Expanding globally comes with complex challenges - from unfamiliar regulations and tax obligations to a lack of local employment law knowledge. Before going global, it’s important to understand the support systems that can simplify your international hiring and growth strategies.
Employer of Record (EOR) services and Professional Employer Organisations (PEOs) are two solutions that can reduce the headaches of global expansion from an employment and HR perspective. But what does each option offer and how do you know which one will be the right fit?
In this post, we’ll explain the core differences between these two models, comparing compliance management, hiring scalability, and overall features. By the end, you’ll hopefully gain clarity on the best option for your company’s global plans and specific needs.
Before comparing these international employment solutions, let’s clearly define what each model represents:
An Employer of Record (EOR) is a service provider that legally employs some (or all) of your workforce on your behalf. With an EOR, you don’t need to set up foreign legal entities as you expand globally.
The EOR assumes legal responsibility for employment liabilities, including compliance, payroll, and benefits. Rather than just an extension of your HR department, a quality EOR acts as a full-service global expansion partner by owning key legal employer obligations across borders, such as:
Drafting and signing employment contracts
Ensuring compliance with local labour laws
Processing payroll
Paying taxes and social security contributions
Providing mandated benefits
Onboarding and offboarding (including termination support)
Administration Relief: The EOR takes care of all hiring paperwork, contracts, payroll, and benefits
Local Market Expertise: In-country experts ensure hiring and employment practices adhere to local regulations across all your international locations
Compliance Cover: Leading EOR services stay on top of changes to local employment laws and informs you of relevant updates. This ensures there are no compliance blind spots.
Scalability and Agility: Rapidly expand your global footprint by expanding into countries without establishing local entities first.
A Professional Employer Organisation (PEO) partners with you in a co-employment relationship, sharing or fully managing key HR responsibilities related to the employees. One of the key differences from the EOR model is that with a PEO, you retain your status as the primary legal employer. It's important to note that you can only use a PEO if you already have an established entity in the country where you require their HR services.
PEOs are typically used to offload tasks, such as:
Recruiting and hiring
Processing payroll and compensation
Administering benefits
Ensuring compliance with local labour laws
Cost Optimisation: PEOs leverage collective purchasing power to negotiate competitive rates on benefits like health insurance and workers’ compensation. This provides budget relief for HR departments
Turnkey Tech and Systems: Leading PEOs typically invest in advanced HRIS technology and payroll systems that streamline onboarding, compliance, and data management - increasing efficiency
Operational Support: Day-to-day administrative tasks like payroll, contracting, and managing employee files are handled by PEO HR experts.
| Feature | EOR | PEO |
| Legal Employer | Yes (takes on employer responsibilities) | No (acts as a co-employer) |
| Compliance | Manages all employment law compliance, including local regulations, taxes, and benefits | May assist with compliance, but ultimate responsibility is yours |
| Payroll | Handles all aspects of payroll processing, including local taxes and deductions | Typically provides payroll processing, often integrated with other HR functions |
| Entity Required | No (ideal for companies without a local presence) | Yes (requires you to have a registered entity in the country where you hire employees) |
| Best for... | Rapid global expansion Minimising compliance risks in new markets Testing new markets before committing to a local entity | Companies with established entities seeking HR support Outsourcing HR functions to focus on core business activities Accessing improved benefits and HR expertise |
Beyond the core definitions, here are some additional factors to consider when weighing up whether an EOR or PEO is the right fit for your company:
EOR: When using an EOR, employees benefit from unified and consistent support across borders. For example, at Boundless, we ensure a smooth and unified onboarding experience across all of the countries we serve. This includes the singing of employment contracts, onboarding to our platform, and access to our diligent customer support. This centralised EOR structure means employees have a single point of contact for any questions they may have. That continuity from day one simplifies the employee experience while fully complying with regional laws.
PEO: With a PEO, the legal and admin responsibilities remain with you, the employer. As such, you still need to have expertise across regions to answer employee questions. This means that even if the PEO is processing payroll, the workers will need to contact their employing company with questions. Yet, employees under a PEO model often benefit from enhanced benefits packages. PEOs leverage their extensive networks and buying power to offer employees a wider array of choices and potentially more competitive options for health insurance, retirement plans, and other benefits.
EOR: With an EOR, you offload the burden of becoming an expert on employment compliance across multiple countries. The EOR assumes much of the legal employer responsibilities associated with international hiring, and they should keep you informed about changing regional laws and regulations. However, the quality of compliance management can vary significantly among providers, so choosing a reputable and experienced EOR is crucial.
PEO: With a PEO service, you retain co-employer status, which means you share compliance liability with the PEO (depending on the country). While many PEOs have compliance specialists who can help protect your business, the ultimate accountability often rests with you as the employer. This means you’ll need in-house resources to actively monitor legislative changes across all locations where your PEO handles payroll and HR-related tasks. Although the PEO assists with operational tasks like payroll, the responsibility for oversight and ensuring compliance ultimately falls on your shoulders.
EOR: EOR solutions provide unmatched agility for you to scale your company internationally. With established infrastructure across regions, EORs allow rapid, seamless global growth - easily expanding your teams without needing to set up your own entities. This model empowers swift activation of new countries aligned to your growth roadmap. .
PEO: Expanding globally with PEO services typically involves more steps on your end. Adding new locales requires you to first establish your own local entity in each one before assessing PEO availability. This slows down your expansion speed. Yet, this is mainly due to the fact that a PEO's core purpose differs from EORs - PEOs focus on reducing administrative HR-based workloads in markets where you already have infrastructure rather than rapidly enabling geographic growth.
With everything we have covered so far, let's take a look at a few of the key use cases for each of these global employment models. First up - a look at when EORs would be the preferred option.
If you’re an early-stage startup or scaling an existing business, rapidly hiring overseas with an EOR lets you access global talent with ease. No need to spend time and resources incorporating local entities early on. EORs also provide comprehensive HR services, including payroll processing, compliance with employment laws, and benefits administration, allowing businesses to streamline their HR and compliance operations while focusing on core activities.
Expanding into a new country is risky, and once established, entities can be difficult to close. An EOR provides the opportunity to test a new market with far fewer employment risks. Once you validate product-market fit and want to scale more substantially, you can always establish your own entity later on.
In finance, healthcare, communications, and other highly regulated sectors, offloading compliance risk onto an EOR provides that all important peace of mind as you navigate complex policy environments abroad.
EOR services usually present a more cost-effective solution compared to setting up and running your own entity. While initial setup costs for an owned entity might not be that excessive, the ongoing expenses of maintenance can quickly add up. To shed some light on this, here is a list of all the things we take care of on behalf of our customers with global workforces.
This makes EOR services an appealing option for a wide range of businesses, from bootstrapped startups and companies operating on tighter budgets to larger organisations with thousands of employees.
If you want to tap global talent pools to build a productive remote team, an EOR minimises cross-border hiring friction. Focus on managing great talent without administrative distractions.
Here are some situations where opting for a PEO makes the most sense:
For companies that have already established local branches, subsidiaries, or entities abroad, a PEO helps optimise HR, payroll, benefits, and compliance for those existing overseas employees.
PEOs enable you to outsource HR functions in order to free up internal resources. This means you can focus energy on accelerating core business initiatives rather than getting bogged down in global HR complexities.
By automating tasks like onboarding, payroll, benefits enrolment, and time tracking, PEOs increase HR efficiency. Not only does this minimise administrative workload, but it also reduces compliance risks and errors through standardised global processes.
In competitive global talent markets, comprehensive benefits packages are key for recruitment and retention. PEOs leverage bulk buying power to provide upgraded benefits that individual companies may struggle to offer on their own.
Many PEOs provide talent acquisition services to assist help you hire employees in unfamiliar overseas markets. This recruitment expertise and local network is invaluable for companies lacking experience sourcing global candidates.
With a firm grasp on the pros and cons of each employment model, answering a few strategic questions should help you figure out whether an EOR or PEO is the best fit.
💼 What are your core struggles?
If your main headaches are related to navigating overseas legal and compliance complexity, an EOR can eliminate those concerns.
If your main goal is to offload/outsource HR tasks in a country where you already have an entity, a PEO is likely the best option.
🌎 Do you want to hire overseas without setting up foreign entities?
If you want to deploy talent in multiple countries before committing to establishing your own entity, an EOR enables that strategic agility.
📈 Do you already have established overseas entities?
If yes, a PEO can plug into your existing infrastructure abroad and help out with some of the HR and payroll tasks.
However, even if you have an overseas subsidiary, an EOR still might make sense if you want to offload all employment and compliance responsibilities.
⚖️ Is legal/compliance risk a top concern?
If nerves around violating foreign employment regulations keep you up at night, sharing those obligations with an EOR provides confidence and peace of mind while expanding.
🔎 How quickly do you need to scale overseas?
If rapid global growth is critical over the coming quarters, EORs easily facilitate fast country expansion and team ramp-up. PEOs support steadier, slower growth.
🗄️ Do you want to completely offload HR responsibilities?
If your goal is to free up your internal team by outsourcing all HR tasks, including payroll, benefits management, recruitment, and onboarding, then a PEO might be the right fit.
🏋️♀️ Do you want access to better employee benefits?
If you're looking to enhance your employee benefits package to attract and retain top talent, PEO services can offer access to a wider range of benefits options and potentially better rates due to their buying power.
✈️ Are you testing the waters in a new market?
If you're unsure about committing to a long-term presence in a new country, an EOR allows you to hire and test the market without establishing your own legal entity.
When selecting an EOR or PEO service, it’s crucial to vet vendors thoroughly since service quality varies dramatically. Here are some key evaluation criteria:
It's not enough to just claim global expertise - drill down on whether vendors have substantial in-country knowledge. Ask questions like: Can you walk me through the unique compliance issues in Germany? How do you stay on top of changing laws in the UK? Any quality partner should speak fluently to the nuances and rapidly shifting regulations across your expansion locations.
Take your time researching this. Have there been any major issues or regulatory run-ins? It's perfectly fair to ask for details. Every vendor has learning curves, but you want reassurance they take compliance seriously, especially given the risks involved with overseas hiring. Require guarantees that their systems are constructed to adhere to laws for your specific expansion plans.
Unfortunately, some vendors overstate what they can deliver, sometimes promoting dubious "workarounds" for complex employment regulations abroad. Be very wary of any "too good to be true" pitches. Make sure above-board compliance takes centre stage in their practices and philosophies.
Mistakes or delays with international payroll can undermine employee trust and company reputation fast. Ask point blank about their payroll accuracy rates, what currencies they process smoothly, and look at customer review sites to spot any red flags with errors or lagging support. Global payroll needs to work flawlessly.
Beyond the legal and compliance aspects, the day-to-day experience with your EOR or PEO provider is critical. Consider the following:
Responsiveness: How quickly do they respond to inquiries or issues?
Communication Channels: Do they offer multiple channels for communication? Are they available during your working hours?
Technology Platform: Is their technology platform user-friendly?
Expanding globally presents huge opportunities, but also legal and operational risks if not handled correctly. If the Employer of Record model seems like the right fit for your distributed hiring needs, it’s important that you avoid providers who overpromise. Many talk about their wide-ranging capabilities, yet underdeliver compliant support, leaving customers vulnerable to fines, shutdowns, and damaged reputations.
However, we are making it our personal mission to raise the bar on responsible overseas hiring in the EOR space.
🌎 Local Expertise - With a fully distributed global team, Boundless offers specialised in-region knowledge tailored to your expansion needs. From Europe to Latin America and Australia and South Africa, we empower compliant cross-border business growth.
⚖️ Gold Standard Compliance - We stress regulatory compliance over cutting corners. Our in-house legal and tax experts ensure full compliance guided by your specific industry, and we always stay ahead of the changing regulatory landscape.
🤝 Consultative & Responsive - Expect collaborative, customised guidance for your global growth ambitions - not just another vendor relationship. We care deeply that you execute domestic and overseas hiring the right way.
💰Hassle-Free Global Payroll - We guarantee accurate, on-time payroll processing, consolidated into a single invoice for all your global employees.
Interested to learn more? Reach out to one of our team members today!
