If your business is expanding into a new country or region, an EOR can help you on-board the team. They handle the legal work and compliance issues for you and are the perfect HR partner.

In most cases, EORs secure general liability as well as workers’ comp insurance on behalf of you.

EOR vs. EOR vs.

The introduction of new HR tools into the market at an accelerated pace, making it challenging to figure out which choice will best suit your business’s needs. Two solutions that seem alike on the surface include employer of record services (EOR) and professional employment organisations (PEO).

Both offer solutions that can help your company to improve its human resources control and be in compliance with local laws. There are however some significant differences between them that could impact your decision.

EOR services are usually employed for seasonal workers, contractors, and hiring on a project basis. They serve as legally-authorized employers within the country in which they work, assuming the liability for all employment-related obligations and risks.

In comparison, PEOs offer more comprehensive HR services for businesses looking to scale globally. Since they are co-employers, they handle all aspects of HR for your benefit, such as compliance, payroll tax, benefit administration and many more. They also assist in company registration as well as legal entity formation, where applicable. This could be helpful for firms with large and complex workforces.

Understanding the Differences

In simple terms the definition of the EOR is the person who is the employer in charge, they have to fulfill all legal compliance as well as payroll obligations. With an EOR, it’s a three-way relation between the firm, the employee and the EOR. They can also provide extra HR services like brokering health insurance, pensions and bonus schemes.

A PEO however is considered an employer co-owned. They are accountable to you as part of the company, and are particularly useful for small businesses who are trying for ways to scale internationally. PEOs are able to reduce expenses and help in risk reduction as well as ensure compliance throughout the world.

Prior to deciding on you choose to use an EOR or PEO service, assess the requirements of your business and expected growth plan. Take into consideration whether you have enough employees in your staff and geographical location, in addition to the amount of control that you would like to have over HR processes within your own organization. Also, consider the cost and budget impacts of both alternatives. Decide on the option you prefer.

HR Outsourcing

In the event that you are planning to recruit local employees or expanding internationally, both an EOR or a PEO can help with HR management through being accountable for a variety of tasks that are time-consuming and risky to make errors with regard to. These include securing a work visa, monitoring compliance, the hiring of employees and ensuring local laws are respected.

EORs are also responsible for managing seasonal workers, contractors and other projects. EOR supervises seasonal employees as well as contractors, project-specific employees and seasonal workers It’s an excellent alternative for businesses looking to expand abroad without setting local companies in every country. This could save you time and money for the long-term.

The employer of record service is a good fit for smaller companies that cannot afford or provide comprehensive benefits to large companies. But EORs EOR could have less influence over its internal culture. It could hire staff who’s attitudes are different from the corporate culture. This can cause a problem in the event that a business wants to keep its policies and practices. Make sure to look for reputable providers and choose a partner that can handle these differences effectively.

Legal Employment Status

Employer of Record and PEO solutions allow you to outsource the tedious payroll, tax withholdings as well as benefits management including compliance monitoring, onboarding and much more. Instead of depending on your in-house HR staff, these external service providers act as an extension of your company and take on legal employment status and responsibility of employers in the countries the location they operate.

It’s a plus that you won’t have to fret about putting your company at risk for a worker classification misstep, like those that made the news during the Uber and Pimlico Plumbers cases. EORs are a great way to ensure that your company is protected from liability. EOR is a great way to increase your global workforce without having to establish an entity that is local to you.

In the case of companies seeking to hire more seasonal workers, contractors and project-specific staff, as well as country employees for short-term projects an EOR is a great choice. In a PEO arrangement, you enter into a co-employment arrangement and legally responsible for your employees. But through an EOR the employer retains responsibility for the day-to-day duties and tasks.