A global Professional Employer Organization (PEO) is an organization that allows companies to hire people in other countries. While the global PEO may act as the legal employer, the company partnering with the global PEO is the one making all the decisions regarding the workers.
The global PEO is there to handle payroll, payments and tax requirements for the country. The goal of this agreement is to give the original employer flexibility to bring on workers abroad without too much of a headache regarding legal liability, or the need to open an entity.
Difference between PEO, global PEO, and EOR
PEO, global PEO, and EOR are terms that sometimes get mixed up. We go through the differences below:
Professional Employer Organization (PEO) refers to a third-party provider that handles HR, payroll, and employment-related tasks, usually on a local scale. In this arrangement, the company and the third-party provider enter a co-employment agreement, whereby the third-party provider oversees employment-related tasks, while the company handles the day-to-day responsibilities.
Global PEO and Employer of Record (EOR) are terms that tend to be used interchangeably. In this case, the global expert alliance recruits and manages workers in a different country on behalf of another company. Within this agreement, the EOR/Global PEO is the legal employer, taking full legal liability for any mishaps.
General process to partnering with a global PEO
In general, the process of partnering with a global PEO tends to go something like this:
- Researching the global PEO in terms of coverage, quality, and reputation
- Scheduling an initial consultation to figure out if the global PEO meets the targets you’re looking to hit
- Conducting thorough background checks
- Completing SLA negotiations – a service level agreement (SLA) is a document that outlines terms and conditions for this type of partnership. The document should include expectations of the partnership, the responsibilities of each party, performance metrics, and other factors.
What to consider when using a global PEO
It’s essential that the global PEO you choose has the level of expertise necessary to help you grow and protect your business. That means:
Top-notch compliance expertise. The global PEO of your choice needs to know the relevant country’s compliance requirements inside and out. On top of that, they need to be able to keep their finger on the pulse regarding any regulatory or legal changes that can affect employment and payroll requirements.
Security and privacy at its peak. Working with a global PEO means you are putting your workers’ data, as well as your own, in the hands of another party. Trust, therefore, is essential. The global PEO you choose should have the protection necessary to keep this information safe from hacking and data breaches.
Flexibility and scalability. You may very well choose to eventually expand your coverage in the country in which you’ve partnered with your global PEO. In that case, the third-party provider should be able to allow for that growth and expansion to occur.
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