When employing in a foreign country, there are a number of administrative and legislative factors that must be considered, whether they are employee or entity related. Moreover, Employee costs, visa requirements, eligibility criteria, layers of taxes and various local tax authorities, social security and other legally required employment compliances, all can contribute to a rather complicated employment process. Understanding the difference between an EOR and a PEO is vital.
Luckily, there is a cost-effective way for you and your company to pass on the burden of administrative compliances and focus on the business, of doing business.
So where do you start?
What do EOR and PEOs do, what do they mean? What services are included, and how do you know which is right for your company? Our team is here to answer any questions you may have about the complexities of registering and employing in Africa!
1. What is an EOR?
An EOR or Employer of Record acts as the legal local employer on behalf of an internationally situated business that does not have an established in-country entity. Hiring an EOR means that your company does not need to establish an in-country employment presence. Consequently the EOR takes responsibility for all employment related legal and compliance matters. Providers generally bill EOR on a per-person flat fee basis.
2. What is a PEO?
A PEO or Professional Employer Organisation provides comprehensive HR and financial services to businesses that already have an in-country legal entity. The services that PEOs offer include but are not limited to payroll, accounting services, benefits administration, regulatory compliance, risk management, and various ad hoc services. Providers generally bill PEO services on an hourly basis, with scalable fees depending on the support a business needs.
3. What is the difference between an EOR and a PEO?
- An EOR assumes the full legal responsibility for employment. It acts as the employer on behalf of the client for tax and compliance purposes.
- A PEO facilitates HR-related and accounting operations, while the client remains the sole employer.
4. What are the benefits of using an EOR?
- Gives you the freedom to establish and build business operations in foreign markets without the hassle of having to establish your own entity.
- Allows you and your company to focus on core business objectives without the administrative burdens that come with managing local employment legislation and requirements.
- Facilitates your expansion across Africa, knowing that your business is compliant with local regulations
5. How does EOR help with international expansion?
An Employer of Record enables a business to employ in a foreign country without setting up a legal entity, while ensuring your company complies with local employment laws and regulations.
6. Can an EOR assist with payroll and taxes?
Yes! An EOR facilitates payroll processing, tax withholding and remittances, and ensures that your company is jurisdictionally compliant.
7. Who is responsible for employee benefits under an EOR?
The EOR provides and manages pre-authorised employee benefits. EOR in Africa ensures that employee benefits comply with in-country requirements and remain competitive in the local labour market.
8. Is using an EOR cost-effective?
- Partnering with an EOR will help your company avoid the expense and time-cost associated with local compliancy in a new country.
- Choosing EOR in Africa as your employment partner means that we agree upon and finalise all fees up-front. This allows you to strategically budget for the financial year in advance
9. What are the benefits of using a PEO?
EOR in Africa are compliance experts that you are outsourcing to perform administrative HR and payroll-related functions. Ultimately, a PEO enables your business to operate more efficiently and effectively, positioning you for sustainable growth and success in the competitive marketplace.
- Partnering with a PEO gives you a strategic advantage by allowing your business to focus on its core mission
- By ensuring compliance, managing payroll and benefits, and offering professional HR support, a PEO minimises risks
- Reduced administrative burden
- This consequently leads to cost savings, enhanced employee satisfaction, and improved recruitment and retention
10. How does a PEO improve compliance and mitigate risk?
We have made it our business to ensure that we, and as a result our clients, are always up to date on local and national employment laws and regulations in the countries in which we operate.
11. Do I need an EOR or a PEO?
Consider your motivations for seeking out an EOR or PEO. Are you looking to expand your business into a new country, or do you need HR and financial assistance within your locally established entity?
- If you do not have an established entity in the country you wish to expand into, you need an Employer of Record!
- If you already have an established entity in the country you wish to expand into, yet require assistance with your HR and financial services (such as payroll, benefits administration, regulatory compliance, and risk management), you need a Professional Employer Organisation!
- We can tailor both service offerings to the specific needs of your business.
12. What makes EOR in Africa unique?
- With several decades of experience in the employment industry, our team is embedded in the African labour market
- Through our on-site experience, our team have acquired robust multi-jurisdictional knowledge of local and national labour legislation, and regulatory requirements
- Having “boots on the ground” has allowed us to develop a strong network of competent stakeholders and service providers across Africa.
- With one-point of contact provided to each of our clients, our team ensures clear and consistent communication, and an efficient resolution to any questions or queries.
- These elements have equipped our team with the tools needed to deliver sustainable and highly effective employment solutions to our clients.
Need further clarification on the differences between an EOR and a PEO?
Or would you like to know more about our service offering? Visit our solutions page, send us a mail, or give us a call us at +27 21 330 5670.
Our team is on-hand and available to offer your team any support it may need.