What Is an International PEO?
They are organizations that make it simpler for smaller companies to expand their operations into global markets. Companies can turn to these agencies for all aspects of employee management in a new foreign market. The best international PEOs are able to undertake everything from background checks to onboarding personnel to supervising benefits. International PEOs make sure to stay compliant with legal restrictions for both contractors and regular employees, which means a business won’t risk fines for misclassification. In addition, international PEOs can help companies avoid being stymied by cultural differences in new global markets.
What Does PEO Stand For?
PEO stands for Professional Employer Organization. Small and mid-sized companies generally turn to PEOs for human resources management in the countries where a business hires new employees outside of their country of operations. This includes tasks such as payroll and benefits administration.
These organizations also offer human resources services like overseeing payroll, insurance, and benefits. Yet coordinating with an international PEO differs from working with a PEO in your home country. International professional employer organizations, also known as global professional employer organizations, can handle every step in hiring new employees.
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What Is the Difference Between a PEO and an Employer of Record?
The international PEO is the legal employer for the global workforce it hires to work for your business. That means it’s the Employer Of Record, or EOR, for these employees. Even though the terms international or global PEO are frequently used, global EOR more accurately describes what a global PEO does.
Keep in mind that the global PEO is only the sole EOR for international personnel in markets where your business doesn’t run its own operations. If your company contracts with a PEO in your home country, the PEO can be a co-employer. This means that both your business and the PEO will be employers of record (EOR).
What Is a Global Employment Organization?
You may be confused by the many terms and acronyms in this field. But in addition to names like global professional employers organization and international professional employers organization, you should also be familiar with the term Global Employment Organization, or GEO. A GEO is another way to describe the work of an international PEO. In fact, GEO is a more precise term for what a global PEO does. That’s because it reflects the fact that personnel are hired and employed by the GEO itself.
In the business world, the terms international PEO, EOR, and GEO are often used interchangeably. You can make sure you’re working with the right type of firm by asking who the employer of record will be for overseas hires, as well as making sure that your global EOR or GEO will handle employment compliance issues for contractors and employees.
Who Is the Legal Employer With an International EOR?
These agencies supervise areas like onboarding, offboarding, benefits, and payroll, and they are also the legal employer for people hired internationally. Yet keep in mind that the people on the global PEO’s payroll are still working for your business. Your management team will decide what projects they’re assigned. These workers can attend meetings and participate in discussions within your company. Your EOR partner simply makes sure your new workers remain in compliance with local laws and regulations.
This is in contrast to when companies use a PEO in the country where they are based. In those cases, the PEO handling human resources is often considered a co-employer. Both are legally responsible for employees in this situation.
Global PEO Companies vs. Hiring Contractors
Some companies might initially think that using international contractors is preferable to coordinating with an international professional employer organization. On the surface, hiring contractors is a less expensive path. However, your business could run into legal difficulties and face fines should you work with misclassified contractors. Instead of taking that risk, many companies turn to international PEO organizations. These organizations make sure your company stays compliant with all local laws and regulations.
What Are the Benefits to Businesses?
Global professional employers organizations allow companies to work with overseas talent and explore new markets. And an international professional employers organization can often save money for companies during this process. Working with a PEO means a firm won’t have to go through the process of setting up a foreign legal entity to operate in a new country.
What if your organization intends to establish a permanent presence in a new market eventually? Global PEO services can still be useful and help your firm conserve resources. By partnering with one of the world’s top international PEO companies, an organization can have people working on the ground as it navigates through the legal requirements to set up a base in a new country.
Why Would a Company Use an International EOR?
If your business wants to build its international profile, a partnership with one of the top agencies in a prospective market may be the right answer. Here are a few example situations where turning to one of these companies is a good idea:
- When a firm wants to expand to a new market: Working with top companies makes it easier for small and mid-size businesses to test the waters before committing a vast amount of time and effort to market expansion.
- To be able to work with talent from across the globe: They make it possible for companies to bring on international workers while staying in compliance with the laws and regulations in different countries. In addition, these agencies are adept at addressing common issues such as language or cultural differences.
- To keep talented employees who have relocated: Global providers allow companies to keep great people working on their team, no matter where they decide to call home.
- To avoid relying on contractors: When companies use overseas contractors, they risk misclassifying them and not staying compliant with local laws. With international PEO organizations, your company can rest easy because the PEO will oversee compliance as the employer of record for any hires.
Also Read: Foreign General Liability for Organizations
How to Find the Best Global PEO For Your Business
There are many trusted international PEO companies, but you want to work with one that’s a match for your firm. This means you’re looking for international PEO services that suit your company’s unique culture and future plans.
When seeking a match, be ready to ask questions to gauge compatibility. Here are a few things to keep in mind in order to find the best international PEO for your company:
- Top agencies are upfront about what they charge clients. Most either base their fees on a percentage of employee compensation plus taxes or charge a set amount per employee. It’s up to your management team to decide which approach is the better fit for your organization.
- Ask what the process is should your company decide at some point to set up a legal business entity in the market where you’re currently using global PEO services. The best global PEO providers often have a way to transition the PEO’s employees over to a company’s payroll and benefits, which means you don’t have to start the hiring process all over again.
- Is your company interested in expanding to multiple new markets? Some companies have built a trusted network of experts in several countries. You might prefer to work with one global firm that can assist you with new hires and local compliance requirements across the globe, rather than contracting with a different international PEO in separate foreign markets.
- Though the international organization is the official employer, the business contracting with the provider should be able to assign work tasks as needed. Talk to prospective firms to make sure no intervening layers of management will slow operations.
- Their services can be adjusted to suit what an organization has in mind for a new market. Talk to potential partners to make sure they understand your requirements and have the ability to do what you need.
Global Insurance for Organizations
- Compare multiple quotes and coverage options
- Work with an insurance expert at no additional cost
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