Global hiring is becoming increasingly popular as a means to expand your business. It allows you to grow teams of top talent globally, not just locally. You will have local knowledge of the country's cultures and norms. Workers who live near the operation can also carry out processes on the ground.
So how do you go about hiring international workers? There are various methods with their pros and cons. You may have heard of some popular solutions, such as using a PEO or EOR service provider or collaborating with a GEO or AOR. In this guide, we aim to explain what these acronyms mean and what they offer so you can make informed decisions for your company.
What is a Professional Employer Organization (PEO)?
A Professional Employer Organization (PEO) provides all HR-related functions for your international employees and acts as a co-employer. A PEO service provider helps alleviate some of the administrative tasks for your HR team by hiring, onboarding, and setting up payroll for your international employees.
The PEO also ensures that the recruitment process complies with the laws and regulations of the country you're hiring in and that employment contracts are drawn up accordingly. In addition, the PEO makes sure to pay your international employees on time in their local currency and manages statutory benefits, taxes, social security contributions, and pensions.
When you partner with a PEO service provider, you enter a co-employment agreement with the PEO. That means you and the PEO are both employers of the employee, and both share legal responsibility for them. Co-employment brings some risks in that it is illegal in some countries. You may also become liable when there's a breach of local employment laws due to mistakes conducted by the PEO.
Your company also needs a legal entity in the country to hire workers with a PEO service provider. That is different from a PEO. We will discuss this in detail below.
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What is an Employer of Record (EOR)?
An Employer of Record (EOR) hires international employees on your company's behalf and is the legal employer on record. That means they take on the legal responsibilities of your global employee, protecting your business from legal ramifications resulting from noncompliance. The EOR service provider can do this because they've usually set up their legal entities in the target country.
Many EOR services platforms, such as Skuad's, include the same HR tasks provided by PEO services. The EOR service provider helps you with international recruitment by searching for top talent and providing a smooth hiring and onboarding process on your behalf. EOR service platforms have local teams in countries they help hire to meet employment requirements, including securing work permits and visas.
EOR service providers also manage payroll, much like PEO service providers. They handle all the processes related to social security contributions, taxes, benefits, and probation periods. An EOR provides ongoing support throughout the international employment lifecycle, including handling termination and offboarding procedures. Learn more about how Skuad's EOR services can help you quickly pay your international workers right away.
What is a Global Employment Organization (GEO)?
A Global Employment Organization (GEO) is a company that provides global employment solutions. GEOs ensure that companies comply with all local laws when employing international workers. They also offer services to help companies handle HR administrative tasks.
You may think a GEO is similar to a PEO and an EOR because they provide related services. You can think of a GEO as an international expansion partner offering a range of solutions, including PEO and EOR services. GEOs provide services that usually extend beyond what's provided by a PEO or EOR service platform.
Similar to a PEO, a GEO manages HR tasks for a company's international employees. Responsibilities include talent acquisition, hiring and onboarding, and payroll management. Sometimes the term "GEO" is used interchangeably with the term "global PEO," or sometimes referred to as "international PEO services." A Global PEO acts like an EOR by hiring international employees on your behalf. They become the legal employer and ensure your company's labor laws and tax compliance.
A GEO differs from a global PEO in that it provides flexible solutions depending on your company's hiring needs. International PEO services providers may have strict employment contract terms that limit the types of employees you can hire internationally. A GEO can help you draft employment contracts for various employment types (e.g., full-time employees, independent contractors, etc.) and ensure that your company complies with local laws that pertain to employee classifications.
Besides common services provided by PEOs and EORs, GEOs can also help you with your global expansion strategy. Suppose you're seeking to grow your business in a country and foresee yourself hiring more workers there in the future. In that case, a GEO can support you in setting up a legal entity or subsidiary in that country. Services that a GEO may provide in this scenario include helping you to open a corporate bank account, register with tax authorities, or obtain necessary certifications.
Lastly, you may have heard people use the term "global employment outsourcing" to replace "global employment organization" in some cases. Although the services between the two are very similar, we'll note a slight difference here. Global employment outsourcing refers to some employer functions, such as compliance or payroll responsibilities, being outsourced to a third-party platform. That is the same as a global PEO or EOR solution. A global employment organization is different in that it offers services compared to those offered by global employment outsourcing. A GEO is also more widely accepted, as some global employment outsourcing solutions may be illegal in some countries or regions.
If you already know that you want to grow your business in a specific country in the long run, then working with a GEO to set up your subsidiary may be the better option for future recruitment. However, many companies do not yet have the means to do that in their global expansion. Working with an EOR like Skuad may be the best immediate option to hire top talent worldwide and globally grow your business.
What is an Agent of Record (AOR)?
An Agent of Record (AOR) is an employment solution platform that manages and hires your company's global independent contractors. An AOR helps classify and ensure compliance with your hiring and employment agreement.
Many countries view employees and contractors differently in the eyes of the law. As such, you need to understand regulation differences when deciding how you want to hire your international worker. There are usually more laws to protect employees, but misclassifying your workers as contractors when performing duties similar to employees can get you in trouble with local laws. The consequences of misclassification can be severe, ranging from paying fines to jail time.
Some PEO or EOR service providers may also help you hire and manage independent contractors in addition to employees, but that is not always the case. As such, you may partner up with an AOR business to recruit and pay your independent contractors more efficiently while maintaining compliance.
The AOR facilitates the contract negotiations for you and provides ongoing recommendations to mitigate potential risks. Throughout the process, the AOR also ensures that the contractor maintains the necessary certifications and documentation to avoid misclassification.
If you're looking to hire both independent contractors and full-time employees, Skuad has solutions for you.
Skuad Provides You With EOR Services for Global Hiring
If you're looking to start hiring international workers immediately, partnering with an employer of record services provider like Skuad is the quickest way for your business to expand globally. Start hiring worldwide without establishing a legal entity, saving you time and money. Rest assured that your company is always in compliance with Skuad's team of legal experts who stay up to date with all laws and regulations in your country of hire.
You can count on Skuad's HR solutions to help hire, onboard, and pay your international employees and contractors. That frees up time for your in-house HR team to tend to other pressing responsibilities. With an extensive network in 160+ countries, Skuad lets you hire, pay, and manage your international employees without any hassles. Skuad is your one-stop solutions platform to grow your globally distributed teams with the option to handle all service needs on a single interface.
Book a demo with Skuad to kickstart your global expansion today.