A Global Employment Organization/ Outsourcing is an employment solution that enables the companies to delegate their duties and roles as employers to the Employer Of Record (EOR). EOR then takes over their legal responsibilities and administration, including global payroll, while client companies retain their managerial duties and control over the business and the workers, no matter where they’re situated.
The companies might have a dedicated, in-house HR department that takes good care of everything related to their employees. However, for large enterprises and companies who are starting their international expansion and want to engage the global workforce, it’s safer to find the Employer Of Record and use GEO services. With their help, you don’t have to establish a foreign entity for each country where you find exceptional talent.
When looking for the perfect employee arrangement that includes outsourcing (hiring expats, independent contractors, or sole proprietors), you’ll run into a number of acronyms and might get confused. For this topic, we chose to define GEO and compare it to PEO and EOR, for businesses looking for labor compliance and international employment solutions in countries outside of the United States.
This article acts as a comprehensive guide for the Global Employment Organizations; by the end of the reading, you will learn:
- The full explanation and definition of GEO
- Which tasks does GEO handle for client companies?
- What are the GEO’s responsibilities?
- What are the benefits of using GEO services instead of an in-house HR team?
- Who can benefit from GEO services?
- What is the difference between Global Employment Organization (GEO) and Professional Employment Organization (PEO)?
- What is the connection between Global Employment Organization (GEO) and Employer Of Record (EOR)?
Defining Global Employment Organization (GEO)
GEO is an acronym for Global Employment Organization (term GEC/ Global Employment Company is also used). It is a legal entity that enables companies to hire employees abroad, without having to create a branch outside of their home country.
As employment law differs from one country to another, GEO acts as a legal Employee of Record (EOR) in each country. By that, GEOs accept all the employer responsibilities such as administration, payroll, and taxes, enabling companies to work compliantly while retaining their global mobility and the option to outsource wherever they deem fit.
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What does GEO do?
GEO Employment Solutions
As an Employer Of Record for business needs of multinational companies, GEOs take care of a wide variety of staffing, HR, and administrative tasks.
These tasks include:
- Helping you comply with local laws (labor law, rules, and regulations)
- Handling tax administration and insurance
- Filling the payroll requirements in the host country
- Creating apt employment contracts that follow the local laws
- Coming up with employee benefits
- Employee hiring and management
- Money transfer across the home state and foreign countries
- Processing the work permit and visa-related requests for each foreign employee (if applicable)
So, EOR focuses on the employee administration, while client companies and employees still communicate and set the terms. Job description/ duties, company position, and salary remain a part of the agreement between employee and employer — and GEO makes it legal in employees’ countries, coordinating the entire process.
Benefits of using the GEO services
Letting someone else manage the HR workload has the obvious benefit of having less to worry about, but there’s much more to it! These services go beyond plain human resources administration: from scouting top talent worldwide, to making sure your company breaks no laws, no matter the country in question.
Below are all of the benefits that come with using the GEO services instead of doing it yourself.
GEO increases scalability
GEOs are able to scale your company and the employee number faster, according to industry shifts and business requirements. These organizations know more about the local industry circumstances, where and how to look for new people.
No more compliance and security issues
If you hire independent contractors and their job description looks too much like what the local government considers to be an employee — you’re at risk of employment violations.
Good to know: What’s the difference between Independent Contractor vs Employee
By using GEO services, you can rest assured that EOR is compliant with the local labor laws and there won’t be any penalties coming your way.
The operational errors regarding taxes and payroll are significantly reduced, as the whole team of experts works on it.
GEO helps with entering new markets quickly
Even if you are considering establishing a business entity (permanent establishment) in a new country, finding an Employee Of Record might be a better solution in the beginning. Setting everything up can last too long and the whole process is complex; if you wish to begin the operations there as soon as possible, EOR will enable you to start mush sooner. You can work on setting up the company entity in the background, and waste no time!
Using GEO is cost-effective
Setting up a local branch only to hire a couple of people is too pricey. With GEO acting as the employer of record, you never have to go further than your HQ. The range of tasks a single GEO handles can also replace many different consulting firms, experts, and agents.
Better time management and increased productivity
Instead of handling the administrative HR tasks in-house, you’ll save more time by hiring human resources professionals to take care of it. While you focus on important tasks that increase your revenue, GEO acts as a global HR service and resolves every issue regarding international employees: payroll, taxes, complying with local labor laws, and more.
GEOs open doors to richer talent pools
GEOs are crucial when you wish to have global talent at your disposal, and pick new employees from all over the world. Depending exclusively on your business needs and nothing else, GEO can look into the local talent of each new country you pick and pick expert employees with an amazing track record.
GEOs can bring attractive employee benefits
GEOs have access to more attractive benefit packages than your company could afford on its own. This will make your job offers highly desirable to local employees, and the ones who are already on board will feel valued and happy with their work. A good benefits package makes it easier to negotiate with candidates as well and gives you the power to pick the best ones before the competition does.
Global Employment Outsourcing (GEO) vs Professional Employment Organization (PEO)
GEO is often called global PEO (Professional Employer Organization), but there are important differences between these two entities you should consider before choosing one of them for your company.
Most importantly, PEO as a type of co-employment does not exist outside of the United States — and in some countries, it’s not allowed at all. For example, co-employment is even illegal in France and Switzerland. This means that, if you’re planning a global expansion, GEO presents a better option.
When it comes to similarities between GEO and PEO, note that many people use the term “international PEO” to help explain the purpose of GEO. Both of these legal entities relieve the companies from certain HR and payroll burdens (in varying degrees), especially the administration, making sure there are no compliance risks present.
However, the following differences will help you decide what suits your enterprise better.
Liability: GEO vs PEO
With GEO, the responsibility falls onto the Employer of Record (EOR); using PEO means that you’re personally liable for your employees.
Employee insurance: GEO vs PEO
When it comes to GEO, employer of record is obliged to provide the employees with full insurance coverage. Precisely, these are things that are the equivalent of the country-based general liability, workers compensation, and professional indemnity.
While PEO provides some coverage, you’ll need to create an insurance plan that complements it and gives you a full protection scope.
Employee Contracts: GEO vs PEO
With GEO, you are not liable, as the employment contract is signed between the employee and the employer of record.
As PEO is merely a co-employer, in case there’s any breach of the employment contract, you are liable.
Business Registration: GEO vs PEO
With GEO, business registration is not required, but with PEO it is, in every country you hire the employees.
HR Services & Support: GEO vs PEO
If you’re using GEO, they will make sure you’re compliant with local laws, rules and regulations — EOR implements all HR requests necessary.
PEO will provide you with HR support upon your request, but you must implement and act on any recommendations.
In the end, you should note that GEO is a more comprehensive solution for hiring employees abroad. Unlike PEO, it provides the companies with a full scope of employment administration through the Employer Of Record.
If you wish to know more about PEO, we wrote a detailed PEO guide — so have a look!
Global Employment Organization (GEO) vs Employer Of Record (EOR)
In the chapters above, we mentioned another entity quite a lot: (Global) Employer Of Record. As GEO and EOR are often used interchangeably, it’s worth differentiating these two terms a bit.
Global Employment Organization is a company that hires employees on the client company’s behalf, assuming the legal responsibility for new employees. Once the company signs a contract with GEO and the GEO in question hires an employee, it becomes the employer of record — the particular legal entity that puts people to work.
This means that the client company isn’t *technically* (by law) the Employer Of Record, but the Global Employment Organization is. In agreement with GEO, an employee responds directly to the business, but is legally tied to GEO that acts as Employer Of Record — and if it comes to contract breach or breaking the country law, GEO is liable, not the client company.
To learn all there is about EOR, read our Guide on Employer Of Record
GEO is an ideal solution for companies who wish to hire global talent without having to establish a local branch in each country. As an employer of record, the organization is liable for any breach of contract/ local labor laws (unlike PEO). At the same time, the client firm stays in charge of business completely and arranges the compensation, job description, and other work-related details with the employers.