Employ
Recruit
An International PEO is a service that enables businesses to hire employees in other countries without setting up a local entity. It handles HR, payroll, tax compliance, and benefits administration, ensuring companies follow local labor laws while expanding globally.
What is an International PEO (Professional Employer Organization)?
An international PEO, also known as a global PEO or Employer of Record (EOR), simplifies the process of hiring employees in foreign countries. By partnering with an international PEO, companies can expand their global workforce without the need to establish expensive and time-consuming legal entities. This service assumes the legal responsibility of employment, ensuring compliance with local labor laws and regulations in the countries where employees are hired.
Instead of dealing with complex international employment regulations, tax laws, and employee benefits, an international PEO handles the administrative burden for you. It becomes the official employer of your foreign workers, managing payroll, employee benefits, employment contracts, and tax filings on your behalf. This arrangement allows your business to focus on growth while reducing the risk of non-compliance and legal challenges in foreign markets.
How an International PEO Works
When you hire through an international PEO, the service becomes the legal employer for your overseas staff. It takes care of various HR functions, including:
- Onboarding: Ensuring all legal and administrative requirements are met when bringing new employees on board.
- Payroll Management: Processing payroll and ensuring tax withholdings are accurate and compliant with local laws.
- Employee Benefits: Administering benefits packages that comply with local regulations.
- Legal Compliance: Handling the complexities of local labor laws, including termination, contract management, and more.
By managing these administrative tasks, an international PEO allows you to hire workers in new markets quickly, without the need for a physical office or local entity.
How Does an International PEO Differ from a Local PEO?
Many companies use PEOs for small business in their own countries. It makes sense if the company is small and doesn’t have the resources to manage HR in-house — or if it just prefers to outsource the tasks to another company. In other words, a domestic PEO provides services to businesses in the country where they are headquartered. However, it doesn’t have the expertise needed to provide support on a global level because its staff are not familiar with the regulations of other countries.
In addition, an international PEO goes a step further by also serving as the employer for the business when it wants to hire workers located in other countries. In other words, it acts as an employer of record (EOR).
What’s the Difference Between an International PEO and an Employer of Record?
There’s no difference between an international PEO and a global EOR — the terms are interchangeable. Companies offering these services may also use a third name: global employment organizations (GEOs).
The confusion arises because a domestic PEO and an EOR are different. A domestic PEO acts as a co-employer with a business, while an EOR is the sole employer.
Using an EOR means you don’t need to establish a legal entity in the country where you want to hire workers. Another significant difference between co-employment and hiring using a global PEO is which business assumes liability. When another company hires on your behalf, that company is legally liable.
Best International PEO for 2025
What Services Does an International PEO Company Provide?
An international PEO provides several services related to employing workers in another country on your behalf, along with HR tasks to manage those workers. The services you’ll receive will depend on what the international PEO can offer and what you decide is necessary for your company. Common services include:
- Contracts are written with local labor laws in mind.
- Background checks of candidates you’re considering hiring, including a criminal history search and past employment verification.
- Immigration support, such as assistance with work visas.
- Onboarding new employees, including classifying workers correctly.
- Withholding taxes and making the correct deductions (which are subject to change each year).
- Ensuring ongoing compliance with local regulations.
- Providing payroll in the local currency to ensure correct and timely payments.
- Offering benefits that meet the country’s legal requirements and are appealing to attract top talent.
- Administrative tasks like managing paid time off and sick leave and completing paperwork.
- Off-boarding tasks when employees stop working for your company.
- Creating an HR strategy for the company, such as finding leads for new talent and retaining current employees (only some international PEOs offer this service).
Benefits of Using an International PEO
It is possible to hire from other countries without using an international PEO. Still, most businesses find a partnership’s benefits worthwhile — at least while establishing a presence in a new country. Some of the main advantages to bear in mind include the following.
1. No Need to Establish a Legal Entity
A significant benefit is not wasting time establishing a legal entity in every country where you want to hire employees. This process is long — sometimes taking as much as six months. In contrast, businesses may be able to enter a new country within days if they use an international PEO. If you want to ultimately set up your legal entity in the country, consider using an international PEO temporarily.
2. Cost Effective
Using an international PEO is less expensive. There are also significant cost savings to not setting up a legal entity, which requires registration fees and consultations with tax experts.
3. Stay Compliant
An international PEO with experience in the country you want to enter will be familiar with labor laws to ensure you stay compliant. In addition, since the company is a legal employer, it will be responsible for adhering to labor regulations. This is another way an international PEO may save you a significant amount of money, as making mistakes regarding taxes, benefits, overtime, and terminations often comes with steep fines and other penalties.
4. Focus on Core Work
You’ll also gain all the same benefits as you would by working with a domestic PEO. By outsourcing your HR, your team can focus on work related to your expertise. This is even more significant when working in a new country because you must be extra careful that all your paperwork is correct, which could take time away from core operations.
5. Become More Flexible
There may be times when you want to take advantage of a new opportunity abroad — or the opposite could happen: you may want to leave a market quickly if conditions change. Partnering with an international PEO allows you to stay in the country for as long or as little as you want. This is particularly useful if you’re unsure if you wish to maintain a permanent presence in the country.
6. Hire the Best Talent
You may need to look abroad if you’re looking for someone with specific knowledge and qualifications. An international PEO makes it possible to recruit and hire talent anywhere with the same ease as hiring within your own country. This is becoming increasingly attractive as more companies realize that a remote workforce may suit their needs.
7. Provide Contractors with Permanent Positions
You may have already started establishing a presence in another country through a team of contractors. However, most countries have laws that specify how long a worker may remain a contractor for the same company. This is because there are differences between contractors and permanent employees in terms of things like benefits and tax requirements.
To keep talent on your team long-term, you may need to convert a worker from a contractor to an employee — but this means hiring the worker through a legal entity. An international PEO can hire this talent to give workers permanent positions at your company.
How Much Does an International PEO Cost?
How much you pay an international PEO will depend on the company’s pricing model. Some companies charge a fixed rate for each employee they hire on your behalf; others take a percentage of each employee’s salary.
You should also carefully check the terms and conditions to look for hidden costs. Some international PEOs may charge extra for things like onboarding and administrative tasks. You may also need to pay extra for additional services not included in the standard package.
How to Find the Right International PEO for You
To make sure you choose the right international PEO for your business, consider the following:
Pricing Structure and Fees
Determine what pricing structure would better suit your business. This may depend on what type of employees you’re hiring. For instance, paying a percentage of the employees’ salary may work to your favor if you’re hiring entry-level workers, whereas a fixed rate is likely to be more cost-effective if you’re searching for executives.
Experience in Your Desired Countries
It’s crucial to choose an international PEO that already operates in the countries you want to enter, as this will mean the company is already familiar with local laws. Even though the international PEO will be liable for any mistakes, the last thing you want is disruption to your business operations due to partnering with an inexperienced company.
Services Available
If there are any specific services you want to receive, make sure the international PEO offers them. Avoid choosing a company that offers many services you won’t need, as this will likely mean you need to pay more.
Customer Support
It’s important to work with an international PEO that will be responsive when you have queries or need support with employees. Make a note of how quickly the company responds when you initially reach out, read reviews from other businesses that have partnered with the company, and ask the company about its customer support policy.
In particular, find out what means of communication the company uses, typical response times, and customer support hours.
A Good Track Record
You should also check reviews on platform like G2 or Trust Pilot to find out if the company has a history of any problems. Avoid any companies that have been involved in complex liability disputes or data breaches.
Knowledge of Your Industry
It’s helpful if the international PEO you choose has experience working with businesses like yours, especially ones in the same or a similar industry. This will mean the company has a good idea of what you need from your workers and what kinds of challenges it may need to overcome.
FAQs About International PEOs
Have doubts about how an international PEO would fit into your global business strategy? These FAQs should answer most of your questions. If you still have questions, reach out to our team at Remote People.
Contracting workers is another solution that avoids the need to set up a legal entity in another country. However, there are shortcomings to this arrangement. For example, it tends to be unsuitable once your team grows to more than just a couple of contractors, especially since you’ll have more HR tasks. Plus, contracting is only a temporary solution, as you’re unable to keep workers as contractors indefinitely. Lastly, you’ll be taking on more risk, including the possibility of misclassifying workers.
Even though the international PEO is the employer, your company will have full control over your employees abroad. The role of an international PEO is just to hire workers and offer HR support.
The services you receive from your international PEO will depend on the company you choose and the arrangement you agree to. The company may charge extra for off-boarding or you may only incur a fee if you don’t provide enough notice for the termination. The amount of notice you need to provide often depends on the country, as there are often local laws regulating terminations.
Start Working with Remote People International PEO
It should be clear that partnering with an international PEO is the way to go if you want to start hiring in more countries. The arrangement simplifies the hiring process, costs less than creating your legal entity, limits your liability, and means you can start hiring employees almost immediately. Stop thinking about expanding into individual countries and begin developing a global strategy.
Remote People offers international staffing solutions in more than 150 countries. We go beyond acting as your EOR and providing HR support by helping you find workers worldwide. After a consultation to discuss your needs, we’ll give you a selection of top candidates. We’ll then support you with the onboarding, making it a hands-off process.
