PLAYROLL BLOG

Insights into global expansion & employee retention

Published: May 11, 2022

Employer of Record VS PEO: Making the Right Choice

If you were wondering what the difference between an Employer of Record and a Professional Employer Organisation is, then you’ve come to the right place. It is important to know the difference between the two, especially if you are considering making use of the services of either. Not to worry though, we’ll lay it all out for you.
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What Is an Employer of Record?

Simply put, an employer of record (EOR) is a third-party company that acts as an employer for the sake of tax and legal purposes. EORs are most commonly used by companies looking to expand internationally or non-recruiting small businesses.

This is due to the fact that there are boatloads of benefits when using an EOR if you are looking to sow some seeds across the global pond. Small and large businesses can also benefit from the fact that an employer of record can manage their H.R. and payroll duties.

What is a Professional Employer Organisation?

A professional employer organisation (PEO) is a company that specialises in managing the human resources of other businesses. A PEO can be outsourced to take over human resources services such as filing taxes, benefits administration, regulatory compliance, payroll processing and more.

Key differences between an Employer of Record and a PEO

When you use an EOR’s services, it becomes the full legal employer of your personnel. An employer of record becomes in charge of all employer-related responsibilities such as payroll, insurance and taxes.

If your company decides to partner with a PEO, both your company and the PEO become legal employers of your workforce, which means that your company is still responsible.

An EOR ensures that you can recruit talent from nearly every region that is supported by the employer of record that you decide to partner with. This is, thankfully, owing to the fact that you do not need to register your business in the region you are hiring if you are partnered with an EOR.

When using a PEO, your business needs to be registered in the specific region that you choose to hire in. A PEO will therefore only be beneficial to your business if you choose to hire only in regions in which your company is registered.

An EOR partner can help your business manage many different types of talent ranging from freelance, part-time, full-time, seasonal and even other types of flexible personnel.

PEOs are usually used as co-employers for permanent personnel. A company will need to find an alternative method to pay their non-permanent employees compliantly.

EORs can generally partner with any company regardless of how many personnel are on their payroll.

Companies that partner with PEOs are generally larger as many PEO partners ask that their clients co-employ at least 5-10 employees.

The difference between an EOR and a PEO largely depends on your company’s needs. Understanding the differences in the services provided can help make your choice easier.

Who will benefit from using a PEO?

PEOs are best suited for large companies that operate domestically or hire employees from regions in which they are registered. PEOs can help these companies find local talent and rid them of the arduous hiring process and some other human resource practices. Your company will still, however, be legally liable due to PEOs co-employing your personnel.

Who will benefit from using an Employer of Record?

If your company is looking to hire talent from all over the globe in a legally compliant way then you needn’t look any further as we’ve got you covered at Playroll.

We make hiring internationally a walk in the park by offering a wide range of services that can be customers to your needs. We plan on providing EOR services in every country in the world. So what are you waiting for? Come play with us.

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