Before hiring an employer you should read this article.
A PEO (Professional Employer Organization) is an outsourcing company which provides solutions related to co-employment. You set up a relationship with the provider and they will help you to manage the administrative work but employment responsibilities are still on your company.
Below are the main differences between EOR and PEO:
Workers are classified differently:
If you choose an EOR, then the EOR services provides employment and take legal responsibility of the employees, but in case of a PEO, the legal responsibility still lies on you for employing your employees.
Responsibility for business registration:
EOR enables you to hire employees in other countries without registering a physical entity but in PEO you need to register your entity in your location. Difference in minimum number of workers required to start up. EOR can be started with one or two employees but for PEO you need minimum 5-10 employees to start.
For the employer of record, the insurance cost is already included, but in the case of a professional employer organization, the insurance is paid in addition to the PEO service cost which is one of the largest hidden cost in the service.
Employer of Record VS Staffing Agency: Which One is the Best Solution?
An Employer Of Record hires the employee for the foreign client where the employee perform work for the client and the EOR firm will handle all the personal functions of the employee such as payroll, tax depositing, expense claim, social contributions and other paper work. All the employee responsibility is taken by the EOR firm only.
A Staffing Agency just help with the recruiting process of the employee but they cannot hire staff. So, there are no contractual relationship between the employee and the staffing agency. The agency help you with the headhunting services and finds the right candidate according to your requirements.
Services Offered by an Employer of Record:
The employer of record takes care of important responsibilities related to employment.
Some of the most important are shown below:
- Employee Compensation
- Managing time sheets
- New onboarding
- Background checks