What is contract novation, and what carries across

Novation transfers an existing employment contract from one employer to another on a single date, instead of terminating it and signing a new one. Where local law allows, continuous service, accrued leave and benefits carry across with it. What transfers is country specific, so Teamed confirms it per jurisdiction before the date is set rather than promising it everywhere.

Who runs the transition

People, not a workflow. The specialists who handled your EOR employment in that country stand up the entity, file the employer registrations, move payroll across and stay on the account afterwards. Teamed treats the move as a stage of the employment lifecycle rather than an offboarding.

Does graduating cost anything

Entity formation is a scoped project fee and entity management is a monthly fee, both quoted against your country mix and headcount. Teamed does not charge a fee for leaving the Employer of Record itself, aside from statutory payments that local law requires and that go to the employee.

What happens if the crossover never arrives

Nothing changes, and that is a legitimate outcome. Plenty of countries never carry enough headcount for an entity to make sense, and an Employer of Record stays the right structure there indefinitely. The model is about being in the right structure, not about moving through all three stages.

Can you move back to an EOR after forming an entity

Yes, and it happens when a market shrinks or a restructure closes a team. Because both structures run on the same system, moving back is the same kind of transition as moving forward. The entity can be wound down separately once employment has moved.

THE GRADUATION MODEL

The Graduation Model, when to move from an EOR to your own entity

An Employer of Record is the right structure for a first hire in a new country, until it is not. The Graduation Model is how Teamed works out when that changes, and moves you without anyone re-onboarding.

Model your crossover

Three doorways in a row, each more solid than the last, with one unbroken path running through all three.

When should you move from an EOR to your own entity?

When your own entity in a country costs less than the EOR fees you pay there. Teamed calls that move the Graduation Model, and monitors the threshold for you.

What is the Graduation Model?

The Graduation Model is the three stage progression Teamed supports for an international team. You start with contractors, move to an Employer of Record when a working relationship looks like employment, and move again to your own legal entity when the numbers in that country justify it. All three run on one system, so nobody re-onboards at a transition and employment records carry across where local law allows.

The point of naming it is the second move. An Employer of Record is the right structure for a first hire in a new country, until it is not, and your provider is usually the first to see when that changes. Teamed models the threshold country by country, watches headcount against it, and starts the conversation. Most providers have no reason to.

THE THREE STAGES

One system, three structures

The stages are structures, not tiers. Plenty of teams sit in two of them at once, in different countries, and that is the point of running all three in one place.

Stage one
Contractors
You engage people who run their own businesses, on contracts written for the country they work in, paid without FX markup.
Fits while the work is genuinely project shaped and the relationship would survive a classification test.
Stage two
Employer of Record
Teamed employs the person through its own entity or a vetted partner entity, and you direct the work. Payroll, benefits and statutory filings run underneath.
Fits from a first hire in a new country, and for as long as your headcount there sits below the crossover.
Stage three
Your own entity
You become the legal employer. Teamed forms the entity, registers it, and keeps running payroll and compliance for you if you want that.
Fits once the entity costs less than the EOR fees in that country, or when policy requires you to be the employer.

CrossoverA planning point between stage two and stage three, not a cut off. It moves with your own salaries, statutory costs and headcount, so Teamed models it country by country rather than quoting one number.

WHAT ACTUALLY HAPPENS

The move itself

The mechanic is contract novation. Your employment contracts transfer from the Teamed entity to your new one on a single date, rather than ending and restarting. Where local law allows, continuous service carries across with them, which matters more than it sounds. In Spain the antiguedad date is the basis of the statutory severance calculation. In Qatar it drives end of service gratuity. In France, health and provident cover moves without a lapse.

This is run by people, not by a button. The same specialists who handled your EOR employment in that country stand up the entity, file the registrations, and stay on the account afterwards. Teamed sets the entity up in 100+ countries, and the usual span from decision to first payroll is four to eight weeks.

Key facts

Lifecycle: One systemContractors, EOR and your own entity, with no re-onboarding between themSource: Teamed Platform· verified 2026-09-05
EOR reach: 187+ countriesTeamed owned entities plus vetted partner entitiesSource: Teamed coverage· verified 2026-09-05
Entity formation: 100+ countriesIncorporation, registrations and ongoing employment operationsSource: Teamed GEMO· verified 2026-09-05
Decision to first payroll: Four to eight weeksTypical span for entity formation, before country specific variationSource: Teamed GEMO delivery· verified 2026-09-05
Crossover contact: 5 business daysAccount manager contact after a country crosses its modelled thresholdSource: Teamed Proactive Advisory policy· verified 2026-09-05

Where to go next

Crossover Calculator for the number in your own country, at your own headcount.
The EOR crossover point for when an Employer of Record stops being the cheaper answer.
EOR versus entity costs for the full cost comparison and where the numbers flip.
Entity setup and management for what Teamed actually does once you own the entity.
Providers scored on the path to your own entity for how the market compares on this specific move.

Questions people ask about graduating

What is contract novation, and what carries across
Novation transfers an existing employment contract from one employer to another on a single date, instead of terminating it and signing a new one. Where local law allows, continuous service, accrued leave and benefits carry across with it. What transfers is country specific, so Teamed confirms it per jurisdiction before the date is set rather than promising it everywhere.
Who runs the transition
People, not a workflow. The specialists who handled your EOR employment in that country stand up the entity, file the employer registrations, move payroll across and stay on the account afterwards. Teamed treats the move as a stage of the employment lifecycle rather than an offboarding.
Does graduating cost anything
Entity formation is a scoped project fee and entity management is a monthly fee, both quoted against your country mix and headcount. Teamed does not charge a fee for leaving the Employer of Record itself, aside from statutory payments that local law requires and that go to the employee.
What happens if the crossover never arrives
Nothing changes, and that is a legitimate outcome. Plenty of countries never carry enough headcount for an entity to make sense, and an Employer of Record stays the right structure there indefinitely. The model is about being in the right structure, not about moving through all three stages.
Can you move back to an EOR after forming an entity
Yes, and it happens when a market shrinks or a restructure closes a team. Because both structures run on the same system, moving back is the same kind of transition as moving forward. The entity can be wound down separately once employment has moved.

Last verified 2026-09-05

Find out where you actually are

Model your own crossover in any country we cover, or talk it through with someone who has run the move before.

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