In today’s globalized business world, hiring international employees has become increasingly common for organizations looking to expand their operations and improve their competitiveness.
However, hiring international staff members can also present various challenges, including:
- Navigating complex legal and regulatory requirements
- Setting up payroll
- Providing benefits
Fortunately, some solutions can help organizations onboard international employees quickly and efficiently. These include a Professional Employer Organization (PEO) or Employer of Record (EOR).
These types of organizations provide a range of services that can fast-track the process of hiring international employees.
Here, we’ll explore how PEOs and EORs can help companies quicken the onboarding process and reduce paperwork.
What is a PEO or EOR?
Before diving into the specifics of how PEOs and EORs can help companies onboard international employees, it’s essential to understand what these organizations are and how they work.
A PEO is a company that provides comprehensive HR services to small and mid-sized businesses.
These services include:
- Managing payroll
- Providing benefits and insurance
- Handling compliance issues
A PEO acts as an outsourced HR department for the client company. This enables them to focus on their core business functions.
An EOR, on the other hand, is a company serving as the legal employer for a client’s employees. This can be especially useful for organizations that are expanding internationally and need to hire staff in foreign countries.
By using an EOR, the client company can avoid the legal and regulatory obstacles involved in setting up a foreign entity. Instead, they can rely on the EOR to handle payroll, taxes, and compliance.
Speeding up the Onboarding Process with a PEO/EOR
Now that we understand what PEOs and EORs are let’s explore how they can help companies quicken the onboarding process for international employees.
Setting up Payroll
One of the biggest challenges of hiring international staff members is setting up payroll. This can be a complex and time-consuming process involving multiple tax jurisdictions and compliance requirements.
However, a PEO/EOR can handle this for the client company, ensuring that the employee is paid correctly and on time.
One of the many perks of using a PEO or EOR is the ability to provide benefits to international employees.
PEOs and EORs can manage benefits for employees in different countries, which can be valuable for companies developing globally. It can be challenging for companies to navigate the local benefits landscape, especially if they aren’t familiar with the local laws and regulations.
But PEOs and EORs can provide comprehensive benefits packages for international employees, including:
- Health insurance
- Retirement plans
- Other benefits
PEOs and EORs can negotiate with local providers to secure the best deals for the client company and their staff. Moreover, PEOs and EORs can ensure that all benefits plans comply with local laws and regulations. This is essential, as non-compliance can lead to expensive fines and penalties for the client company.
By using a PEO or EOR, companies can be confident that their benefits plans are completely compliant with local laws and regulations.
Another benefit of using a PEO or EOR for benefits management is that they can handle all the administrative tasks linked with benefits management, such as enrollment, claims processing, and other tasks. This can save the client company time, money, and resources, as they don’t need dedicated staff managing benefits administration.
Navigating Legal and Regulatory Requirements
Another challenge of hiring international employees is navigating the legal and regulatory requirements of different countries.
A PEO or EOR can help companies stay compliant with local laws and regulations, including tax and labor laws. This can be especially important for companies expanding into countries with unfamiliar legal and regulatory systems.
By using a PEO/EOR, the client company can avoid any legal and regulatory issues involved in setting up a foreign entity. Instead, they can rely on the PEO/EOR to handle compliance issues.
One of the most time-consuming aspects of onboarding international employees is the paperwork.
Onboarding international staff members involves a lot of documentation, including:
- Employment contracts
- Tax forms
- Benefits enrolment
- Compliance paperwork
A PEO or EOR can simplify this process by taking on the bulk of the paperwork, minimizing the load on the client company.
A PEO or EOR can provide electronic onboarding portals that staff can use to complete the necessary documentation quickly and easily. The platforms can be customized to meet the specific needs of the client company, ensuring that all required documents are collected, signed, and filed in good time.
PEO and EORs also reduce the risk of errors or incomplete documentation, which can lead to delays and additional paperwork.
Plus, PEO and EORs can handle all the administrative tasks associated with employee management, such as time tracking, vacation requests, and other HR tasks. This can free the time of HR staff in the client company so they can focus on more important, strategic tasks, such as employee development and training.
Cultural and Language Support
Some PEOs or EORs provide cultural and language support for international employees that require it. They can help with language translation services, cultural training, and other support services that can help international staff members feel more comfortable and productive in their new environment.
Immigration and Visa Assistance
PEOs and EORs can help companies navigate the complicated process of obtaining work visas and work permits for international employees.
They can help with the necessary documentation, filing deadlines, and other requirements. This can be especially valuable for organizations that aren’t familiar with the local immigration laws and regulations.
PEOs and EORs can help organizations manage the risks of hiring international employees. For example, legal and regulatory risks, compliance risks, and HR-related risks.
By providing comprehensive risk management services, PEOs, and EORs can help companies avoid expensive mistakes and treat any risks before they become significant issues.
Local Market Knowledge
PEOs and EORs are packed with extensive knowledge of local markets, including labor laws, tax regulations, and other business requirements.
By using a PEO or EOR, organizations can tap into this knowledge and gain a competitive advantage in the local market.
Flexibility and Scalability
PEOs/EORs offer plenty of flexibility and scalability, enabling companies to adapt quickly to changing business needs.
They can scale up or down their HR services as required, depending on the size and scope of their operations. This can be particularly helpful for companies that are expanding rapidly or experiencing fluctuations in their business.
As well as all these streamlining benefits, PEOs, and EORs can help companies save money on their HR management costs. By outsourcing HR functions, organizations can refrain from hiring dedicated HR personnel or investing in costly HR software and infrastructure.
PEOs and EORs also have economies of scale, allowing them to negotiate better rates with service providers and pass the savings on to their clients. For example, PEOs and EORs can negotiate lower rates for health insurance and retirement plans, as they represent a bigger pool of staff than any single client company.
This can lead to significant cost savings for the client company, especially if they are expanding into a country with high benefit costs.
Plus, PEOs and EORs can help companies avoid the fees of setting up a foreign entity, which can also be costly and time-consuming.
By using a PEO or EOR, companies can avoid the legal and administrative costs associated with setting up a foreign entity, such as legal fees, registration fees, and ongoing compliance fees.
Data Privacy and Security
PEOs EORs can also help companies ensure the privacy and security of their staff data. They have highly secure data privacy and security protocols in place to protect sensitive information, such as employee records and payroll data.
This is particularly important for companies that operate in countries with strict data privacy laws.
PEOs and EORs have the expertise and resources to manage data privacy and security risks effectively. They can ensure that employee data is stored securely, with appropriate access controls and encryption measures. They can also ensure that data is only shared with authorized parties and that data breaches are reported quickly and appropriately.
These measures can contribute to the overall streamlining process of hiring international employees.
PEOs and EORs — Two Streamlined Methods
Hiring international employees can be a complex and challenging process. But it’s also an essential part of many companies’ growth strategies, and it doesn’t need to be hard.
Companies can streamline the onboarding process by using a PEO or EOR, from setting up payroll to managing benefits and compliance. This can help organizations onboard international employees more quickly and efficiently, allowing them to focus on their jobs and achieve their career growth goals.
Are you an international company and need to onboard Canadian team members quickly? Do you have questions about PEO and EOR? As the experts at Pivotal PEO:
- What is a PEO? What are its advantages and disadvantages?, Society for Human Resource Management (SHRM)
- What Is A PEO? Pros, Cons & Considerations, Forbes Advisor, February 2023
- What’s the Difference Between a PEO and an Employer of Record?, Business News Daily