When expanding your workforce or streamlining HR operations, both Employer of Record (EOR) and Professional Employer Organization (PEO) models offer compliant solutions. But although they may appear similar at a glance, these models differ significantly in terms of structure, implementation, and business use.
Legal Structure: Who Is the Employer?
| EOR – Employer of Record | PEO – Professional Employer Organization |
|---|---|
| The EOR becomes the official legal employer of your staff and is responsible for tax filings, insurance contributions, payroll, and compliance. | A PEO creates a co-employment relationship where your company remains the legal employer while the PEO handles HR, benefits, and compliance. |
| Your company directs daily work, but the EOR assumes all employment-related legal responsibilities. | Often used domestically in a shared responsibility setup. |
Use Case Scenarios
| EOR is ideal for: | PEO is ideal for: |
|---|---|
| Hiring internationally without registering a local entity | Companies operating in their home country |
| Engaging workers for short-term or project-based roles | Businesses outsourcing HR while retaining control |
| Converting contractors into compliant employees | Established teams (often 5+ employees) |
| Testing new markets with minimal upfront investment | Companies looking for cost savings via group benefits |
Setup and Implementation
| EOR | PEO |
|---|---|
| Quick and simple setup without the need to register a local entity | Requires your company to be legally registered in the country |
| Onboarding possible within days | Setup takes longer and includes more complex contracts |
| No employee minimums | Often has minimum employee requirements |
| Ideal for rapid market entry | Suited for established domestic operations |
Cost and Pricing
| EOR Pricing Includes: | PEO Pricing Includes: |
|---|---|
| A percentage of salary (typically 7–15%) | Fixed admin fee per employee (e.g., Euro 150-200/month) |
| Compliance, payroll, and HR admin | Discounts for larger teams via pooled services |
| No onboarding or setup fees | May include initial setup fees |
| Transparent, all-inclusive billing | Scales well with company size |
Flexibility and Control
| EOR | PEO |
|---|---|
| Limited ability to customize contracts or benefits | Greater control over policies and benefit design |
| Must follow local employment standards | Allows use of existing HR systems |
| The provider manages compliance and payroll fully | Stronger integration into your operations |
| Easier to exit or switch providers | Typically longer-term partnership |
Final Thoughts
If your priority is to hire internationally with speed and legal safety, the EOR model provides the most efficient route.
If you’re operating domestically and want to retain HR control while outsourcing admin, a PEO is a solid strategic choice.
Still unsure?
Contact Northern Partners to explore compliant workforce solutions across the Nordics
