Table of Contents

PEO Vs EOR : What's The Difference

Quick Summary : In this article you will learn

  • What is PEO & EOR ?
  • Difference between PEO VS EOR
  • Services of EOR & PEO

What is PEO?

PEO stands for Professional employer organization. It is an organization that enters into a joint-employment relationship with an employer by hiring employees to the employer, so PEO shares and directs different employee-related duties and liabilities. So using the PEO, employers can outsource the human resource functions, including employee benefits, employment taxes, compensation, and payroll administration. Its important to mention that co-employment is legal in US, while in some countries like France it is illegal for working two employs at same time.

What is EOR ?

EOR stands for Employer of Record, which deals with the legal employment of your workers in various countries. EOR is the employer on paper. But in reality, EOR only helps with the paperwork just for compliance. Under the EOR you continue to work with your employer the same way you used to work with all other employers. So EOR helps you to hire full-time workers in countries where you don’t have a legal entity.

PEO vs EOR Key Differences Between Them

They are both often interchangeable, but they have some essential distinctions. Most PEOs handle the HR functions for businesses that already own the entities. EORs mainly employ the workers on behalf of their client companies without needing to open an entity.

In the case you do not own an entity in the country where you want to hire someone, then in such a case, EOR is needed, not a PEO. As working with the global employment partner and having the requirement to open your entity before hiring the workers, that partner, in reality, provides EOR services, but only PEO services. Sometimes these companies are called Global PEOs or providers of Global PEO services.

The key differences between an EOR and a PEO include:-

  1. The employer of record can hire the workers in other countries on your behalf without having the office location in that country. In contrast, PEO requires you to have your local entity in that country or region.
  2. On paper, EOR is the legal employer of your worker. Using the PEO, co-employment terms exist between your company, employer, and PEO.
  3. Having an own legal entity in the country makes working with a PEO more of an affordable choice.
  4. Working with an EOR is more affordable and rapid than opening a new entity if you don’t have an entity.
You can hire employees from different countries by Professional Employer Organization only if you open an entity. Like the EOR, PEOs provide the same human resources as payroll and benefits administration. But with the PEO, you have the additional need for co-employment with your local entity.

PEOs need you to have a local entity and enter the co-employment need, while EOR allows you to hire in different countries with no entity and without the co-employment status.

Read Also : What is DPA

What services does Por provide?

Some or maybe all the functions of HR can be outsourced depending on the PEO and the contract. Companies are not interested in co-employment but want some of the benefits of outsourcing to get that from the administrative services outsourcing.

Many advantages exist for the PEO, especially for a small employer that may not have the deep HR experience or system abilities for functions such as payrolls and HRIS or the time and resources needed to focus on many transactional HR functions.

Using PEO, HR can relieve themselves from the burden such as:-

  • Hiring.
  • Administration of the benefits.
  • Administration of the payroll.
  • Unemployment administration.
  • Drug testing programs.
  • Compliance assistance.
  • Medical and family leave administration

What Services Does Eor Provides ?

It is responsible for a payroll that ensures all the critical withholding and deductions and other compliance obligations of employers are met. They are cost-effective, more compliant, and an international expansion tool that sets up a separate company or subsidiary abroad.

You can employ professionals in different countries without needing a local setup. It saves the cost of developing various subsidiaries and allows the onboarding of new employees within days. With the international employer of record solution, you can ensure that all the hired staff is in full visa and immigration compliance.


The decision to contract the services of such companies depends on the level of liability and stress the clients can handle. The payment schedule complexity can address all the answers, the number of jurisdictions, and the insurance policies involved in your present staff.


PEO is a type of a full-service human resources outsourcing that is a type of a co-employment. In such a type of a relationship both the business and the PEO share some employer duties. Mostly payrolls are processed, workers compensation coverage is maintained, by the PEOs.
A combined organization of manufacturers, retailers, or other employers of wage laborers is actually an employers organization.

Post Tags

Share This :