Equity for EOR employees: can they receive stock options?

Yes — employees hired through an Employer of Record can receive equity or equity-like incentives, with the right structure in place. Emerald Technology and AAB work together to help high-growth companies offer stock options, phantom equity, and other reward structures to international employees compliantly.
Talk to a specialist
Countries
0
Hires per year
0 +
Client retention
0 %
Emerald Equity Hero Tight Crop V2

Can EOR employees receive equity or stock options?

Yes. An Employer of Record (EOR) is a third party that legally employs your international team on your behalf, handling payroll, tax, and compliance so you don’t need a local entity. Equity participation for these employees is possible, but it sits outside the standard employee share scheme most companies already have in place.

The complication is structural, not conceptual. Your EOR employee’s legal employer is the EOR, not your company. Most tax-advantaged option plans — UK EMI schemes, US ISOs — are built around a direct employer-employee relationship, and granting into them without adjustment can create eligibility problems, unexpected tax charges, and questions about whether the arrangement inadvertently creates an employment relationship between the worker and your company. None of that makes it impossible — it means the plan has to be built with EOR workers in mind from the start.

Emerald Equity with AAB

Download the AAB Equity for EOR Employees Checklist

Why equity matters for your international team

Attract top talent

Attract top talent

Compete with local employers by offering ownership alongside salary, even when your best candidate is hired through an EOR rather than a local entity.

Retain key employees

Retain key employees

Align long-term incentives with company growth, giving international hires the same retention lever as your domestic team.

Reward globally, consistently

Reward globally, consistently

Make sure international employees aren't excluded from the value creation your reward strategy is built around, wherever they're hired.

Get started
Small green dotted arrow going up and right

Download the AAB Equity for EOR Employees Checklist

Whether you're considering stock options or alternative incentive plans, the checklist highlights the key legal, tax and compliance considerations for offering equity to employees hired through an Employer of Record.

Download checklist
Equity as EOR employee

What changes when your employee is hired through an EOR

Offering equity to an EOR employee follows the same principles as a standard grant, but several things work differently in practice:

  • Standard option plans are often built for direct employees — an EOR employee may need a non-employee or unapproved option plan instead
  • Local payroll and tax treatment are usually straightforward for a direct employee — an EOR employee’s award needs a cross-border tax review covering both home and host country
  • A direct employee’s tax position is generally well established under the local plan — an EOR employee’s grant can trigger country-specific tax charges, including an accelerated charge at grant in some cases
  • Standard plan rules and a single award agreement usually cover a direct employee — an EOR employee typically needs bespoke documentation aligned to the EOR employment framework
  • Employment status isn’t a consideration for a direct employee — for an EOR employee, it has to be confirmed that equity participation doesn’t create an employment relationship with your company

In partnership with AAB

Emerald Technology employs your international team compliantly. AAB brings the specialist legal, tax and reward expertise that equity for EOR employees requires — global employment tax and cross-border compliance advice that goes beyond what an EOR relationship alone can cover.

Aab Logo

How Emerald and AAB help

01.

01. Governance and employment status review

AAB checks your constitutional and investor documents to confirm equity can legally be issued to a non-employee, and Emerald and AAB jointly confirm that offering equity doesn’t create an employment relationship between the worker and your company.

02.

02. Structure and documentation

Where a standard option plan won’t work, AAB advises on the right alternative — a non-employee option plan, or a cash-settled structure such as phantom equity or an exit-linked bonus — and drafts the award documentation. Emerald stores the signed version in the employee’s platform record.

03.

03. Tax, social security and accounting sign-off

AAB confirms tax treatment at grant, vesting and exercise in both home and host country, and who is responsible for filing and withholding.

Talk to Emerald and AAB about equity for your EOR team

If you’re planning to offer equity or phantom equity to an employee hired through an EOR, get the structure right before you make the offer. Emerald and AAB will review your situation together and tell you plainly what’s feasible, what isn’t, and what it will take.

Talk to a specialist

Direct employees vs EOR employees: what changes

Direct employeeEOR employee
Option planStandard employee option planMay require a non-employee or unapproved option plan
PayrollLocal payroll, single jurisdictionCross-border tax review, home and host country
Tax treatmentGenerally well-established for the local planCountry-specific analysis, often including accelerated or "dry" tax charges at grant
DocumentationStandard plan rules and award agreementBespoke documentation aligned to the EOR employment framework
Employment status riskNot applicableMust be reviewed to confirm equity doesn't create an employment relationship with the end client

Frequently asked questions

Do you need some help or do you have some questions on some features?

Yes, in many cases, but usually through a non-employee or unapproved option plan rather than the standard scheme offered to direct employees. Whether it’s feasible depends on your constitutional documents, board and investor approvals, and the tax and securities rules in the employee’s home and host country.

An employee stock ownership plan (ESOP) or standard option pool is typically designed around direct employees in a single jurisdiction. International employees hired through an EOR usually need a separate, non-employee plan structure rather than direct inclusion in the existing ESOP, to avoid prejudicing the tax-advantaged status of the plan for your direct employees.

Phantom equity is a cash-settled incentive that mirrors the value of company shares without actually transferring ownership. It’s often used as an alternative for EOR employees when a direct option grant isn’t feasible, paying out on vesting, exit, or another defined trigger, based on the value of the underlying shares.

This depends on the structure, the home and host country, and which party — the parent company or the EOR — is responsible for filing and withholding. AAB assesses the relevant taxing points at grant, vesting, exercise and settlement in both jurisdictions before any award is made, so there are no surprises for you or the employee.

It can, if it’s not structured carefully. A core part of the governance review is confirming that equity participation doesn’t create a direct employment relationship between the worker and your company, which would undermine the purpose of the EOR arrangement. This is checked before any award is made, not after.

VC and PE-backed companies typically have additional constraints — dilution caps, option pool limits, and investor consent requirements for issuing new equity. AAB reviews these alongside your existing constitutional and investor documents as part of the governance and eligibility review, so any award to an EOR employee has the right approvals before it’s offered.

Have more questions?

Get in touch with us and one of our team will help answer your question

Speak to the experts

Other solutions to help you Employer of Record

Immigration And Visits Icon White

Immigration and Visas

Our Employer of Record and global employment solutions allow you to confidently and effectively manage a global workforce, including hiring the best talent and expanding into new territories quickly and flexibly.
Discover more
Contractor Conversion Icon White

Contractor Conversion

Convert your contractors into full-time employees, helping your business to build a strong company culture, onboard the best talent, minimise risk, and provide added security. Discover how our contractor conversion services can help to reduce costs and streamline workflows throughout your business.
Discover more
Compliance Icon White

Compliance

Ensure your business remains protected when moving into new international markets, with our team ensuring all legislative requirements are understood, and the proper processes and implementations are in place. Explore how our international compliance team can help reduce costs, increase protection and ensure success.
Discover more
Benefits Icon White

Benefits

Implementing a bespoke and compliant hiring strategy will help to ensure the success of your international hiring efforts and provide your employees with global benefits they won’t receive anywhere else. These benefits will help to retain staff and attract the best talent from across the world.
Discover more

Useful resources and tools

Employee Cost Image@2x 1.webp

Employee Cost Calculator

Utilise our employee cost calculator to explore the costs of international expansion by comparing and exploring the details around international hiring with a comprehensive price breakdown.
Hiring Guides@2x

Hiring Guides

Access comprehensive hiring guides for different regions, industries and roles. Understand local employment laws and market trends to hire the best talent efficiently.

Latest from the blog

View all blogs
Ready to streamline your workforce management and revolutionise your recruitment processes?
Get started
Emerald Logo White

Global Talent Acquisition and Employer of Record (EOR) for Pre-IPO and Private Equity backed technology businesses.

X-twitter Linkedin

Stay up to date with global best practices.

Newsletter Signup

Iso 27001
Soc2

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.