Global employment organization is also known as global professional employer organization (PEO). The global employment organization (GEO) market is expected to grow to $8.8 million from 2015-2025. As the industry is booming and remote work is gaining traction, many companies are looking to hire both local and global talent to meet their business goals and take their companies to the next level. But how does a company hire employees across the globe? Following country-specific procedures requires a lot of paperwork, as well as time and money. The answer is using GEO services. It’s an easy and fast way to hire employees from around the globe without spending too much time getting familiar with local laws or setting up multiple local entities. In this article, we will discuss global employment organizations, how they work, what they do, and how you can benefit from them.
What Is a Global Employment Organization (Geo)?
A global employment organization is an organization that hires foreign employees without requiring a physical location in that particular place. It often follows the procedure of employers of record for the specific country where the employees are being hired. When a GEO adheres to a procedure of local employers of record, the procedure itself is already systematically working to onboard the new employee(s). This makes the hiring process smooth and ensures that employers comply with established laws in the employee’s native country, where the GEO relies on local experts.
For the hiring process, companies often have an in-house HR department. But large enterprises looking to expand their hiring toward international talent cannot rely on their in-house HR department. Companies looking to expand internationally turn to GEO services to help them navigate the distinct laws and business practices in each country where employees are being hired. Using GEO, these companies avoid having to build a separate location in each country where their employees work.
Why Use GEO Services?
Global employment organizations are often backed by experts and specialists who advise on country-specific laws, business practices, onboarding, and payroll.
Companies use GEO to:
- quickly hire exceptional global talent.
- save time and money by doing necessary registration processes and acting as a local entity in the particular country.
- eliminate HR workload.
- ensure that the loyal payroll meets all legal and regulatory standards in the host country.
What Does a Global Employment Organization Do?
A GEO handles various tasks and departments such as HR, staffing, and administrative services crucial to a large enterprise’s day-to-day functioning.
Some of the tasks of a GEO include:
- Making sure that the entity follows all the local rules and regulations
- Taking care of insurance and taxes
- Handling payroll requirements in the host country
- Managing and creating contracts that adhere to local laws
- Making sure that all employees receive equal and fair benefits
- Finding and hiring qualified talent
- Transferring money from the company’s native country to foreign countries
- Filling out Visa-related and work permit requests
- Running a local entity through EOR
- Advising the entity on various hiring aspects
Additional Benefits of GEO
GEO is not only used to hire and manage global employees. There are various other benefits of GEO services:
- You can get a different alternative of establishing a local entity
Even though GEO services often mean a company can hire foreign employees without establishing a physical branch in the country where the employee works, some companies must establish local entities due to the nature of their business. While GEO services can help with this, there are other ways to set up a local entity to hire global employees. Setting up a local entity often takes weeks or months due to heavy paperwork and local laws. This consumes a lot of time, energy, and money, which will not make enough sense when all you have to do is to hire global employees. In this case, with GEO, you don’t have to establish any entity to hire multiple global employees.
- With a GEO, you can use a third party company or partner
If your company has existing business relationships in a foreign country, then the company in the foreign country can place your employees on their payroll. This alternative works out when you have a strong business relationship with a third-party company whose services you can utilize. If you’re planning to use the services of a third party, make sure they are knowledgeable and reputable in their field. Also, be sure to have all agreements in writing, outlining all expectations, services, communication channels, anticipated timeline and deadlines.
- You can hire global employees as an independent contractor.
To avoid any employment issues while hiring global staff, you can hire people as independent contractors instead. An independent contractor works under self-employed status and therefore is responsible for paying taxes and securing healthcare and other benefits independently. The important thing to keep in mind when hiring a foreign independent contractor is to be aware of any local laws that might affect how you work with that person.
- You can pay global employees remotely from your native country
Another alternative to using GEO services to hire global employees is to put your global employees on a remote payroll from your native country. To avoid problems with money transfers and payments, ensure that all transactions between you and the foreign employee adhere to ethical business practices in the employee’s country.
GEO services avoid all the issues that you might face while putting the employees on your own payroll. And you can easily provide employee benefits on a remote payroll system.
Global Employment Organization Vs EOR
Like PEO, EOR is very similar to GEO but with slight differences. Unlike EOR, GEO handles all the HR work necessary in an employee’s country. A GEO can hire and manage all foreign employees, as well as fulfill all the legal responsibilities for new employees. When a company employs a GEO, the GEO becomes EOR for that particular company — a legal entity that hires global employees. In other words, GEO is EOR. The GEO also then assumes any legal risk associated with the country’s laws and business practices.
Global Employment Organization Vs PEO
Global employment organization is also known as global professional employer organization (PEO). However, there are some subtle-yet-important differences between the two terms. Consider these differences to determine which route is best for your company before taking it global.
PEO is a co-employment that doesn’t exist outside the USA, and in some countries, it’s not even allowed. For example, co-employment does not exist in France and Switzerland. This would mean that GEO will be a better option if you’re planning a global expansion.
Another difference between PEO and GEO is that PEO does not offer all the GEO employment services. PEO does offer payroll and registration services but does not offer EOR through GEO.
Whether for the short or long term, GEO offers a more advanced employment solution for companies. GEO through EOR handles all aspects of employment administration.
Benefits of Using GEO Services As EOR
Some of the benefits of using GEO as EOR are:
- Assisting with work permits and immigration
With EOR as a local employer, you can sponsor work permits for any new employee. You don’t have to worry about filling out paperwork, meeting deadlines, or knowing the ins and outs of local laws. With GEO and EOR, you can easily sponsor work permits and visas for any of your international employees.
- Assisting with all tax compliance and legal issues
Experienced in working with tax regulations, EOR can handle all tax compliance and withholding details that pertain to your foreign employees. EOR experts and specialists help with hiring and outsourcing and are well familiar with local laws, tax compliance and international hiring procedures
- You can run a remote payroll through your native country
With EOR, you can operate a payroll directly from your own country, through which international employees receive pay stubs like any other employee, along with all contributions and withholdings.
- GEO saves time and money
Setting up a local entity in a foreign country simply to hire one or more foreign employees is complicated and costly. By using GEO as your EOR, you will not be required to set up a commodity. A GEO as EOR can handle various tasks and departments for your company, allowing you to focus on other important work.
- Increases productivity of HR department:
When GEO acts as your global HR service and handles all aspects of administration, you can go about your work without having to worry that protocols are being followed overseas. GEO helps you in hiring, managing, onboarding global employees.
How Can Multiplier Help in Global Employment?
If you’re planning to employ global employees for your team, consider using Multiplier to act as your GEO. Multiplier offers all the GEO-as-EOR benefits. You can easily onboard global employees without worrying about local laws by signing up for Multiplier GEO services.
Frequently Asked Questions :
Q. How do you ensure compliance with local labor laws and regulations when hiring employees in multiple countries?
Do the following to stay compliant while hiring employees in multiple countries:
• Understand the global and domestic laws relevant to the countries with the help of legal experts
• Establish a legal entity or partner with an EOR to hire and onboard the employees
• Gather documents and initiate the work visa processes, if necessary
• Offer a comprehensive compensation package, include details regarding mandatory deductions and the employment perks
• Set up a payroll system that releases the employee’s payment on time and accurately
• Safekeep the payment invoices as evidence of your compliant processes
Q. What is the role of an employer of record in global employment and how can it help businesses expand internationally?
An Employer of Record (EOR) helps companies onboard their desired candidates from various countries without the need to set up a local entity for each country. In addition to global expansion, EORs provide compliance guidance ensure a completely legal hiring and onboarding process. Hence, there is reduced liability during onboarding, as the EOR assumes the legal responsibilities of onboarding candidates
Furthermore, EORs enable seamless payroll and tax administration so the employer does not miss out any necessary payment on time. At the end, these service providers are a faster and cost-effective entry into markets, as the time to set up an entity and internal teams for hiring can take months and foot an expensive bill.
Q. What is the process for terminating employees in different countries and how does it differ from the process in the US?
Termination laws vary across countries. However, the following necessities are very popular in major regions:
•Legal grounds of termination, which define the circumstances in which both parties can end their agreement without any legal hassle
•Notice period, where an employer notifies the employee of their termination and provides employment to a few weeks or a month till their last working date.
•Severance pay, which is the amount an employer releases to the employee in case of termination due to redundancy or mass layoff.
On the other hands, termination process in the US requires employers to provide COBRA (Consolidated Omnibus Budget Reconciliation Act) details while notice period and exit interviews are optional. Moreover, US employees with at-will employment (in the absence of an employment agreement) can be terminated immediately without any notice.