Mar 28 2022

EOR VS PEO

“In an era of globalization and fierce competition, treading new global markets is now an option many organizations are exploring. To stay globally compliant, they are looking to manage their human resources with EOR & PEO Service.”

by  Sriram Iyer, Founder & CEO, hrtech.sg

In an era of globalization and fierce competition, treading new global markets is now an option many organisations are exploring. The key reasons for international expansion are (1)Tap into new customer segments (2)Access diverse markets (3)Tap into culturally diverse workforce (4)Access new capital sources (5)Access new technology infrastructure

While international expansion looks like an attractive and lucrative proposition, it can be challenging as the learning curve is usually steep. As a part of this process, organizations usually focus on building a new customer base and tend to miss out on other critical aspects related to local customs, laws and regulations.


The Need for Global Compliance

In our 2022 HRTech Market Outlook Report, one of the eight key trends that we had highlighted is Global Compliance Management. Global compliance is a must for corporations with a multi-country presence, but a variety of factors—some in your control, but others not—make it increasingly difficult to achieve compliance. 

The Global Business Complexity Index 2021, shows that compliance requirements are on the rise globally and penalties for misconduct are becoming stricter. Going forward in 2022, businesses would need access to real-time, reliable data of people working under different employment models globally. This will help them make informed decisions, meet compliance expectations and ensure staff safety at work.

Let's have a look at the two concepts to understand how your organization can stay on the top of Global Compliance: 

  • Employer of Record (EOR) 
  • Professional Employer Organization (PEO)

What is EOR & PEO?

Employer of Record (EOR) and Professional Employer Organization (PEO) are third-party organizations that work with your firm to manage your human resources requirements. 

Both EOR and PEO services include strong HR capabilities to assist you in growing your workforce and improving the employee experience while you concentrate on other elements of your business. However, EOR providers offer additional legal protection and expansion prospects, whereas PEO providers are more like an outsourced HR department that work within your company.

Employer Of Record(EOR)

Employees sign employment contracts with the EOR services, not with your company, and EOR providers are lawful employers of anybody you recruit via them. (Of course, you still have to decide on the employee's pay and evaluate their work.) However, since EOR is the legal employer, you can work with any talent across geographies where the EOR service provider holds a business license. 

EOR management software offers better risk management and employee benefits while saving you time dealing with insurance companies and paperwork. General liability, workers' compensation, and other forms of insurance needed by each employee's country of residency are all provided by EORs. They also assume complete responsibility for the client company's personnel structure.

EOR performs all of the tasks of a PEO, including payroll and benefits, but for workers who work outside of the PEO's home country and without putting the client firms at risk. Because legislation, employment practices, and expectations differ throughout the world, a global EOR is a crucial partner. Any missteps might jeopardize your customers' growth aspirations. Furthermore, an EOR can save your clients time and money by avoiding the costs of forming a company, employing legal and financial advisors, and exposing themselves to the danger of worker misclassification.

Professional Employer Organization(PEO)

When you sign a co-employment agreement with a PEO service provider, it means the people you recruit are employees of your firm and they must reside wherever your company has a business registration. You are legally accountable for your employees, and the PEO provider's role is to assist you with your HR needs. A PEO is an outsourced HR department providing access to expert yet affordable services. 

A PEO management software will help you with - 

  • Employee onboarding
  • Employee evaluations
  • Contract termination
  • Making educated decisions for global HR management
  • Saving money on health insurance and perks

Many small and medium-sized firms in Singapore are working with a PEO service provider to provide excellent benefits to their workers without burdening their HR administration or in-house HR personnel.

Difference Between EOR and PEO:

The major difference between EOR & PEO are listed below,

Employer of Record
Professional Employer Organisation
Serves as a legal employerServes as a co-employer
Assumes responsibilitiesShares responsibilities
Can handle a portion of HR functionsCan handle the entire HR function
Is ideal for a portion of workforceIs ideal for the entire workforce
Service for a minimum of 1-5 employeesService for a minimum of 5-10 employees
Allows companies to expand their workforce across geographiesWorks with clients registered in specific locations
Payroll fundingNo payroll funding

Though some people use the phrases interchangeably, there are a few key differences between PEOs and EORs. PEOs primarily manage HR services for organizations, whereas EORs go a step further and hire employees on behalf of their clients. You'll need an employer of record, not a PEO, if you don't own a company in the nation where you wish to hire someone.

A service agreement is used by your record employer to manage the legal employment of your staff in other countries. The EOR is the employer on paper. In reality, the EOR does a little more than make paperwork easier for the sake of compliance. Under the EOR, you continue to work with your workers in the same way that you do with the rest of your team.

Professional employer groups do not have the resources to hire people in foreign countries on your behalf. PEOs offer many of the same human resource services as EORs but without the added layer of international compliance. PEOs also don't usually provide the same level of local legal advice as an EOR would.

In most cases, your PEO is not engaged in your employment arrangements. A professional employer organization (PEO) is more of a service provider than a worldwide expansion partner. An EOR, on the other hand, permits your organization to hire people from all over the world right away. Employment contracts are signed by your company, your employee, and your EOR to verify that your hiring of overseas workers is lawful.

It's vital to realize that an EOR can handle all of your company's HR obligations, including payroll and benefits administration. When your team expands into new nations, having an all-in-one partner to manage these critical procedures, as well as your compliance requirements, may make life a lot simpler.

Benefits of Using EOR & PEO

The advantages of using EOR & PEO are as follows:

  • Cost-effective alternative to setting up your own local entity 
  • They have the local expertise to provide a rapid and informed response to support local employees
  • Faster speed to market 
  • Payroll Compliance 
  • Offer better employee benefits and a smoother HR experience

How to Choose Between an EOR & PEO? 

Much of the decision between PEO and EOR is based on your personnel strategy. Are you taking on a contingent workforce for a limited time? Then an EOR is the best option. Do you want to outsource all of your HR functions, including onboarding and benefits administration? Engage the services of a professional employer organization (PEO).

Many businesses look at PEOs and EORs because they want to expand. We advocate selecting a solution that will fit your long-term growth ambitions rather than merely your current scenario.

Choose an EOR if you wish to open the door to development and expansion. EORs allow you to expand across state and national borders without having to worry about forming local entities or complying with local regulations. This is especially crucial in the age of remote work because collaborating with an EOR gives you access to the greatest talent in the globe, not just in your area.

A PEO can be a better choice if you want to stay local and retain full legal accountability for your small contingent crew.

EOR & PEO Service Providers in Singapore

The best EOR & PEO service providers in singapore are listed below:


Globalization Partners 

Globalization Partners enables companies to expand internationally quickly and easily across six continents and 187 countries. Hire anyone, anywhere, quickly, and easily. Use their AI-driven, automated, fully compliant global employment platform powered by their in-house worldwide HR experts. Their Global Employer of Record (EOR) model allows companies to hire employees in as little as 12 hours without having to navigate complex international legal, tax, and HR issues.


Here are some of the additional resources that can be accessed from hrtech.sg resources section to understand more about Globalization Partners’s service offerings and unique selling points:


Sign Up for Globalization Partners


Multiplier

Multiplier is a global talent enablement platform that facilitates international hiring. They save you the hassle of establishing a local legal entity to access talent in that country. Your team is legally employed by them in each country. They also provide the full employment package of compensation and benefits, in compliance with local labour laws.


Sign Up for Multiplier


Deel

Deel streamlines worldwide compliance and payments for international teams, empowering companies to hire contractors and employees globally. They offer Full Global Compliance, Compliance document collection, one-click payments, support 120+ currencies and automate invoicing. 


Sign Up for Deel


Elements Global Services

Elements acts as your single, global partner and legal employer for your employees around the world. They own and manage our own local entities in over 135 countries and fulfil all payroll and HR management. Their Direct EOR model simplifies your global expansion with our global network of expertise that provides tailored payroll, benefits, HR, local compliance and global mobility solutions that work for you. Their revolutionary technologies and innovative solutions break down the barriers to global expansion by eliminating the need for traditional outsourcing and minimizing inefficiencies and confusion.


Sign Up for Elements Global Services

Sriram Iyer is a Human Resources practitioner with around two decades of experience in the areas of HR Technology, Workforce Planning & Strategy, Talent Supply Chain, Employee Engagement, Talent Branding and Acquisition & Client Management. Based in Singapore since Jan 2012, he has strong exposure to the JAPAC region and has a knowledge of the cultural nuances of the region. Prior to becoming an entrepreneur, he has also played leadership roles with NCS (Singtel Group Enterprise) and Nasdaq-listed Cognizant Technology Solutions in Singapore, running large scale talent initiatives across regions. He is a proud alumnus of National University of Singapore (Singapore) and Symbiosis Institute of International Business (India).

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