A global PEO (professional employer organization) is a service firm that helps companies expand into new markets without setting up new international business entities.
The global PEO becomes the employer of record for their client company, taking on the complexities of international hiring like payroll and tax compliance. It can also be referred to as an international PEO, EOR (employer of record), or global employment organization.
What does a global PEO do?
Excellent global PEO services cover every single aspect of international expansion. They handle:
-
Global payroll: Whether your workforce spans a country or continents, you can use a global PEO to help you process and distribute payroll. Pay global employees on time, for the right amount, without a hiccup—wherever they are. No more figuring out monetary conversions or taxes.
-
Employee benefit plans and administration: Providing current and prospective employees with competitive compensation includes competitive benefit packages. With a global PEO (EOR), you can select benefit plans that fit the legal requirements of your employee’s country, and administer them through the platform they’re used to.
-
Tax filing: A global PEO can handle taxes, social contributions, pension, and other fees, and ensure you deduct the right amount depending on the worker’s local laws.
-
Employee onboarding: Provide new employees with seamless onboarding experiences by having their contract and legal documents ready for them to e-sign on your global PEO system.
-
Employment contracts: Create employment contracts that are compliant with each country’s unique tax and employment laws.
-
Insurance plans: Provide employees with the best available health insurance plans in their area.
-
Regulatory compliance: Some global PEOs, like Deel, have a network of legal partners who regularly review contracts to ensure they’re legally compliant and are kept up-to-date as the requirements change.
-
HR and employee management: Automate your menial tasks, simplify with digital processes, and finally have a single source of truth for all employees. Plus, the heavier tasks—like legal and compliance documentation—are left to a network of experts.
Is a PEO the same as a global PEO?
Standard PEOs and global PEOs are alike, but not the same. A PEO is used to outsource HR tasks and administrative duties, but they don’t have the same international power as a global PEO.
A Standard PEO:
-
Are co-employers of your employees
-
Require you have a legal entity in each country where an employee resides
-
Handle general HR tasks and administrative duties
-
Don’t provide certain insurance to employees
-
Don’t handle all legal compliance issues
-
Typically require a minimum of five to ten employees
A Global PEO:
-
Is the legal employer of your international worker
-
Will likely already have a local entity in a worker’s country
-
Handles onboarding, contracts, payroll services, termination, and more
-
Provides full-suite insurance, general liability, workers compensation, and more
-
Takes care of all legal compliance documentation (and all legal and financial risk)
-
No minimum employee requirements
What are the benefits of global PEO outsourcing?
The main benefit of global PEO outsourcing is that it makes international expansion simple. But let’s take a closer look into the benefits your HR team will experience.
More time and energy for core business needs
When a company enters international expansion, they need to manage unique labor, tax, and compliance laws for every employee from a new country.
With global PEO services, you can take those tasks off your HR team’s plate and hand them over to experts. Swap out hours of manual data entry and correcting human error and focus on your core business needs, like developing your global talent or expanding your services.
Cost-effective savings
Although a global PEO is often a large investment, in the long run, the investment pays off. Robotic process automation (RPA) is commonly used for processing invoices, data transfers, accounting, and payroll in global PEOs. And according to a Deloitte survey, HR teams realized 10% to 60% in savings by applying that technology to their processes.
Access to a global team of top talent
Have you ever found the perfect candidate for the job, only to realize they can’t join the team because of their physical location? With a global PEO, international borders are no longer barriers. Global PEOs enable their client companies to hire anywhere in the world without setting up a subsidiary in a new country, opening the door to the best talent, not just the nearest.
Local compliance in new markets
Understanding compliance laws for a foreign country is a large undertaking, and one that’s best left to the experts. EORs like Deel hire professionals to ensure each contract is created in compliance with local laws and requirements, including:
-
Taxes
-
Social Security
-
Workers’ compensation
-
Minimum wage
-
Termination requirements
-
Employee benefits
Global expansion without setting up new business entities
If you’re looking to hire internationally without a global PEO, you have two options. You can either hire the worker as an independent contractor, or set up a business entity in the worker’s home country.
Hiring foreign contractors can bring you a larger pool of talent at typically lower prices. But hiring contractors also comes with the risk of misclassification and weaker non-competition clauses, NDA protection, and IP protection. Starting up a new business entity in every new market you hire in is costly and can take time, which isn’t conducive to a fast-growing business.
With a global PEO, you hand off the legal and financial risk to professionals, while still handling the day-to-day work of your international employees.
Strong employee data security
Managing international teams means handling sensitive employee data like employment contracts and payroll information from around the world. Protecting that information shouldn’t be another administrative task for your HR team. Instead, choose a GDPR-compliant global PEO with advanced IP protection, an up-to-date information security program, and an authentication access method, like Single Sign-On (SSO).
Clear financial forecasts for your business
Want to see an annual breakdown of your US Social Security contributions? What about your pension costs in the UK? With a data-driven EOR, you can see every line item to get a better understanding of your global payroll data. Then, you can use that information to drive improvements across the board.
How much does a global PEO cost?
Your global PEO (EOR) investment will depend on the services you need and the number of employees you have. At Deel, our services are priced per contract, per month. Learn more about Deel’s pricing model.
