Both a PEO (Professional Employer Organization) and EOR (Employer of Record) are solutions that help companies expand and operate without establishing a local legal entity. However, there are distinct differences:
PEO (Professional Employer Organization): A PEO serves as a co-employer alongside your company. While the PEO manages HR responsibilities such as payroll, benefits, and compliance, your company retains control over the daily management and operations of the employees. The employment relationship is shared between your company and the PEO.
EOR (Employer of Record): An EOR, on the other hand, becomes the primary legal employer for your staff. The EOR assumes all local employment liabilities and manages all HR-related functions, including contracts, payroll, taxes, and ensuring adherence to local labor laws. This setup offers a more hands-off approach for companies looking to operate compliantly.
In essence, while both models offer payroll and HR solutions, the level of responsibility and engagement varies. An EOR, such as GTS Nordic, offers a more comprehensive solution for businesses that prefer to delegate all local employment tasks and liabilities to a third party.