Should you hire or not the Employer of record Germany?

The PEO Germany is known for expanding the business into new markets in the foreign land. Professional Employer Organisations i.e. PEO helps in the employment of new talent and offers some of the key HR related services.

The organisations are seen in a state of confusion when it is about hiring the Employer of record Germany. In this post let’s outline the benefits as well as the limitations of hiring them for your employment needs:

Pros

· Lowers the overhead cost of HR

The fee the organisations pay for Employer of record services Germany cover all the HR services which are required for the seamless working of an organization. This makes scaling up of the organization a cost effective exercise.

· Simplification in the payroll

The PEOs usually manage the payroll functions for the client organization. This includes paying the salaries to the employees, deducting the taxes as per the laid down guidelines, and paying the social security contribution to the appropriate authority. Having a company to handle the payroll saves a lot of time, efforts and expenses on the part of the organization.

· Managing the employee benefits

The EORs make sure that all the employees get their due benefits on time, for which they are legally entitled as per the prevailing laws. This also comprises of pension and healthcare related plans. Some firms even offer benefits such as remote work allowances, late or early shift allowance or any other special allowance to the employees; all these need to be managed by the EORs only.

Cons

· Legal liability remains intact

The PEO company does not assume any legal responsibility of the employee of the client organization. The organization may be required to set up a local entity for legal and bureaucratic issues. However, global PEOs employ on behalf of the organization and even set up a legal entity of their own, but all PEOs don’t offer this service.

· Recognition issues

The PEO model has not achieved recognition in each and every country and location. For instance, France does not allow PEOs and focus on other models. Germany on the other hand allows employer of record agencies.

· No compliant record of employment

Usually the PEOs don’t enter into any employment contract with the organization for which they work. The services offered by them are limited to the legal advice only. However, the international PEOs may be governed with an employment contract which can be signed before initiating the services.

The decision to hire or not?

PEOs are known for providing a scale to the business by branching out to new markets particularly in international boundaries. However, the disadvantages associated with them are deterring as these companies are recognized everywhere. It is thus important to read the fine print of the company to understand what they can possibly do and what are their limitations in order to make the decision of hiring them or not.