If you are thinking about international expansion in to Europe, you have probably heard of an international PEO. An International Professional Employer Organization is a way to employ people without having your own entity in that specific country. In this blog, insights are given on how an international PEO can add value for your European expansion.
What is a European PEO?
The acronym PEO stands for Professional Employer Organization. A PEO is an HR outsourcing company that provides comprehensive HR services for businesses. PEOs work with businesses to assist them with payroll, benefits, HR consulting, and regulatory compliance. Working with a PEO allows you to grow your organization by focusing on your core business. A European PEO is a mechanism to employ people without having your own entity in that specific country.
Why use a PEO?
There are several reasons for businesses to use international PEOs. First of all, a PEO provides assistance with payroll, benefits, and compliance issues under local/national laws. By taking care of the paperwork and providing regulatory compliance assistance, PEOs allow businesses to improve productivity and profitability during their expansion. In other words, working with a PEO allows you to grow your organization by focusing on your core business. Also, a PEO could potentially reduce legal liabilities or obligations to employees that it would have otherwise.
According to a recent study by economists, small businesses that use PEOs grow 7% to 9% faster, have 10% to 14% lower employee turnover and are 50% less likely to go out of business. (1)
At EuroDev there is a focus on great employment practices. For many Small – Medium Enterprises (SMEs), it is difficult to arrange these employment practices well, especially in an unfamiliar country with unique and specific employment laws. Choosing a PEO can also help bridge the gap between different cultures. As you may know, Europe has an array of cultures.
According to a recent study by economists, small businesses that use PEOs grow 7 to 9% faster.
Who uses a PEO?
Any business can find value in a PEO relationship. Mostly, SMEs are using a PEO. Sometimes larger businesses are also finding value in a PEO relationship because PEOs offer advanced HR technologies and expertise in HR management. PEOs can add value for businesses in any industry ranging from accounting firms to high-tech companies and small manufacturers.
PEO in Europe
It is important to know that if you use a PEO outside the United States or Canada, in Europe for example, you are required to have or set up a legal entity in the European country where the employee would be located. This can be complex and costly. EuroDev provides alternative methods for this. A global employer of record (EOR), provides the simplest way for businesses to grow and manage their international presence.
Guidelines for choosing a PEO
- Meet the people who will be serving you and make sure the PEO is capable of meeting your goals.
- Ask for client and professional references.
- Check whether the PEO has experience with similar cases.
What are the most popular European PEO destinations among our clients?
- The United Kingdom
- The Netherlands
- Do business owners lose control of their business when they work with a PEO?
- No, the business owner retains ownership of the company and control over its operations. PEO only has an administrative role and will not interfere with the daily work or management of staff.
- What is the difference between PEO and EOR?
- An EOR puts a portion of your business and employees on its payroll. A PEO takes on all of your employees and provides all HR-related functions.
In case you would like to have more information, do not hesitate to connect with Monique Ramondt-Sanders - VP of Human Resource Outsourcing at EuroDev. Interested in more information concerning our HR Outsourcing services? Please have a look at our HR Outsourcing page.
EuroDev, established in 1996 with offices in The Netherlands, has a single, defined purpose to help mid-sized North American companies expand their business in Europe. We have created a proven, successful business development model and since our founding, have partnered with over 300 companies to help them define and meet their European business goals. Services provided include Sales Outsourcing, HR Outsourcing, and Digital Marketing.