One other thing you need to know about Employer of Record companies is that they are not the same thing as a Professional Employer Organization (PEO). The distinctions between one and the other are subtle, but very important, as we’ll see: 

• Liability: As mentioned before, an EOR takes the better part of the liability of hiring somebody. Through working with a PEO, the client company is much more liable, as they will be the ones that hold and sign the employment contracts, assuming all liabilities and responsibilities.
• Geography: Naturally, since a PEO is typically a co-employer, hiring someone overseas through a PEO would entail having to set up a legal entity within that country. This also means that a PEO wouldn’t be completely in charge of ensuring compliance with local labor laws, as is the case with an EOR.  
• Insurance and other Benefits: With a PEO co-employment situation, the client usually has to pay for an insurance policy provided by the PEO, but as the actual employers, they need to provide the workers with insurance of their own. The same goes for other benefits such as a retirement fund or expenses. When working with an Employer of Record, on the other hand, the client’s employees are fully covered under what the EOR provides, which will be tailored to the local laws and regulations, or what local companies are able to offer top talent.
  

The reason why PEOs are sometimes confused with EORs is that they are not required to be the employer of record in order to take care of a good portion of your HR processes. However, some PEOs do become employers of record, but not all of them offer that option. Also, they typically don’t operate in many countries. A PEO will typically focus on a certain market, which is why some EORs will partner with them to further their scope of operations within a new country.

• Papaya Global: Hire and pay all employee types in 140+ countries.
• Deel: Payroll and savvy local expertise for remote international employees.
• Remote: HR services & payroll platform for remote teams. 
• Globalization Partners: Global Employer of Record platform. 
• GoGlobal: Fastest-growing independent EOR firm

What is an ERO? 

ERO stands for ‘Employer of Record’. It is an essential component of an internationally-compliant payroll, since it’s what most providers use in order to be the legal employer of a worker in their country. Through this practice, a company doesn’t need to set up a legal entity in that country in order to stay compliant with the local labor laws. 

What is global payroll?

The term “global payroll” refers to the compensation that a company needs to make to its foreign employees, independent contractors, and freelancers. Typically handled by the HR or finance departments, it includes salaries, tax withholdings, invoicing, benefits, bonuses, PTO, overtime, commissions, and of course, international bank transfers.