EOR vs PEO: Demystifying Employment Solutions

Blog
CPBTZ
May 19, 2022
The Atlas Team
Employer of Record, EOR, PEO, Global PEO — there are so many similar sounding terms for just two types of employment service. Although these terms are easy to confuse, their use can lead to very different consequences in HR and payroll compliance and accuracy — where there is zero margin for error.
It is critical to ensure that both you and your employees are aligned with all local laws regarding taxation, labor and even data protection.

These challenges may seem obvious if you’re already familiar with employment laws in your own country, but if you plan to expand internationally, you will need to be fluent in a range of local legal requirements, aware of the potential risks and understand how employment services vary.

What Is a PEO? What Is an EOR? 

Professional Employment Organization (PEO)

A PEO undertakes a portion of HR tasks — like benefits enrollment and payroll — and splits the risk with your company. This is because a PEO supports your company through a co-employment agreement, which means that both the PEO and the company are employers. This exposes your company to additional risk.

Employer of Record (EOR)

An EOR is empowered to employ staff in other countries where your company lacks a legal entity. An EOR is solely liable for the employees’ local tax and labor law compliance — including all administrative aspects and complying with all local legal regulations — while you continue to focus on your employees’ day-to-day work and the wider business.

What Are the Core Differences?

🫴📍 A PEO Supports Locally

A PEO supports businesses seeking to offload some HR duties for employees located in the same country where their business is registered.

🤝 🌐 An EOR Partners Globally

An EOR is suitable for any business planning to expand their operations and employ staff overseas in a fully compliant and rapid manner.

Why Use a PEO?

A PEO facilitates and manages part of a company’s HR processes, including payroll and benefits like healthcare, dental, and vision. It can even include hiring and training of staff. This is helpful to some small and medium-sized businesses, as it means they do not have to employ a huge HR team to support their staff. It also allows a company to offer their employees benefits like a pension or 401k, health and dental plan options – which they may not have been able to do without the use of a PEO service.

When a company works with a PEO provider, they sign a co-employment agreement where they contractually allocate and share the employer’s responsibilities and liabilities. The PEO will usually only assume responsibilities associated as “general” for purposes of administration of benefits and remittance of payroll and payroll taxes.

✅ A PEO Can Facilitate:

  • Remitting wages and withholdings of the worksite employees
  • Depositing and reporting employment taxes to local, state and federal authorities
  • Enrolling and supporting employees with their benefits

❌ A PEO Cannot Facilitate:

  • Global employees in countries where the client company isn’t already incorporated
  • Global mobility options
  • Removal of all global labor law and taxation risk
  • Small groups of employees from a company (they often have a minimum employee requirement of between 5-10 people)

Your company remains responsible for your own direction and operations, so most other areas of HR will still need to be addressed by your internal HR team.

Even though a co-employment agreement will clearly define the liability split between you and the PEO, it isn’t always watertight. This is because a co-employment agreement splits the risk, so neither your business nor the PEO is fully responsible.

PEOs are considered a good choice in the U.S. for cross-state employment; while your business would still share the risk of hiring across states, the PEO can work at ensuring that you've adhered to each state's individual tax and labor laws. However, if your business wants to move employees globally, a PEO is not the solution. Co-employment is illegal in major economies like France and Brazil.

How Does an EOR Work?

When you partner with an Employer of Record, you enter into an agreement that allows the EOR to legally employ your staff through its own local entity. The EOR is responsible for handling HR support to guide both you and your employee through their entire international journey — whether it’s a six-month assignment or a permanent position.

An EOR can onboard, manage and pay staff on your behalf. Consider it the legal employer while you retain the role of managing employer — executing the day-to-day management of your employees. In other words, you still call the shots on hiring, compensation, assignments, duties and termination.

✅ An EOR Can Facilitate:

  • Global expansion via compliant placement of employees into countries where your company is not incorporated
  • Global mobility, including visa sponsorship for employees and their family
  • Employee onboarding, including benefits enrollment and support  
  • Payroll administration for global employees, including collecting and reporting employment taxes to all required in-country authorities
  • Cross-cultural training for employees, as well as support in English and local languages
  • Collation of all HR information to remain compliant and data-safe with any local privacy requirements

❌ An EOR Cannot Facilitate:

  • While an Employer of Record can sponsor and support an application for a visa, it cannot guarantee that it will be approved

What’s the Most Important Takeaway when Comparing PEO and EOR?

A PEO supports your local business by handling your HR where your business already has a local entity. PEOs use co-employment agreements — which are illegal in some major economies — and so they share the financial and legal risks with you.

An EOR partners with you around the globe by employing staff in countries where you lack a local entity. The EOR takes on all the risk for any local or international fiscal or labor laws, allowing you to focus on your business strategy and day-to-day goals. This partner removes international barriers to entry, enabling you to start expanding your business within weeks.

Are You Considering Global Expansion?

EOR: The Ultimate Global Employment Solution

Many companies are prioritizing global expansion. A quarter of European middle-market organizations are planning international expansion, according to Ernst & Young’s annual Growth Barometer.

An EOR is a seamless way of reaping the benefits of international reach at a fraction of the cost, time and risk. It accelerates the process of employing overseas more cost-effectively than creating and managing dozens of local entities in a host of different languages. Whether your company wants quick global expansion or support for remote workers on assignments, an EOR service allows you to place employees globally in a locally compliant way.

In a Partnership with an EOR, Who Holds the Control and the Risk?

The EOR legally employs the overseas personnel and therefore takes on all the fiscal and legal risk. The EOR takes on the full liability of the employees and minimizes any risk to you as it ensures full compliance in every country where you place employees.

While the EOR is responsible for ensuring local compliance, you retain control over your employee and business strategy. This allows you to focus on your core business objectives without the distraction and stress of understanding thousands of global HR requirements and laws.

Unlike a PEO service, an EOR solution fully supports and facilitates your company’s global need to employ overseas. An EOR can be your company’s single employer for all its global employees.

Unlike a PEO service, an EOR solution fully supports and facilitates your company’s global need to employ overseas.

What Does an EOR Service Cover?

  • Local registration
  • Remuneration and compensation
  • Employment contracts in multiple languages
  • Employment law for 160+ countries
  • Local tax compliance
  • Cultural training
  • Employee onboarding, payroll and offboarding
  • Full global support for the employee and the client
  • Data privacy guidance

Only with an Employer of Record is it possible to place staff anywhere in the world within weeks. It’s the groundbreaking, 21st-century solution to global expansion.

Ready to learn more?

Speak with a Global Expansion pro today.

EOR vs PEO: Demystifying Employment Solutions

Blog
CPBTZ
May 19, 2022
The Atlas Team
Employer of Record, EOR, PEO, Global PEO — there are so many similar sounding terms for just two types of employment service. Although these terms are easy to confuse, their use can lead to very different consequences in HR and payroll compliance and accuracy — where there is zero margin for error.
It is critical to ensure that both you and your employees are aligned with all local laws regarding taxation, labor and even data protection.

These challenges may seem obvious if you’re already familiar with employment laws in your own country, but if you plan to expand internationally, you will need to be fluent in a range of local legal requirements, aware of the potential risks and understand how employment services vary.

What Is a PEO? What Is an EOR? 

Professional Employment Organization (PEO)

A PEO undertakes a portion of HR tasks — like benefits enrollment and payroll — and splits the risk with your company. This is because a PEO supports your company through a co-employment agreement, which means that both the PEO and the company are employers. This exposes your company to additional risk.

Employer of Record (EOR)

An EOR is empowered to employ staff in other countries where your company lacks a legal entity. An EOR is solely liable for the employees’ local tax and labor law compliance — including all administrative aspects and complying with all local legal regulations — while you continue to focus on your employees’ day-to-day work and the wider business.

What Are the Core Differences?

🫴📍 A PEO Supports Locally

A PEO supports businesses seeking to offload some HR duties for employees located in the same country where their business is registered.

🤝 🌐 An EOR Partners Globally

An EOR is suitable for any business planning to expand their operations and employ staff overseas in a fully compliant and rapid manner.

Why Use a PEO?

A PEO facilitates and manages part of a company’s HR processes, including payroll and benefits like healthcare, dental, and vision. It can even include hiring and training of staff. This is helpful to some small and medium-sized businesses, as it means they do not have to employ a huge HR team to support their staff. It also allows a company to offer their employees benefits like a pension or 401k, health and dental plan options – which they may not have been able to do without the use of a PEO service.

When a company works with a PEO provider, they sign a co-employment agreement where they contractually allocate and share the employer’s responsibilities and liabilities. The PEO will usually only assume responsibilities associated as “general” for purposes of administration of benefits and remittance of payroll and payroll taxes.

✅ A PEO Can Facilitate:

  • Remitting wages and withholdings of the worksite employees
  • Depositing and reporting employment taxes to local, state and federal authorities
  • Enrolling and supporting employees with their benefits

❌ A PEO Cannot Facilitate:

  • Global employees in countries where the client company isn’t already incorporated
  • Global mobility options
  • Removal of all global labor law and taxation risk
  • Small groups of employees from a company (they often have a minimum employee requirement of between 5-10 people)

Your company remains responsible for your own direction and operations, so most other areas of HR will still need to be addressed by your internal HR team.

Even though a co-employment agreement will clearly define the liability split between you and the PEO, it isn’t always watertight. This is because a co-employment agreement splits the risk, so neither your business nor the PEO is fully responsible.

PEOs are considered a good choice in the U.S. for cross-state employment; while your business would still share the risk of hiring across states, the PEO can work at ensuring that you've adhered to each state's individual tax and labor laws. However, if your business wants to move employees globally, a PEO is not the solution. Co-employment is illegal in major economies like France and Brazil.

How Does an EOR Work?

When you partner with an Employer of Record, you enter into an agreement that allows the EOR to legally employ your staff through its own local entity. The EOR is responsible for handling HR support to guide both you and your employee through their entire international journey — whether it’s a six-month assignment or a permanent position.

An EOR can onboard, manage and pay staff on your behalf. Consider it the legal employer while you retain the role of managing employer — executing the day-to-day management of your employees. In other words, you still call the shots on hiring, compensation, assignments, duties and termination.

✅ An EOR Can Facilitate:

  • Global expansion via compliant placement of employees into countries where your company is not incorporated
  • Global mobility, including visa sponsorship for employees and their family
  • Employee onboarding, including benefits enrollment and support  
  • Payroll administration for global employees, including collecting and reporting employment taxes to all required in-country authorities
  • Cross-cultural training for employees, as well as support in English and local languages
  • Collation of all HR information to remain compliant and data-safe with any local privacy requirements

❌ An EOR Cannot Facilitate:

  • While an Employer of Record can sponsor and support an application for a visa, it cannot guarantee that it will be approved

What’s the Most Important Takeaway when Comparing PEO and EOR?

A PEO supports your local business by handling your HR where your business already has a local entity. PEOs use co-employment agreements — which are illegal in some major economies — and so they share the financial and legal risks with you.

An EOR partners with you around the globe by employing staff in countries where you lack a local entity. The EOR takes on all the risk for any local or international fiscal or labor laws, allowing you to focus on your business strategy and day-to-day goals. This partner removes international barriers to entry, enabling you to start expanding your business within weeks.

Are You Considering Global Expansion?

EOR: The Ultimate Global Employment Solution

Many companies are prioritizing global expansion. A quarter of European middle-market organizations are planning international expansion, according to Ernst & Young’s annual Growth Barometer.

An EOR is a seamless way of reaping the benefits of international reach at a fraction of the cost, time and risk. It accelerates the process of employing overseas more cost-effectively than creating and managing dozens of local entities in a host of different languages. Whether your company wants quick global expansion or support for remote workers on assignments, an EOR service allows you to place employees globally in a locally compliant way.

In a Partnership with an EOR, Who Holds the Control and the Risk?

The EOR legally employs the overseas personnel and therefore takes on all the fiscal and legal risk. The EOR takes on the full liability of the employees and minimizes any risk to you as it ensures full compliance in every country where you place employees.

While the EOR is responsible for ensuring local compliance, you retain control over your employee and business strategy. This allows you to focus on your core business objectives without the distraction and stress of understanding thousands of global HR requirements and laws.

Unlike a PEO service, an EOR solution fully supports and facilitates your company’s global need to employ overseas. An EOR can be your company’s single employer for all its global employees.

Unlike a PEO service, an EOR solution fully supports and facilitates your company’s global need to employ overseas.

What Does an EOR Service Cover?

  • Local registration
  • Remuneration and compensation
  • Employment contracts in multiple languages
  • Employment law for 160+ countries
  • Local tax compliance
  • Cultural training
  • Employee onboarding, payroll and offboarding
  • Full global support for the employee and the client
  • Data privacy guidance

Only with an Employer of Record is it possible to place staff anywhere in the world within weeks. It’s the groundbreaking, 21st-century solution to global expansion.

Ready to learn more?

Speak with a Global Expansion pro today.

EOR vs PEO: Demystifying Employment Solutions

Blog
CPBTZ
May 19, 2022
The Atlas Team
Employer of Record, EOR, PEO, Global PEO — there are so many similar sounding terms for just two types of employment service. Although these terms are easy to confuse, their use can lead to very different consequences in HR and payroll compliance and accuracy — where there is zero margin for error.
It is critical to ensure that both you and your employees are aligned with all local laws regarding taxation, labor and even data protection.

These challenges may seem obvious if you’re already familiar with employment laws in your own country, but if you plan to expand internationally, you will need to be fluent in a range of local legal requirements, aware of the potential risks and understand how employment services vary.

What Is a PEO? What Is an EOR? 

Professional Employment Organization (PEO)

A PEO undertakes a portion of HR tasks — like benefits enrollment and payroll — and splits the risk with your company. This is because a PEO supports your company through a co-employment agreement, which means that both the PEO and the company are employers. This exposes your company to additional risk.

Employer of Record (EOR)

An EOR is empowered to employ staff in other countries where your company lacks a legal entity. An EOR is solely liable for the employees’ local tax and labor law compliance — including all administrative aspects and complying with all local legal regulations — while you continue to focus on your employees’ day-to-day work and the wider business.

What Are the Core Differences?

🫴📍 A PEO Supports Locally

A PEO supports businesses seeking to offload some HR duties for employees located in the same country where their business is registered.

🤝 🌐 An EOR Partners Globally

An EOR is suitable for any business planning to expand their operations and employ staff overseas in a fully compliant and rapid manner.

Why Use a PEO?

A PEO facilitates and manages part of a company’s HR processes, including payroll and benefits like healthcare, dental, and vision. It can even include hiring and training of staff. This is helpful to some small and medium-sized businesses, as it means they do not have to employ a huge HR team to support their staff. It also allows a company to offer their employees benefits like a pension or 401k, health and dental plan options – which they may not have been able to do without the use of a PEO service.

When a company works with a PEO provider, they sign a co-employment agreement where they contractually allocate and share the employer’s responsibilities and liabilities. The PEO will usually only assume responsibilities associated as “general” for purposes of administration of benefits and remittance of payroll and payroll taxes.

✅ A PEO Can Facilitate:

  • Remitting wages and withholdings of the worksite employees
  • Depositing and reporting employment taxes to local, state and federal authorities
  • Enrolling and supporting employees with their benefits

❌ A PEO Cannot Facilitate:

  • Global employees in countries where the client company isn’t already incorporated
  • Global mobility options
  • Removal of all global labor law and taxation risk
  • Small groups of employees from a company (they often have a minimum employee requirement of between 5-10 people)

Your company remains responsible for your own direction and operations, so most other areas of HR will still need to be addressed by your internal HR team.

Even though a co-employment agreement will clearly define the liability split between you and the PEO, it isn’t always watertight. This is because a co-employment agreement splits the risk, so neither your business nor the PEO is fully responsible.

PEOs are considered a good choice in the U.S. for cross-state employment; while your business would still share the risk of hiring across states, the PEO can work at ensuring that you've adhered to each state's individual tax and labor laws. However, if your business wants to move employees globally, a PEO is not the solution. Co-employment is illegal in major economies like France and Brazil.

How Does an EOR Work?

When you partner with an Employer of Record, you enter into an agreement that allows the EOR to legally employ your staff through its own local entity. The EOR is responsible for handling HR support to guide both you and your employee through their entire international journey — whether it’s a six-month assignment or a permanent position.

An EOR can onboard, manage and pay staff on your behalf. Consider it the legal employer while you retain the role of managing employer — executing the day-to-day management of your employees. In other words, you still call the shots on hiring, compensation, assignments, duties and termination.

✅ An EOR Can Facilitate:

  • Global expansion via compliant placement of employees into countries where your company is not incorporated
  • Global mobility, including visa sponsorship for employees and their family
  • Employee onboarding, including benefits enrollment and support  
  • Payroll administration for global employees, including collecting and reporting employment taxes to all required in-country authorities
  • Cross-cultural training for employees, as well as support in English and local languages
  • Collation of all HR information to remain compliant and data-safe with any local privacy requirements

❌ An EOR Cannot Facilitate:

  • While an Employer of Record can sponsor and support an application for a visa, it cannot guarantee that it will be approved

What’s the Most Important Takeaway when Comparing PEO and EOR?

A PEO supports your local business by handling your HR where your business already has a local entity. PEOs use co-employment agreements — which are illegal in some major economies — and so they share the financial and legal risks with you.

An EOR partners with you around the globe by employing staff in countries where you lack a local entity. The EOR takes on all the risk for any local or international fiscal or labor laws, allowing you to focus on your business strategy and day-to-day goals. This partner removes international barriers to entry, enabling you to start expanding your business within weeks.

Are You Considering Global Expansion?

EOR: The Ultimate Global Employment Solution

Many companies are prioritizing global expansion. A quarter of European middle-market organizations are planning international expansion, according to Ernst & Young’s annual Growth Barometer.

An EOR is a seamless way of reaping the benefits of international reach at a fraction of the cost, time and risk. It accelerates the process of employing overseas more cost-effectively than creating and managing dozens of local entities in a host of different languages. Whether your company wants quick global expansion or support for remote workers on assignments, an EOR service allows you to place employees globally in a locally compliant way.

In a Partnership with an EOR, Who Holds the Control and the Risk?

The EOR legally employs the overseas personnel and therefore takes on all the fiscal and legal risk. The EOR takes on the full liability of the employees and minimizes any risk to you as it ensures full compliance in every country where you place employees.

While the EOR is responsible for ensuring local compliance, you retain control over your employee and business strategy. This allows you to focus on your core business objectives without the distraction and stress of understanding thousands of global HR requirements and laws.

Unlike a PEO service, an EOR solution fully supports and facilitates your company’s global need to employ overseas. An EOR can be your company’s single employer for all its global employees.

Unlike a PEO service, an EOR solution fully supports and facilitates your company’s global need to employ overseas.

What Does an EOR Service Cover?

  • Local registration
  • Remuneration and compensation
  • Employment contracts in multiple languages
  • Employment law for 160+ countries
  • Local tax compliance
  • Cultural training
  • Employee onboarding, payroll and offboarding
  • Full global support for the employee and the client
  • Data privacy guidance

Only with an Employer of Record is it possible to place staff anywhere in the world within weeks. It’s the groundbreaking, 21st-century solution to global expansion.

Ready to learn more?

Speak with a Global Expansion pro today.

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past
Blog
CPBTZ

EOR vs PEO: Demystifying Employment Solutions

Employer of Record, EOR, PEO, Global PEO — there are so many similar sounding terms for just two types of employment service. Although these terms are easy to confuse, their use can lead to very different consequences in HR and payroll compliance and accuracy — where there is zero margin for error.
It is critical to ensure that both you and your employees are aligned with all local laws regarding taxation, labor and even data protection.

These challenges may seem obvious if you’re already familiar with employment laws in your own country, but if you plan to expand internationally, you will need to be fluent in a range of local legal requirements, aware of the potential risks and understand how employment services vary.

What Is a PEO? What Is an EOR? 

Professional Employment Organization (PEO)

A PEO undertakes a portion of HR tasks — like benefits enrollment and payroll — and splits the risk with your company. This is because a PEO supports your company through a co-employment agreement, which means that both the PEO and the company are employers. This exposes your company to additional risk.

Employer of Record (EOR)

An EOR is empowered to employ staff in other countries where your company lacks a legal entity. An EOR is solely liable for the employees’ local tax and labor law compliance — including all administrative aspects and complying with all local legal regulations — while you continue to focus on your employees’ day-to-day work and the wider business.

What Are the Core Differences?

🫴📍 A PEO Supports Locally

A PEO supports businesses seeking to offload some HR duties for employees located in the same country where their business is registered.

🤝 🌐 An EOR Partners Globally

An EOR is suitable for any business planning to expand their operations and employ staff overseas in a fully compliant and rapid manner.

Why Use a PEO?

A PEO facilitates and manages part of a company’s HR processes, including payroll and benefits like healthcare, dental, and vision. It can even include hiring and training of staff. This is helpful to some small and medium-sized businesses, as it means they do not have to employ a huge HR team to support their staff. It also allows a company to offer their employees benefits like a pension or 401k, health and dental plan options – which they may not have been able to do without the use of a PEO service.

When a company works with a PEO provider, they sign a co-employment agreement where they contractually allocate and share the employer’s responsibilities and liabilities. The PEO will usually only assume responsibilities associated as “general” for purposes of administration of benefits and remittance of payroll and payroll taxes.

✅ A PEO Can Facilitate:

  • Remitting wages and withholdings of the worksite employees
  • Depositing and reporting employment taxes to local, state and federal authorities
  • Enrolling and supporting employees with their benefits

❌ A PEO Cannot Facilitate:

  • Global employees in countries where the client company isn’t already incorporated
  • Global mobility options
  • Removal of all global labor law and taxation risk
  • Small groups of employees from a company (they often have a minimum employee requirement of between 5-10 people)

Your company remains responsible for your own direction and operations, so most other areas of HR will still need to be addressed by your internal HR team.

Even though a co-employment agreement will clearly define the liability split between you and the PEO, it isn’t always watertight. This is because a co-employment agreement splits the risk, so neither your business nor the PEO is fully responsible.

PEOs are considered a good choice in the U.S. for cross-state employment; while your business would still share the risk of hiring across states, the PEO can work at ensuring that you've adhered to each state's individual tax and labor laws. However, if your business wants to move employees globally, a PEO is not the solution. Co-employment is illegal in major economies like France and Brazil.

How Does an EOR Work?

When you partner with an Employer of Record, you enter into an agreement that allows the EOR to legally employ your staff through its own local entity. The EOR is responsible for handling HR support to guide both you and your employee through their entire international journey — whether it’s a six-month assignment or a permanent position.

An EOR can onboard, manage and pay staff on your behalf. Consider it the legal employer while you retain the role of managing employer — executing the day-to-day management of your employees. In other words, you still call the shots on hiring, compensation, assignments, duties and termination.

✅ An EOR Can Facilitate:

  • Global expansion via compliant placement of employees into countries where your company is not incorporated
  • Global mobility, including visa sponsorship for employees and their family
  • Employee onboarding, including benefits enrollment and support  
  • Payroll administration for global employees, including collecting and reporting employment taxes to all required in-country authorities
  • Cross-cultural training for employees, as well as support in English and local languages
  • Collation of all HR information to remain compliant and data-safe with any local privacy requirements

❌ An EOR Cannot Facilitate:

  • While an Employer of Record can sponsor and support an application for a visa, it cannot guarantee that it will be approved

What’s the Most Important Takeaway when Comparing PEO and EOR?

A PEO supports your local business by handling your HR where your business already has a local entity. PEOs use co-employment agreements — which are illegal in some major economies — and so they share the financial and legal risks with you.

An EOR partners with you around the globe by employing staff in countries where you lack a local entity. The EOR takes on all the risk for any local or international fiscal or labor laws, allowing you to focus on your business strategy and day-to-day goals. This partner removes international barriers to entry, enabling you to start expanding your business within weeks.

Are You Considering Global Expansion?

EOR: The Ultimate Global Employment Solution

Many companies are prioritizing global expansion. A quarter of European middle-market organizations are planning international expansion, according to Ernst & Young’s annual Growth Barometer.

An EOR is a seamless way of reaping the benefits of international reach at a fraction of the cost, time and risk. It accelerates the process of employing overseas more cost-effectively than creating and managing dozens of local entities in a host of different languages. Whether your company wants quick global expansion or support for remote workers on assignments, an EOR service allows you to place employees globally in a locally compliant way.

In a Partnership with an EOR, Who Holds the Control and the Risk?

The EOR legally employs the overseas personnel and therefore takes on all the fiscal and legal risk. The EOR takes on the full liability of the employees and minimizes any risk to you as it ensures full compliance in every country where you place employees.

While the EOR is responsible for ensuring local compliance, you retain control over your employee and business strategy. This allows you to focus on your core business objectives without the distraction and stress of understanding thousands of global HR requirements and laws.

Unlike a PEO service, an EOR solution fully supports and facilitates your company’s global need to employ overseas. An EOR can be your company’s single employer for all its global employees.

Unlike a PEO service, an EOR solution fully supports and facilitates your company’s global need to employ overseas.

What Does an EOR Service Cover?

  • Local registration
  • Remuneration and compensation
  • Employment contracts in multiple languages
  • Employment law for 160+ countries
  • Local tax compliance
  • Cultural training
  • Employee onboarding, payroll and offboarding
  • Full global support for the employee and the client
  • Data privacy guidance

Only with an Employer of Record is it possible to place staff anywhere in the world within weeks. It’s the groundbreaking, 21st-century solution to global expansion.

Ready to learn more?

Speak with a Global Expansion pro today.

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EOR vs PEO: Demystifying Employment Solutions

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CPBTZ
May 19, 2022
EOR vs PEO: Demystifying Employment Solutions

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EOR vs PEO: Demystifying Employment Solutions

Blog
CPBTZ
May 19, 2022
EOR vs PEO: Demystifying Employment Solutions
Employer of Record, EOR, PEO, Global PEO — there are so many similar sounding terms for just two types of employment service. Although these terms are easy to confuse, their use can lead to very different consequences in HR and payroll compliance and accuracy — where there is zero margin for error.
It is critical to ensure that both you and your employees are aligned with all local laws regarding taxation, labor and even data protection.

These challenges may seem obvious if you’re already familiar with employment laws in your own country, but if you plan to expand internationally, you will need to be fluent in a range of local legal requirements, aware of the potential risks and understand how employment services vary.

What Is a PEO? What Is an EOR? 

Professional Employment Organization (PEO)

A PEO undertakes a portion of HR tasks — like benefits enrollment and payroll — and splits the risk with your company. This is because a PEO supports your company through a co-employment agreement, which means that both the PEO and the company are employers. This exposes your company to additional risk.

Employer of Record (EOR)

An EOR is empowered to employ staff in other countries where your company lacks a legal entity. An EOR is solely liable for the employees’ local tax and labor law compliance — including all administrative aspects and complying with all local legal regulations — while you continue to focus on your employees’ day-to-day work and the wider business.

What Are the Core Differences?

🫴📍 A PEO Supports Locally

A PEO supports businesses seeking to offload some HR duties for employees located in the same country where their business is registered.

🤝 🌐 An EOR Partners Globally

An EOR is suitable for any business planning to expand their operations and employ staff overseas in a fully compliant and rapid manner.

Why Use a PEO?

A PEO facilitates and manages part of a company’s HR processes, including payroll and benefits like healthcare, dental, and vision. It can even include hiring and training of staff. This is helpful to some small and medium-sized businesses, as it means they do not have to employ a huge HR team to support their staff. It also allows a company to offer their employees benefits like a pension or 401k, health and dental plan options – which they may not have been able to do without the use of a PEO service.

When a company works with a PEO provider, they sign a co-employment agreement where they contractually allocate and share the employer’s responsibilities and liabilities. The PEO will usually only assume responsibilities associated as “general” for purposes of administration of benefits and remittance of payroll and payroll taxes.

✅ A PEO Can Facilitate:

  • Remitting wages and withholdings of the worksite employees
  • Depositing and reporting employment taxes to local, state and federal authorities
  • Enrolling and supporting employees with their benefits

❌ A PEO Cannot Facilitate:

  • Global employees in countries where the client company isn’t already incorporated
  • Global mobility options
  • Removal of all global labor law and taxation risk
  • Small groups of employees from a company (they often have a minimum employee requirement of between 5-10 people)

Your company remains responsible for your own direction and operations, so most other areas of HR will still need to be addressed by your internal HR team.

Even though a co-employment agreement will clearly define the liability split between you and the PEO, it isn’t always watertight. This is because a co-employment agreement splits the risk, so neither your business nor the PEO is fully responsible.

PEOs are considered a good choice in the U.S. for cross-state employment; while your business would still share the risk of hiring across states, the PEO can work at ensuring that you've adhered to each state's individual tax and labor laws. However, if your business wants to move employees globally, a PEO is not the solution. Co-employment is illegal in major economies like France and Brazil.

How Does an EOR Work?

When you partner with an Employer of Record, you enter into an agreement that allows the EOR to legally employ your staff through its own local entity. The EOR is responsible for handling HR support to guide both you and your employee through their entire international journey — whether it’s a six-month assignment or a permanent position.

An EOR can onboard, manage and pay staff on your behalf. Consider it the legal employer while you retain the role of managing employer — executing the day-to-day management of your employees. In other words, you still call the shots on hiring, compensation, assignments, duties and termination.

✅ An EOR Can Facilitate:

  • Global expansion via compliant placement of employees into countries where your company is not incorporated
  • Global mobility, including visa sponsorship for employees and their family
  • Employee onboarding, including benefits enrollment and support  
  • Payroll administration for global employees, including collecting and reporting employment taxes to all required in-country authorities
  • Cross-cultural training for employees, as well as support in English and local languages
  • Collation of all HR information to remain compliant and data-safe with any local privacy requirements

❌ An EOR Cannot Facilitate:

  • While an Employer of Record can sponsor and support an application for a visa, it cannot guarantee that it will be approved

What’s the Most Important Takeaway when Comparing PEO and EOR?

A PEO supports your local business by handling your HR where your business already has a local entity. PEOs use co-employment agreements — which are illegal in some major economies — and so they share the financial and legal risks with you.

An EOR partners with you around the globe by employing staff in countries where you lack a local entity. The EOR takes on all the risk for any local or international fiscal or labor laws, allowing you to focus on your business strategy and day-to-day goals. This partner removes international barriers to entry, enabling you to start expanding your business within weeks.

Are You Considering Global Expansion?

EOR: The Ultimate Global Employment Solution

Many companies are prioritizing global expansion. A quarter of European middle-market organizations are planning international expansion, according to Ernst & Young’s annual Growth Barometer.

An EOR is a seamless way of reaping the benefits of international reach at a fraction of the cost, time and risk. It accelerates the process of employing overseas more cost-effectively than creating and managing dozens of local entities in a host of different languages. Whether your company wants quick global expansion or support for remote workers on assignments, an EOR service allows you to place employees globally in a locally compliant way.

In a Partnership with an EOR, Who Holds the Control and the Risk?

The EOR legally employs the overseas personnel and therefore takes on all the fiscal and legal risk. The EOR takes on the full liability of the employees and minimizes any risk to you as it ensures full compliance in every country where you place employees.

While the EOR is responsible for ensuring local compliance, you retain control over your employee and business strategy. This allows you to focus on your core business objectives without the distraction and stress of understanding thousands of global HR requirements and laws.

Unlike a PEO service, an EOR solution fully supports and facilitates your company’s global need to employ overseas. An EOR can be your company’s single employer for all its global employees.

Unlike a PEO service, an EOR solution fully supports and facilitates your company’s global need to employ overseas.

What Does an EOR Service Cover?

  • Local registration
  • Remuneration and compensation
  • Employment contracts in multiple languages
  • Employment law for 160+ countries
  • Local tax compliance
  • Cultural training
  • Employee onboarding, payroll and offboarding
  • Full global support for the employee and the client
  • Data privacy guidance

Only with an Employer of Record is it possible to place staff anywhere in the world within weeks. It’s the groundbreaking, 21st-century solution to global expansion.

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EOR vs PEO: Demystifying Employment Solutions

Blog
CPBTZ
November 9, 2022

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