An International Professional Employer Organization (PEO) helps its clients with payroll, compliance, taxation, and other HR-related administrative tasks on a global level. A PEO comes into the picture right from hiring and assists its clients until offboarding.
What can an International PEO do for you?
So you have an establishment in your country, but you also have a small office in another country. You can leverage your entity in another country and hire employees who can work for you remotely. However, for this, you will need to set up a hiring, payroll, legal, and compliance team in Germany. This will take a lot of your time, and the costs will only make it look like it’s not worth the effort and money.
This is where an International PEO can help you tremendously. The PEO will onboard your German employees on your behalf and manage their payroll, taxes, insurance, benefits, and other day-to-day administrative tasks. Your PEO partner will help you keep track of each international employee, their working hours, and their time-offs efficiently and transparently.
Some of the major functions of a Global PEO include:
- Payroll: Payroll management in itself is a daunting task. You can only imagine the number of people and hours it may take to run a successful month-on-month international payroll system. An international PEO effectively manages all payroll-related tasks while you focus on running your business.
- Compliance: This is one of the main areas where a PEO can help you. PEOs have strong legal teams that are constantly updated with local labor laws and regulations. They make sure that all the payments you make to your employees/contractors are completely legal and in line with the latest regulations.
- Taxes and deductions: Like labor laws, taxes and deductions for each country vary and change every year. PEOs ensure that all your employees are registered for the right tax deductions and make the said deductions on your behalf. These may be as simple as just an income tax or as complex ad housing funds, pension funds, insurance, unemployment funds, etc.
- Benefits and Insurance: Nowadays, many countries have made insurance mandatory. PEOs help you choose a common insurance plan for your employees that meets all the required fields. Some PEOs, such as Multiplier, also help you provide extra benefits like ESOPs and bonuses through their platforms.
- Documentation: Hiring someone new for your company involves a ton of paperwork. Right from employment contracts to multiple declarations, PEOs take care of it all. Each and every document in this ocean of paperwork is crucial, and global PEOs make sure that you don’t miss out on anything.
- HR Strategies: Offering HR consulting and strategies is not a common practice, but some PEOs do offer these services. They can help you at multiple levels, such as talent branding, mass hiring, talent retention, etc.
PEOs will perform a lot of functions in the backend that will ensure that your international employees are paid on time, and compliantly. However, there are some things a PEO does not do, and you must understand them as well.
Things a Global PEO WON’T do
Some of the things a Professional Employer Organization will not do on your behalf are:
- Define goals and objectives: Yes, a PEO will help you manage your employees; however, their performance, goals, KPIs, and KRAs will be evaluated and decided by your hiring managers and internal HR teams only. A PEO will have no say in these matters.
- Decision making: A PEO does not make any major or minor decisions regarding your employees. The client controls things like hiring or firing, managing working hours, leave approvals, negotiating salaries, etc..
A PEO strictly works on an administrative level unless you ask for strategic consultation. Business owners often feel that if they work with a PEO, the control over their employees will be distributed. However, that is not the case.
How to choose between a PEO and an EOR?
Getting confused between a PEO and an EOR is very common, especially because a lot of their major functions are so similar. However, there are two key differences here that you should understand.
- Legal employment status: When you work with a PEO, even globally, your employees officially work for you. This means that you will be the legal and on-paper employer for all your international employees. The PEO will only help you with payroll, taxation, etc. However, when you partner with a global employer of record, the EOR service provider will become the legal employer of the employees who work for you. For example, if you partner with Multiplier and hire employees in the Philippines, Multiplier will be the legal employer of all your employees in the Philippines.
- Setting up a business entity: With a PEO, you need to have a legal entity in the country you are looking to hire. However, an EOR allows you to hire without having a single international entity.
Considering these differences, choosing between a PEO and an EOR should be fairly easy. If you already have a business entity in the country you wish to hire from, an International PEO is the best way to go. However, if you are looking to hire from countries where you don’t have establishments, EORs can prove to be a very cost-effective alternative.
How a Global PEO can help your business
Large enterprises have the financial strength and manpower to go ahead and manage their international employees internally. However, doing the same gets very challenging for small or mid-size businesses. Some of the major benefits of working with an international PEO are:
- Saves time and money: A PEO will take care of a huge skunk of administrative tasks around payroll. These tasks, if performed internally, will take up a lot of your time, and you will also need multiple teams. Working with a PEO can help you save all that time and money which you can invest in growing your business.
- Transparency: Processes like onboarding, offboarding, payroll, and taxation carry a lot of minute details. PEOs help you manage all of the documentation and keep you updated on the stage of every process. This saves time and energy that would otherwise go on drafting, sorting, and documentation.
- Compliance: Compliance is a point that cannot be stressed enough while hiring internationally. You may be an expert with your local laws, taxes, and labor codes, but staying updated on a global level is extremely difficult. PEOs help you stay 100% compliant while you pay your employees. This eliminates the need for you to build a legal team and ensures that you will avoid legal issues.
- More time for core business: A PEO takes a lot of time-consuming tasks from your HR team’s plates. This makes a lot more room for them to focus on strategies for expansion, talent retention, and other core activities that will help you grow your business.
It is clear that working with a global PEO can be quite advantageous for your business. However, choosing the right PEO is just as important.
How to choose the right international PEO for your business?
Choosing the right PEO may seem challenging, but it helps if you break down the following points.
- Check for experience in your industry: Always look for a PEO that has enough experience working for other companies in your industry. Each industry may carry different requirements, and your PEO should be able to navigate through them with ease.
- Evaluate your business needs: You must be clear about the results you expect by working with a PEO. The general functions may be similar for every PEO, but you must choose a partner that can accommodate your specific business needs and work with you smoothly.
- Verify their expertise with local laws: Ensure that the PEO you want to work with has immense expertise in the country you are hiring. Some PEOs may be experts in APAC, and some may be masters of EMEA. You must understand which PEO services work best in your targeted location.
- Gauge your comfort with the platform: PEOs help you track your employees via dashboards. Before choosing a particular PEO, try and evaluate how comfortable you are with the PEO software.
Keeping in mind all these points, you can conduct thorough research and narrow down on a PEO that suits you the best.
Why Multiplier is the best PEO for you?
Multiplier gives you a user-friendly platform that helps you manage your international employees in a few simple clicks. Our legal teams are constantly updated and will ensure that you stay compliant in over 150 countries.
We rely on our robust, secure, and efficient platform to make sure your international employees are paid on time, in the right currencies, and with the right deductions. With Multiplier, you can choose between 3 different insurance plans for your employees and attract more talent with added benefits like ESPOs, performance bonuses, and joining bonuses.
We are obsessed with our clients and ensure that every decision and update is rolled out with your approval.
Book a demo, and experience Multiplier yourself!
Frequently asked questions
Why should we use an international PEO?
An international will seamlessly manage your employees working abroad and will help you with payroll, taxation, and compliance. This will take a lot of the heavy load off your shoulders, and you can focus on business growth.
Why use a PEO instead of paying a worker as a contractor?
Paying one international contractor is manageable, but paying multiple contracts will be just as challenging as paying international employees. Moreover, working with a PEO will keep you out of the trouble of employee misclassification, which can occur fairly easily when dealing with large volumes.
Do you assist with the necessary contributions in-country?
Yes, we maintain 100% statutory compliance and ensure all necessary contributions are made on your behalf and your employees’ behalf.
Is a PEO the same as co-employment?
Working with a PEO is referred to as co-employment in many settings. Co-employment is essentially when two different companies manage separate HR-related tasks for the client company. Here, the responsibilities and roles are very well defined.
Does a company retain control over its workforce when working with a global PEO?
Yes, the client retains 100% control over its international employees when working with a PEO. The PEO only helps with administrative tasks such as payroll and taxation.
Do you provide extensive health insurance coverage?
Multiplier gives you the option of choosing from three different insurance plans for your employees. You can choose one based on your requirements and budget.