An Employer of Record (EOR) is the full legal employer of your worker in a country where you have no entity. A Professional Employer Organization (PEO) enters a co-employment arrangement with a company that already has its own entity, sharing employer responsibilities, mainly HR administration, payroll and benefits.
For hiring abroad without a local company, you need an EOR. PEOs are mostly a US model, used by small and mid-sized US businesses to access better benefits and outsource HR administration.
| Factor | Employer of Record (EOR) | PEO |
|---|---|---|
| Do you need your own entity? | No: the EOR's entity employs the worker | Yes: you co-employ through your own entity |
| Legal employer | The EOR | Shared (co-employment); you remain an employer |
| Main use case | Hiring in countries where you have no entity | Outsourcing HR, payroll and benefits where you already operate |
| Where it's common | International hiring, worldwide | Primarily the United States |
| Typical pricing | Flat fee per employee per month (often US$400–700+) | Percentage of payroll or per-employee fee |
| Benefits | Local statutory and supplementary benefits set by the EOR | Access to the PEO's pooled benefits plans |
- You want to hire in a country where your company has no legal entity
- You need someone to start within days or weeks, not months
- You want the provider to carry local employer obligations (payroll, contributions, contracts)
- You're testing a market before deciding on an entity. See EOR vs local entity
- You already have an entity, typically in the US, and want to outsource HR administration
- You want access to larger-group benefits pricing for a small team
- You're comfortable sharing employer responsibilities under co-employment
No. An EOR is the sole legal employer in a country where you have no entity. A PEO co-employs staff alongside your own entity. Outside the US, the terms are often confused, so check which model a provider actually offers.
Generally not without your own entity in that country. To hire where you have no entity, you need an EOR.
- 1Certified Professional Employer Organizations
Internal Revenue Service (IRS)
The US framework for certified PEOs.