It’s fair to say that EOR is a more advantageous service than PEO. But why? When you want to expand your business globally, this comprehensive employer solution will give you a lot of benefits like versatile talent acquisitions, payroll management, and others.
Of course, you don’t need to worry about all the legal compliance needs if you wanna go abroad and beyond. However, to ensure fairness, you must understand the key differences between the two advanced employment solutions.
Are you curious about the differences? Let’s get started to choose the right services for the success of your business agenda.
What is an Employer of Record (EOR)?
First of all, you should understand the essence of a third-party employer organization.
EOR is a global employment solution that enables your business to hire employees from another country without needing to establish a legal entity.
This model has become a popular global hiring approach since it simplifies and speeds up the hiring process while also reducing costs.
The third-party employer will handle all aspects of employee management internationally, including ensuring legal compliance, managing payroll, securing taxes, and providing insurance.
So, you don’t have to be stressed daily about your global business with those tasks.
Do you want to hire employees from Indonesia with this global employer solution? Here’s the ultimate guide for foreign companies to hire in Indonesia.
What is a Professional Employer Organization (PEO)?
PEO, short for Professional Employer Organization, is an outsourced HR service that helps you follow local employment regulations for payroll and taxes. This service often called as global payroll and a co-employment model.
By using the co-employment model, you can manage your HR costs and enhance your employee experiences while still controlling their daily tasks and responsibilities.
But, if you want to use the PEO service, you need to register your business officially in a certain country.
Key Difference between EOR and PEO
For a while, both concepts sounded similar, which is why people still use them interchangeably. Here are some points that differentiate them.
1. Need for a Legal Entity
By using a third-party organization, you don’t need to set up a legal entity to expand your business in other countries. This happens because the global employer provider officially handles the employment under its legal name.
It’s different from the PEO service. If you use PEO, you need to have your legal entity.
2. Legal Relationship Between Employees and Service Providers
The second point is the legal relationship between employees and service providers. When you hire an international employee through a global employment organization, this third party becomes the official employer for the employee according to the law.
This means the employment contract is made directly between the third-party organization and the employee.
On the other side, choosing PEO service means that you still act as the official employer for your employees. PEO only works as a co-employer. The legal responsibilities from the employment will be shared between your company and PEO.
3. Payments to Employees
In terms of payment to employees, global employer organizations will be responsible for paying salaries, bonuses, and benefits to employees.
But by using PEO services, paying employee’s salaries may be a little bit complicated. In some countries, you have to make the payments directly. PEO might not be allowed to pay the employee for your business.
Main Services Generally Provided by EOR
Do you want to know more about general services covered by global employer organizations? Let’s delve into the exploration below.
1. Global Workforce Management
This comprehensive service regularly handles the complexities of managing a global workforce. It will help you in hiring, onboarding, and managing employees in various countries.
It also simplifies the hiring process internationally and ensures you to scale up your business teams without needing to navigate legal entities directly.
2. HR Support
You don’t have to be overwhelmed with the HR management system, this global employer will give you the best services through enhancing employee relations, employee records, implementation of the hiring framework, and others.
3. Confidentiality & Security
Worry not, your employee data will be protected securely. It will give you peace of mind that the risk of data breaches can be reduced.
4. Risk Mitigation
The third-party employment provider can mitigate your legal risk by providing a safer environment between your company and employees. You will be protected from legal disputes.
5. Legal & Tax Compliance
Managing taxes in different countries can be complex things. Don’t be stressed, these wonderful services will ensure your business adheres to all legal and tax requirements in different jurisdictions.
6. Arranging work permits
The global employer provider also handles the process of obtaining work permits and visas for employees. It will facilitate the employees to work legally in a foreign country.
7. Payroll dan Benefit Administration
Last but not least, this immersive global employment solution will help you manage the payroll process and all administrative aspects including salaries, health insurance, retirement plans, and other perks.
You can effortlessly hire top-quality employees using this global employment provider in Indonesia and many other countries.
Main Services Generally Provided by PEO
What about the general services of PEO? Here are several benefits of the co-employment model.
1. Employee Benefits
A key goal of a PEO is to offer companies affordable employee benefits by pooling employees from multiple businesses and negotiating lower costs for coverage such as medical and life insurance.
2. Tax & Payroll Management
PEO also operates tax and payroll management so that you don’t need give a lot of effort for these tasks.
3. Compliance Support
This co-employment model also assists you with the local laws and the latest regulations. So, it will make sure that your business runs based on the legal requirements.
4. HR Administration
Of course, the PEO service will cover your HR administration including employee records, policies, and procedures.
5. Recruiting and Hiring
PEO also supports you in finding and onboarding new talent to fit your business needs. The recruitment process becomes easier than ever before.
6. Employment Contracts
This HR service will help you in drafting and managing employment agreements to ensure clear terms and compliance.
Considering EOR for Your Business? Choose Abhitech for Seamless Global Expansion!
So, have you decided to use a global employer provider? If yes, you can collaborate with Abhitech for your comprehensive HR solutions without worrying about legal entity matters.
Employee of Record (EOR) service by Arbitech will assist you in managing payroll tasks, risk mitigation, talent recruitment, and soon.
You can stay focused on your business agenda by contacting us now and we will work for you for those comprehensive HR solutions. Lastly, you can visit our insightful blog for detailed information about global employment
