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5 september 2022

Employer of Record vs PEO: What is the difference?

It may be difficult for you to understand the distinctions between an Employer Of Record (also known as an EOR or umbrella company) and a Professional Employer Organization (PEO). In this article we will go over both types in detail.

What is an Employer of Record (EOR)?

An employer of record is a company that takes on the legal responsibility of being an employer, such as paying taxes and salaries, while the client company manages the actual employee. The EOR model can be beneficial for companies that are looking to hire employees in a new country or region, as they can outsource the compliance research and administrative burden. 

What is a Professional Employer Organization (PEO)?

A professional employer organization (PEO) is a company that rents out workers to their clients. The PEO is the actual employer of the employees and does the recruiting. The employees may then work short periods for various clients, earning the PEO fees. 

Sometimes PEO’s are asked to not find a candidate, but to employ a candidate already found by the client. In such a case the services rendered are similar to the EOR service. The employee is then hired with a same contract that would be offered to the staff that they rent out.

The key difference between an EOR and a PEO

The main contrast between an EOR and a PEO is that the PEO lends its own staff to you for a fee, and an EOR helps you hire your own staff in special situations.

The benefits of an EOR

There are a number of benefits that come with being an EOR. Firstly, it can be a cost-effective solution for companies that do not have the resources to manage payroll and taxes on their own. Additionally, EORs can provide compliance with employment laws and access to better health insurance plans. They can also help with immigration, housing, work permits and the 30% riuling.

The benefits of a PEO

PEOs can provide a number of benefits to their clients, but mostly the flexibility of having staff-for-hire that can be onboarded and offboarded easily. The PEO is expected to take care of all Payroll and HR matters.

EOR or PEO? Handy in different situations

Both an employer of record (EOR) and a professional employer organization (PEO) can provide benefits to businesses. It basically comes down to this: Do you have a candidate that you want to work for you, but for whatever reason hiring yourself seems impractical? – EOR will take care of payroll.

Do you want some work done but you can’t find anyone to do it?  – PEO will suggest candidates.

Employer of Record specialized in the Netherlands

If you are looking for an EOR to hire people in the Netherlands on your behalf, look no further than Employer of Record the Netherlands! We can provide compliance with employment laws, access to better health insurance plans, and reduced payroll costs.

We hope that this article was helpful in explaining the difference between an employer of record (also known as umbrella company) and a professional employer organization. If you have any further questions, please feel free to reach out to us. Set up a profile of call Sam!

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