What is the Difference Between PEO and EOR? 6 Things to Know

Source: canadianpayrollservices.com

We are pretty sure that you have seen two acronyms in many different places in the online world. These two acronyms actually refer to Employer of Record and Professional Employer Organization. Both of these services can help entrepreneurs to hire people from all over the world.

Business owners often think this is an easy task. But, keep in mind that international law is pretty strict. Because of that, you will undoubtedly need some sort of employment partner that can guide you throughout the process.

Anyway, in this article, we would like to educate our readers from the United Kingdom. In the other part of the article, you will find out the main difference between UK Peo and EOR. After that, we will also explain which of these two services is better for your organization. So, let’s go!

Source: employers.digitalgrads.com

What Is PEO?

Let’s repeat once again. PEO stands for professional employer organization. This is a type of employment service that small and medium-sized companies can use. Their purpose is to guide entrepreneurs through a couple of challenging HR processes. For instance, you can ask experts of this type to help you with tax filing, development, recruiting, payroll processing, etc.

As you see, PEO is not the type of organization that you can hire on a full-time basis. This is an outsourcing service. Many entrepreneurs are a bit skeptical when they need to outsource a particular service. But, have in mind that all the mentioned processes are going to be completed a lot easier. Plus, the service is not expensive; it is actually pretty cost-effective.

Source: globelise.com

What Is EOR?

As we said, EOR stands for Employer of Record. It is not a secret that companies within the United Kingdom want to reach the most talented potential employees around the globe. But, as stated, international law is pretty confusing and it comes with a list of requirements. Meeting these requirements isn’t easy. But, it can become a lot easier if you find an appropriate EOR provider.

We believe that you do not possess a legal corporation in other countries. Even if you do, it is hard to believe you have a legal corporation in all the markets where you can potentially find good employees. Because of that, you should allow EOR providers to help you with local compliance duties in those countries as well as some other tasks.

Hiring people internationally is not an easy task at all (even if we disclude the duties you have to solve). Because of that, it can be pretty costly if you have international ambitions. If you are not experienced with hiring processes, EOR providers are an amazing alternative.

Source: researchgate.net

Main Differences and Similarities between EOR and PEO

Okay, now after we explained some basics, it is about time to explain the main differences between PEO and EOR. Generally speaking, there is nothing complex that you won’t understand. Based on the highlighted differences below, you will manage to understand which service is more suitable for your organization.

  • PEO providers require businesses to have legal entities in a specific country or region. On the other hand, the EOR providers do not have such requirements. They will help you hire people from all over the world even if you do not have an entity in a specific country or region.
  • EOR is a legit and legal option for all entrepreneurs that want to hire workers from all over the world. They will get a “valid paper” that confirms the legacy of that type of hiring. On the other hand, things with PEO are a bit different. This is actually a co-employment arrangement between three different parties. Those parties are the employee, PEO, as well as, your company itself.

To conclude, the biggest difference of all is related to local entities. If you do not have a local entity, then you will have to collaborate with an EOR provider. On the other hand, if you do have a legal entity, PEO will take care of everything.

But, you also need to have in mind that both options have certain similarities as well. The biggest similarity of all is that they help with almost identical HR tasks. For example, both options will help you with different tax deductions, reporting, benefits as well as payrolls.

Source: skipprichard.com

Be Careful with EOR

There is one hint that we need to give to all the people that are planning to hire people internationally. Some organizations like to represent themselves as EOR. However, as we said, these organizations will not require you to have an entity in a particular region or country. But, we have noticed that some EOR companies have such requirements.

If you find something like that, then be sure that you are dealing with a scam. PEO services are the only ones that have such requirements. Don’t get tricked!

So, Which Type of Partner Is Better for You?

Which option is more suitable for your business depends on different factors. But, the main one is the legal entity. If you have a legal entity in another country, PEO services will be a much better option for you. You can be sure that experts will pick the right works that have the necessary quality you are looking for. On the other hand, if you do not have a headquarters in another country, EOR is a much better option.

Source: bestcareeap.org

Are Both Services Worth It?

Without any doubt, the answer to that question is YES. Do you know someone in a region or country where you plan to start a business? Can you trust contractors that they are capable enough of finding the perfect employee? Without good employees, your business won’t manage to make progress. Because of that, outsourcing this service will certainly pay off in the end. Taking care of HR tasks isn’t easy at all. It is always better to leave the experts to complete the job instead of you.


These are all the differences and similarities between PEO and EOR. We are sure you will easily determine which option is more suitable for you. Both services are pretty good for taking care of HR tasks for an affordable price. Just find the right people to collaborate with, and you will experience all the benefits we talked about.