International PEO
What is an international PEO?
An international professional employer organization (PEO) is a co-employment service that provides global HR services and international hiring and employment. Instead of being on its own to hire employees in a new country and comply with nuanced regulations, an international PEO can be a valuable resource and partner.
An international PEO establishes a legal entity in a foreign country that can legally hire employees in those countries. Companies can partner with an international PEO to gain access to foreign markets and employ local workers.
What does an international PEO do?
An international PEO handles a wide range of international HR tasks, including:
- Hiring and onboarding new employees
- Background checks
- Timesheets and payroll
- Taxes
- Employment law compliance
- Employee benefits
- Insurance
- Termination and offboarding
Partnering with an international PEO doesn't mean the hiring company gives up total control. The employing company still decides who to hire, manages employees’ duties and responsibilities, and pays wages—the international PEO ensures those actions happen legally and stay compliant with local laws. Companies generally partner with a different international PEO for each country where they hire employees, ensuring the group has intimate knowledge of local practices and laws.
Pros of an international PEO
International hiring and human resources can be complicated, especially for companies that are just entering a new market. An international PEO can be a trusted partner, helping you with the following:
- Assuming legal liability for international labor laws, reducing risk for companies
- Facilitating faster and more efficient global expansion by establishing entities in multiple countries
- Offering a single point of contact for various international HR needs, unlike managing multiple specialists
- Managing HR logistics while allowing companies to retain control over their employees
Cons of an international PEO
While there are advantages, PEOs have some pretty hefty drawbacks. These include:
- Pricing is typically per employee—while this can be good for startups, it can be costly for larger international operations
- While companies retain some control over employees and strategy, the legal partnership with an international PEO means you have to let go of some HR control
How does an international PEO work?
Without an international PEO, it’s necessary to create a legal entity in another country. This can be time-consuming, involving everything from local laws to employment contracts and more. And the costs can pile up quicker than you'd like.
An international PEO handles the specifics of compliance and international labor laws, from registering your business to getting your people set up with payroll and benefits. This can feel like you have a local expert on your team, without having to set up shop in every new country you expand to.
How is an international PEO different?
An international PEO is a co-employer, meaning that responsibilities are split between the PEO and the employing company. An international PEO is often compared to or confused with an employer of record (EOR). However, an EOR is a direct employer, meaning employees are employed directly by the EOR and work indirectly for the company. Comparing an international PEO and an EOR, the international PEO offers more control to companies in managing and developing employees.
Traditional PEOs specialize in outsourced HR services under a similar co-employment model. However, a traditional PEO doesn’t handle global HR tasks or hiring; hence the need for an international PEO. A company could have both a traditional and an international PEO based on its domestic and international hiring and HR needs.