Companies now build teams wherever the right people are — across borders, time zones, and currencies. The real challenge isn’t ambition; it’s structure. How do you engage and pay people abroad without slowing growth or taking on unnecessary risk?
Over the past decade, three main solutions have emerged — Employer of Record (EOR), Professional Employer Organisation (PEO), and what earlier industry language called the Global Employment Organisation (GEO), now more accurately known as Global EOR. Each offers a different way to hire, pay, and manage people abroad.
This guide was written for HR, legal, and finance leaders who already work internationally but want a clearer picture of what these models actually do, how they differ, and which fits best at different stages of growth.
It draws on Acumen International’s experience supporting employers in more than 190 countries, cutting through the noise to show how global hiring can be structured cleanly and confidently.
How Global Employment Evolved
The story of global employment began long before anyone used the term EOR.
In the United States during the 1980s, companies began outsourcing HR administration through what became known as the Professional Employer Organisation (PEO) model. It introduced co-employment: a shared arrangement in which the provider managed payroll, tax, and benefits while the client retained operational control. The model worked well within one legal system, but it was never designed to cross borders.
As globalisation gathered pace in the 1990s and 2000s, businesses expanding abroad discovered that co-employment could not be exported. To hire staff in a new country, they needed a local legal entity — or someone who already had one. Local firms began employing workers on behalf of foreign companies, taking on full employer responsibility while the client directed the work. This became the Employer of Record (EOR) model.
By the 2010s, employers wanted the same capability in multiple countries, not one. Providers started coordinating networks of local entities under a single framework. That approach evolved into the Global EOR model: a way to engage talent across jurisdictions with consistent terms, payroll, and HR-compliance oversight.
The confusion between PEO and EOR persisted because the language of co-employment travelled further than the law that defined it. What began as a domestic HR service in the US became the vocabulary for a global industry that operates on very different legal foundations.
From PEO to Global EOR: How the Models Differ
The first modern employment model was the Professional Employer Organisation (PEO) — a US invention. It allowed small and mid-sized companies to outsource HR, payroll, and benefits while sharing employer responsibilities with a specialist provider. This co-employment arrangement worked because the rules were consistent within one jurisdiction. The provider could manage compliance and benefits efficiently, and the client kept day-to-day control. But the model relied on the client already having a legal entity. Once a company tried to hire abroad, the logic collapsed. Co-employment has no legal standing outside the US.
To meet that gap, a new approach appeared: the Employer of Record (EOR). Instead of sharing employer status, the provider became the sole legal employer in the host country. The EOR hired workers locally, ran payroll, paid taxes, and handled benefits, while the client managed performance and workflow. This arrangement allowed companies to employ people in new markets without creating a subsidiary. What began as a workaround quickly became a mainstream method for market entry, pilot teams, and contractor conversions — anywhere speed and compliance needed to coexist.
As distributed teams became normal and companies began hiring in multiple countries simultaneously, the same principle scaled up into the Global Employer of Record model. Providers built networks of owned or partner entities under unified management, offering consistent employment, payroll, and reporting across jurisdictions. Global EOR turned what was once a country-by-country service into a coordinated framework for managing international workforces.
Together, these models trace the evolution of global hiring: from domestic HR outsourcing (PEO) to entity-free local employment (EOR) to fully integrated cross-border operations (Global EOR). The differences lie not in ambition, but in how each balances speed, control, and legal responsibility.
Global PEO vs Global EOR: 2025 Comparison
| Aspect | Global PEO | Global EOR |
| Aspect Global PEO / GEO Global EOR Definition | A service model offered by some international HR providers that adapts the U.S. PEO (Professional Employer Organisation) concept for cross-border use. | An arrangement in which the provider becomes the employer of record in each country, hiring workers under its own registered entities and taking full responsibility for payroll, tax, and compliance. |
| Origin and legal basis | Based on the U.S. PEO co-employment model, which exists only in domestic labour law. There is no global statute defining “Global PEO” or “GEO.” | Grounded in local employment law: the provider registers as the legal employer in each jurisdiction and fulfils all statutory employer obligations. |
| Employment relationship | Co-employment or HR-outsourcing structure: the client and provider share certain employment functions. | Sole employment: the provider is the legal employer; the client directs daily work. |
| Entity requirement | Usually requires the client to have or set up a local entity in each country. | No local entity required; the provider’s own or partner entity employs the staff. |
| Compliance responsibility | Shared or advisory. The client retains some exposure to local labour and tax risk. | Fully assumed by the provider, including payroll, benefits, tax, and termination compliance. |
| Tax and payroll reporting | May be processed under the client’s taxpayer ID, depending on local law. | Processed entirely under the provider’s in-country taxpayer ID and registration. |
| Geographical reach | Can operate across several countries but structure varies by provider; not a uniform legal model. | Unified, legally compliant multi-country employment solution managed under one provider. |
| Best suited for | Companies with existing local entities that want to outsource HR and payroll administration. | Companies hiring where they have no entity or need rapid, compliant entry into new markets. |
| Current relevance | A legitimate and regulated employment model within the United States and similar domestic systems. | The established, legally recognised model for compliant cross-border employment and global workforce management. |
Local Adaptations and Legal Variations
While the idea of a Global Employer of Record suggests a single, uniform model, in practice it must adapt to the legal framework of each country. Local labour law decides what “employer” means, who can hold that status, and under what conditions a foreign company can direct work.
In jurisdictions such as Hungary, Romania, Czechia, Slovakia, and some other countries, employment cannot simply be transferred to an external provider if the client manages the employee’s work directly. These systems treat such arrangements as labour leasing or temporary staffing, which are subject to licensing, registration, and strict limits on duration and control.
In these countries, the EOR delivery may therefore operate under a PEO-style or dual structure, where the provider handles HR administration and compliance, but a local entity, either the client’s or the provider’s, remains the formal employer of record for statutory purposes.
The same applies in several Nordic, Gulf, and Asian jurisdictions where local sponsorship, sectoral licensing, or immigration rules impose limits on third-party employment.
This is why the term Global EOR should be seen as a delivery framework, not a single legal mechanism. It reflects the intent to enable compliant employment without the client establishing an entity, but the legal route varies by jurisdiction.
For globally active companies, understanding these variations is critical. True compliance lies not in the terminology used, but in how each employment is structured to align with local law, taxation, and labour-leasing regulations.
Compliance, Liability, and Control: What Global Employers Actually Need to Manage
Every international hire creates a web of obligations: who signs the contract, who reports tax, who carries liability for termination, and who is answerable to local regulators. These details define whether employment is truly compliant or only appears so.
In a PEO arrangement, control is shared. The client remains the legal employer and therefore bears most employment risk, while the provider handles HR and payroll functions on the client’s behalf. If a compliance breach occurs—such as misapplied tax, benefits error, or dismissal claim—the liability ultimately sits with the client’s local entity.
Under a Global EOR, the provider becomes the legal employer of record. It assumes all statutory duties for payroll, tax remittance, and employment law compliance. However, the client retains operational control over the employee’s day-to-day work. This division creates a clean line of accountability: the provider manages legality, and the client manages performance. But it also means that the client must respect the limits of that arrangement, such as avoiding actions that imply direct employment or unregistered management presence.
For local entities, all obligations converge. The company holds full control and full exposure—employment law, tax, immigration, and regulatory oversight. It gains flexibility but must manage compliance directly or through in-country HR and legal teams.
For multinational organisations, the practical task is not avoiding liability but placing it in the right hands. A mature global employment setup combines clear governance (who does what), local expertise, and transparent documentation across every jurisdiction.
Choosing the Right Model: When and Why Each Works
The decision between EOR, HR outsourcing, or direct employment is rarely about preference. It’s about timing, intent, and local conditions. The right model changes as a company moves from testing new markets to building lasting operations.
Global EOR fits when speed and compliance are more important than ownership.
It’s used to hire before incorporation, convert contractors into employees, or retain people in countries where the company has no legal presence.
In parts of Central and Eastern Europe — such as Hungary, Romania, or Czechia — similar arrangements fall under licensed labour leasing. The label differs, but the logic is the same: enable legal employment where the client cannot directly hire.
HR or payroll outsourcing applies once the company has a local entity.
This is often referred to as PEO in the United States, but internationally it means outsourcing HR administration and payroll while the company remains the legal employer. It reduces overhead and ensures local compliance without transferring risk or control.
Direct employment becomes necessary when the business is ready for permanence.
A local entity allows full control, the ability to employ regulated roles, and eligibility for local tax or investment incentives. It carries the most responsibility but also establishes the company’s true local presence.
In practice, these aren’t competing options but sequential steps in international growth.
- Global EOR opens the door.
- HR outsourcing sustains operations as the footprint grows.
- Direct employment cements long-term presence.
Each model has its moment. The skill lies in recognising when one should give way to the next.
Why Global EOR Has Become Strategic
Five years ago, Employer of Record was still seen as a shortcut — a way to hire abroad quickly without setting up a company. Today, it plays a far larger role. For many international employers, EOR is no longer an exception to standard hiring practice but part of how the workforce itself is structured and managed.
As cross-border hiring has become normal, the questions clients ask have changed.
It’s no longer “can you hire in this country?” but “how will the employment be treated under local law, and who carries the risk?”
That shift marks EOR’s evolution from an administrative service to a compliance, finance, and strategy function.
Modern EOR use cases extend far beyond market entry. Companies now use EORs to:
- Retain key employees after restructuring, mergers and acquisitions, or divestment.
- Support immigration and relocation programmes where entity setup is not viable.
- Employ senior or regulated roles in countries that limit direct control from abroad.
- Manage hybrid teams across multiple jurisdictions under consistent employment standards.
In many of these scenarios, EOR is not a stop-gap but an alternative infrastructure — a mechanism for continuing lawful employment when other routes are impractical or too slow.
This is why the quality of a Global Employer of Record (EOR) provider matters less in terms of speed, and more in terms of liability, transparency, and lifecycle control. The focus has shifted from onboarding volume to legal accuracy and continuity.
An effective EOR provider is now judged not by how fast it can hire, but by how clearly it can evidence compliance, defend audits, and maintain consistency across jurisdictions.
For internationally active companies, Global EOR has become a strategic layer — a way to hold global teams together through change, without compromising legal clarity or control.
The Role of the Third-Party Employer in Workforce Due Diligence
Workforce due diligence is no longer limited to acquisitions or corporate transactions. It now defines how organisations evaluate partners, vendors, and international delivery models. When part of a workforce is employed through a third party such as an Employer of Record (EOR), the review must extend beyond the client’s own entity to the provider’s compliance and governance framework.
Payroll accuracy, employment contract validity, immigration compliance, and benefits administration all form part of an organisation’s operational risk profile. If those functions sit with an external employer, transparency becomes essential. The question is not only who performs the work, but who legally employs the people who do.
A compliant EOR strengthens organisational assurance by providing verifiable documentation and oversight, including:
- Evidence of employer registration, tax remittance, and social contribution payments in each country
- Legally valid, locally compliant employment contracts and benefit records
- Transparent procedures for termination, rehiring, and continuity of employment
- Clear allocation of liability between the EOR and the client company
Lack of visibility or informal arrangements can have the opposite effect, masking the true holder of employment liability, weakening IP protection, and complicating audits or post-transaction integration.
In today’s environment, workforce due diligence is continuous. Whether in investment reviews, vendor selection, or global workforce planning, companies increasingly expect third-party employers to demonstrate the same compliance rigour as any internal HR or finance function.
Planning Global Hiring with the Right Data
Expanding into a new country begins with understanding what compliant employment actually costs. Salaries are only one element — employers must also account for mandatory taxes, social contributions, benefits, and local compliance requirements. Without this visibility, even well-intentioned plans can result in hidden liabilities or unsustainable margins.
The Global Payroll Calculator provides a clear, data-driven way to plan hiring across multiple countries.
It enables HR, finance, and strategy teams to model the total cost of employment before any employment contracts are signed.
Key insights the tool delivers include:
- Employer and employee tax contributions by country;
- Statutory and common voluntary benefits;
- Instant net-to-gross and gross-to-net calculations for each role;
- Comparative cost-of-hire analysis across multiple jurisdictions;
- Total employment cost per role, per country, in both local and base currencies;
- Real-time data aligned with current labour, tax, and social-security rules.
Used early in the planning process, the calculator supports decisions such as where to locate new teams, how to price international projects, and whether an entity or an Employer of Record structure is the most efficient option.
For companies serious about expanding the right way — with full visibility and compliance certainty — the Global Payroll Calculator turns complex regulations into clear, actionable numbers.
Where Global Employment Stands Now
Across five decades, the idea of outsourcing employment has moved from domestic HR administration to a recognised instrument of international business. The terminology has blurred, but the principle remains constant: companies need lawful ways to engage people beyond their own borders.
What defines the present stage isn’t speed or technology, but interpretation — how providers and clients align legal frameworks with real work. Global EOR has become the practical expression of that alignment: a way to employ people legally in markets where opportunity moves faster than incorporation.
Frequently Asked Questions: Global EOR, PEO in Practice
1. Can a Global EOR model be used in every country?
Not universally. In jurisdictions where third-party employment is restricted (for example, Hungary, Romania, and some others), the Global Employer of Record (EOR) must operate under local licensing, dual employment, or labour-leasing frameworks. The model adapts to law, not the other way round.
2. What are the main legal risks of misusing an EOR?
Employee misclassification, permanent establishment risk, and unenforceable intellectual property (IP) ownership are the biggest risks. These arise when the client exercises direct control without recognising the provider’s formal employer status, or when contracts omit jurisdiction-specific clauses.
3. How long can an EOR arrangement last?
There is no fixed limit in most countries. In others, such as parts of Central and Eastern Europe, authorities cap third-party employment to defined project or duration thresholds. The legality depends on intent and continuity, not time alone.
4. How does immigration work under an EOR?
Where local law allows, the EOR or its partner acts as the work permit and visa sponsor. In countries requiring the end-client to hold sponsorship rights, both parties share documentation and compliance responsibilities to ensure lawful residence and work status.
5. Can employees hired through an EOR be transferred to the client’s own entity later?
Yes. Transition is routine once the company incorporates locally. A compliant provider coordinates contract termination, rehiring, and benefit continuity so employees retain seniority and statutory rights.