PEO Company Germany or EOR, which one should you choose?
Professional Employer Organization or a PEO is a companythat works with an employer by leasing employees to the employer, sharing, and managing employee-related liabilities and responsibilities. Human Resource functions such as payroll, benefits, compensation and, taxes can therefore be outsourced in this setup.
Generally, a PEO company Germany functions as a professional employer of employees of their clients. The PEO company takes up employee liability, and the employers gets the benefits of economies of scale and open market, as they receive better benefits at lower prices. They will be co-employees with the client companies.
The extend of outsourcing depends on the client company, the PEO and the specific contract.This can range from a few HR functions, to all HR functions. Some companies also provide an administrative services outsourcing (ASO) agreement, which outsources just the HR functions.
Advantages of using a PEO
Employers see an average better annual return on investment when they use PEO, as opposed to traditional HR.
Companies that use PEOs have better retention and faster businesses growth
PEOs can provide better benefits at a lower cost, which is beneficial for small businesses.
PEO Germany is updated on the latest laws and compliances, which reduces risk and ensures regulatory compliance.
Unlike PEO, Employer of Record pr EOR services becomes the legal employerof the workers. EOR firms handle payroll compliance, payroll taxes,benefits, unemployment claims, and other HR tasks.
PEO or EOR, which is right for your business?
Businesses both small and large will have problems navigating employment and allied compliances. When business expand,laws and regulations relating to employment become more advanced and varied for firms operating in different parts of the world.
A company should have an established legal presence in the states and countries where it has employees for it to work with a PEO. But if the EOR of the company is established in the states where they want to employ, they can can legally employ workers in such places going through the EOR.
A PEO functions as a co-employer of the client company, and its services are utilized for the entire workforce of an organization. HR responsibilities and liabilities of an organization are shared with the PEO, and the PEO can take over all of the functions of the HR department. It can provide services for as low as 5-10 employees.
EOR on the other hand functions as a legal employer of the workers, and takes over the employee related responsibilities and liabilities of the client company. A portion of the functions of the HR department is taken over by the EOR, and it can be used for partial workforce as well. EOR can provide services for as low as 1-5 employees. EOR allows companies to move to a different location or market without the need of setting up a legally registered entity for employee related compliances.