An Employer of Record service is a service to employ employees on behalf of a client. An employer of record is also known as an umbrella company. The Employer of Record service provider takes the employees on their payroll and takes care of payment, taxes and insurances, while client and employees work together as usual. The client pays a fee for the Employer of Record service, plus the costs of employment.

The clients may choose to use Employer of Record services for various reasons. They may be a start-up without an HR or payroll department, so they choose to outsource these functions completely. They may be a foreign company that has a project or an expansion in a new country.  To comply with local regulations, they need to employ their staff within that country. Instead of setting up a new entity for themselves, they may use the infrastructure offered by the Employer of Record the Netherlands service provider (or umbrella company).