it, the employee can apply to have the dismissal annulled. 

None of these are unusual situations. They are what happens when termination is treated as an administrative task in a country where it is a legal one. 

Where Things Tend to Go Wrong 

A few patterns show up repeatedly. 

Moving too fast

The decision is made on a Friday and the instruction arrives Monday morning. Notice review, severance calculations, documentation checks, all skipped in the rush. Speed is understandable in these moments, but it's rarely what the situation actually calls for.

No paper trail

Particularly for performance cases, the absence of written records is the most common source of wrongful dismissal exposure. If it was not documented, it is very difficult to defend. 

Getting the reason wrong

Framing a performance dismissal as redundancy, or the reverse, creates contradictions that are easy to challenge. The stated reason needs to match the process followed. 

Assuming the EOR takes on all the risk

The EOR manages the process and carries certain statutory liabilities. If the client company provided insufficient or inaccurate grounds, that exposure does not simply transfer across. 

How Swapp Agency Handles It 

When a termination instruction comes in, our starting point is always a compliance review. Grounds, documentation, notice entitlements, statutory severance obligations, all assessed against the specific rules of the country involved. We flag the risks before they become claims.

For clients working through a difficult employment situation, whether that is a performance issue, a restructure, or a role that has run its course, the most useful thing we can do is get involved early. We make sure every step is legally sound and fully compliant with local law, and we handle the process with care for everyone involved. That means both the company and the employee are protected, treated fairly and in line with their rights. Clean outcomes on both sides. 

This article is for informational purposes only and does not constitute legal advice. Employment law varies by jurisdiction and changes frequently.