Employer of Record (EOR) vs. Professional Employer Organization (PEO)

When expanding internationally, especially into Asia Pacific regions like Hong Kong, Thailand, Indonesia, the Philippines, Vietnam, Malaysia, and Taiwan, companies often face the decision of choosing between an Employer of Record (EOR) and a Professional Employer Organization (PEO). While both provide valuable services, they differ in their approach and scope of responsibility.

Key Differences Between an EOR and a PEO

1. Legal Employer

   • An EOR becomes the legal employer for your international staff, handling all compliance, payroll, and HR functions in the host country.
   • A PEO operates under a co-employment model, where your company retains some employer responsibilities, and the PEO manages HR functions and compliance.

     For example, if a company from France wants to hire employees in Taiwan, an EOR would handle all aspects of employment, while a PEO would work alongside the company in a shared responsibility model.

2. Compliance Management

   • EOR services ensure full compliance with local labor laws, including employment contracts and employee benefits.
   • PEO services assist with compliance but share employer responsibilities, which may pose risks in countries with strict regulations.

3. Operational Scope

   • An EOR offers a comprehensive solution, managing everything from payroll to compliance.
   • A PEO focuses on HR and payroll functions but may not cover all legal aspects in the host country.