International PEO

international-peo

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Introduction

There are several different third-party global payroll and employment options for hiring remote employees worldwide. Some options are using an employer of record (EOR) or an international professional employer organization (PEO). Both of these involve payroll and employment outsourcing where your company is headquartered in one nation but can have remote workers in numerous nations across the world outside your home country.

A human resources outsourcing company such as Skuad can allow your company to hire remote workers in many countries, positioning you to expand globally and concentrate your resources on your core business while your HR partner takes care of tasks such as payroll, benefits management, and filing taxes.

What is an International PEO?

An international PEO, such as Skuad, can be your company’s co-employer that can hire and pay your company’s remote employees in different nations where your company is duly registered as an entity. The PEO would take care of such human resources activities as paying remote employees, administering them statutory benefits, making employee and employer contributions, and filing and remitting taxes, all while remaining compliant with local labor laws.

Differences Between an International PEO and a Domestic PEO

A domestic PEO would do all of the above human resources activities in one geographical location. An international PEO can do all of these tasks and take on a co-employment role with your company in numerous countries. Skuad can hire employees in over 160 countries and pay them in over 100 currencies.

Differences Between a PEO and an EOR

There are a few differences between the global hiring and payroll options your company has. The option you choose may depend on whether you will be setting up an in-country legal entity and what your company budget will expend for global hiring.

An EOR takes on full employment responsibility for your employees and is the legal employer on paper, drafting employment contracts, and handling hiring, onboarding, and payroll management. This option would not require your company to have a legal entity set up in the country you’re hiring in. The EOR bares the liabilities of employment and hiring. An EOR is likely the most expensive option.

A PEO would not be the full legal employer of your employees but it would be the co-employer of your employees, leaving more human resources control to your company. Your company would still manage your staff and handle day-to-day management while the PEO takes care of payroll and other HR tasks. Both your company and the PEO would share in the liabilities involved in hiring and employing remote staff. However, some of the risks are mitigated because a PEO ensures compliance with local labor laws, timely and accurate tax filings and payments, accurate payroll processing and employee compensation, and the administering of statutory benefits.

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International PEO Roles and Responsibilities

The PEO takes on the role of co-employer for your employees. This human resources role involves handling payroll processing, administering benefits, and filing and paying your payroll taxes to the government. While your company handles the management of the employees, the PEO would be responsible for human resources tasks.

Hiring

A PEO works by leasing employees to your company. Your company chooses who will be hired and join your team. Once in a co-employment arrangement with the PEO, your managers can then train your team and get right to work without worrying about some of the human resources responsibilities.

Payroll

The hours your remote employees’ work can be tracked with the help of biometric devices. Each employee will be paid at least the mandatory minimum wage after payroll has been processed and your banks have been advised to issue employee payroll deposits.

Taxes

Taxes and contributions are calculated as part of the payroll process. They are taken out of the employee’s earnings and paid on time to the respective local government agencies.

Benefits

An international PEO can coordinate benefits for your remote staff. Some of these benefits can include healthcare, vision, dental, and other insurances depending on the local mandated benefits. Other benefits packages may include short-term and long-term disability, pensions, termination pay, bonuses, perks, and supplemental benefits. Your team will also be given paid time off and other leave entitlements depending on the country, including sick leave, all taken care of by the PEO.

Compliance

Tax contributions and statutory benefits are both regulated as part of a country’s labor laws. Accurate payment of both will help ensure compliance with these laws. Labor laws can be complex and include statutes for anti-discrimination, minimum wage, and termination rules. There also may be local, state, provincial, or regional differences in the laws. Any of these laws are subject to change, so your company will need to study and adhere to the laws and their changes. A PEO can help assist with compliance.

Safety Training

While your company is in control of your employees, a PEO can train them in safety matters, helping to mitigate some risks.

What a PEO Does Not Do

As mentioned earlier, your company will legally enter into employment contracts with the employees as opposed to an EOR holding the contract. Your company also must register a legal entity in the countries in which you hire.

International Payroll

To pay your employees properly, payroll must be accurate and timely. That means making sure time sheets are properly filled in and the hours worked are tracked precisely so that every hour is compensated.

Labor Law Compliance

One important aspect of international payroll is compliance with local labor laws. You’ll have to be sure, in whichever country you are hiring, to comply with all labor laws. This includes changing legislation that you’ll have to keep on top of. That means you'll either need to have a legal team in the country of your employees or take advantage of the legal expertise of a PEO. While a PEO can help lower the risk of non-compliance by taking care of tasks such as making timely tax payments, your company should still be aware of and comply with local labor laws.

There are several legal aspects pertaining to employment that your company should be aware of, the specifics of which depending on the country’s laws:

  • Minimum wage laws
  • Overtime laws
  • Statutory benefits
  • Leave entitlements such as annual leave, sick leave, and maternity leave
  • Employer contributions such as social security

Because it is your company that is the legal employer of your employees, registered to employ workers in a given country, it is ultimately your company’s responsibility to adhere to all labor laws and your company can be liable for any laws not complied with.

Employer and Employee Contributions

Depending on the local government’s labor laws, there will be certain contributions that must be made by both the employer and employees. These contributions include social security, pensions, and various insurances such as unemployment, accident and injury insurance, disability insurance, sickness insurance, and health insurance. These contributions must be withheld from employees’ salaries based on their monthly earnings and remitted to respective government agencies on time. A PEO can ensure timely compliance with these laws.

International Hiring

If your company is expanding, there are over 160 countries that you can hire from with an outsourcing company such as Skuad. Using a PEO can help your company by making sure of full local labor compliance. Labor laws can be complex and laws are always subject to change. Each country has its own laws and rules, so it pays to have legal help. These laws regulate such employment aspects as anti-discrimination, minimum wage, statutory benefits such as leave entitlements and social security, and termination laws including notice periods and severance payments.

One of the benefits of hiring internationally across several different nations with an international PEO is the pooling of resources and grouping of employees from different areas into one large cohesive group. This helps to lower payroll costs and allows for lower training costs, insurance premiums, and worker’s compensation rates.

Conclusion

There are several options for your company when it comes to global hiring. Your company can take care of hiring and payroll in-house and set up and register an entity in each country in which you intend to hire. Your company can skip the entity registration and use an employer of record to hire and pay your remote employees. Because of the entity registration, the fuller amount of responsibility as well as liability, the employer of record is likely to be the most expensive option for your company.

The third option is partnering with an international PEO. Your company would partner with a co-employment human resources company such as Skuad to handle HR tasks such as payroll for your remote employees anywhere in the world while your company would still retain some control of the employment relationship with your employees.

An international PEO can help your company in many different nations with:

  • International remote employee hiring
  • Keeping track of employee work hours
  • Paying your remote employees
  • Withholding and remitted taxes
  • Taking care of employer and employee contributions
  • Administering statutory benefits
  • Mitigating risks: labor laws are complied with and taxes will be filed on time

If your company is going to be hiring and expanding globally, Skuad can help you hire and pay your remote employees in a co-employment partnership such as an international professional employer organization. For a demonstration of how we can offer your company solutions, contact us today.

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