PEO vs EOR: Making the Right Choice for Your Global Team

Here's What You Need to Know

An EOR can cost you €500 to €800 per employee each month and lets you hire compliantly in 1 to 4 weeks without setting up a local entity. A PEO runs 2% to 12% of payroll but you'll need your own entity first. It makes sense when you're planning for 10 to 15 employees or more within the next 18 to 24 months. The real question isn't which model to pick. It's knowing when to switch from one to the other as your team grows.

Here's what we'd recommend based on your situation:

• If you need one advisor for everything: Teamed can help you manage PEO, EOR, and entity decisions across 180+ countries through a single relationship. No more juggling multiple providers. EOR starts at €470 per employee per month, and we can support entity setup too.
• When you need to hire fast without an entity: An EOR can get you compliant hires in 1 to 4 weeks while you figure out your long-term plans. Expect to pay €500 to €800 per employee each month.
• If you already have a local company set up: A PEO can make sense when you're planning to hire 10 to 15 people or more within 18 months. It'll typically cost you 2% to 12% of payroll.
• Start with EOR, then switch to your own entity plus PEO: This can work well when you hit 10 to 15 employees in straightforward markets, or 25 to 35 in complex ones. You'll know it's time when the monthly EOR fees start hurting more than entity setup costs.
• When you need extra legal protection: Bring in specialist employment lawyers alongside your provider. This typically runs €15,000 to €50,000 per year for each major country. Essential if you're in finance, healthcare, or facing tricky terminations or works councils.

Your board is asking harder questions about compliance, and for good reason. The UK Employment Rights Act is rolling out through 2026. EU countries are implementing the Platform Work Directive on their own timelines. US states keep tightening contractor rules. If you're relying heavily on contractors, expect more scrutiny. Look beyond the monthly per-employee price. Calculate what this will actually cost you over 24 to 36 months, including switching costs and audit risks.

How to Think About PEO vs EOR if You're the One Signing Off

Your CFO asks about Germany headcount projections. Legal flags contractor risk in France. HR needs to hire someone in Singapore next week. These aren't separate problems. What you choose for Germany today affects whether you'll need an entity there in three years. We looked at what actually matters when you're defending these decisions to your board.

You need someone who can map out what happens in year three, not just process this month's hires. Real compliance expertise means they have actual lawyers in the US, UK, and EU who can tell you what's coming, not just what's required today. You're too big for startup hacks but too small for enterprise bureaucracy. With 200 to 2,000 employees across 5+ countries, you need guidance that fits your reality.

Watch what happens when you need to convert contractors to employees, or move from EOR to your own entity. Does your provider help plan the transition, or do they just hand you a termination notice? If you're already managing five different systems, will this be number six or will it replace three of them? Here's what we've learned: companies that plan their employment structure like they'd plan their tech architecture end up with fewer audit surprises and lower costs overall.

PEO vs EOR Explained: The Definitions That Matter

A Professional Employer Organisation (PEO) is a co-employment arrangement where you retain your own local legal entity while the PEO shares defined employer responsibilities including payroll administration, benefits, and certain compliance processes. You remain the employer of record through your entity.

An Employer of Record (EOR) is a third-party organisation that becomes the legal employer for workers in a specific country. The EOR runs local payroll, statutory benefits, tax withholding, and employment compliance while you direct the employee's day-to-day work. You have no entity in that country.

The choice depends on three variables: whether you have or plan to establish an entity, your expected headcount trajectory over 18–24 months, and the regulatory intensity of the roles you're hiring.

Your Real Options (and the Trade-offs)

Quick summary: Teamed can help you decide, document it, and defend it to your board. EOR platforms get you hiring fast without the entity hassle. PEOs can save money once you have your own entity and enough people. Starting with EOR then switching can give you speed now and efficiency later. Legal counsel can protect you when things get complicated.

Teamed: When You Have Too Many Vendors and Too Many Decisions

Teamed is the unified global employment partner for mid-market companies managing international teams across multiple platforms, vendors, and employment models. We can support you in 180+ countries with EOR from €470 per employee per month, plus entity setup when you're ready. Our team knows what's happening with the UK Employment Rights Act (rolling out through 2026) and the EU Platform Work Directive (each country has its own timeline). We can show you the math on when to stop paying EOR fees and set up your own entity, usually around 10 to 15 employees if you're planning to stay 18 to 24 months. If you're juggling multiple providers across 5 to 15 countries, you're probably burning €60,000 to €180,000 a year just on coordination. Extra meetings, duplicate invoices, missed deadlines. We can help consolidate that mess. You'll like this if you want one advisor who understands your whole picture. You won't if you just need the cheapest option for one country.

Deel: When You Need to Hire Fast and Figure It Out Later

Deel covers 150+ countries and typically charges €500 to €700 per employee per month. You can usually get someone onboarded in 1 to 3 weeks. They'll handle the local employment contract, benefits, payroll, and taxes while you manage the actual work. The platform can also handle contractors and run classification checks. If you need 3 hires in Berlin next month and want to test the market with 1 to 10 people, Deel can work well. They'll process your hires efficiently. They won't tell you when it's time to stop paying EOR fees and set up your own entity. This can suit tech companies that prefer self-service and need speed. It's less helpful if you want someone planning your next three years or helping you transition from EOR to your own entity.

Remote: If Legal Is Driving the Decision

Remote operates in 180+ countries and usually costs €550 to €750 per employee per month. Onboarding takes 2 to 4 weeks depending on the country. They focus on getting compliance right and protecting your IP, with workflows to convert contractors to employees when needed. The platform handles benefits and can manage equity grants too. If your Legal team is worried about contractor misclassification and wants to clean things up, Remote can help with that. They'll guide you on compliance requirements. They won't advise when to establish your own entity or help you consolidate multiple vendors. This can work if compliance keeps you up at night and Legal has a strong voice in hiring decisions. Less so if you need help managing the bigger picture across entities and non-entity structures.

Oyster: Built for Fully Remote Companies

Oyster covers 180+ countries with pricing from €500 to €800 per employee per month. You can typically onboard someone in 1 to 4 weeks. They're built for distributed teams, with local contracts, benefits comparisons, and time-off tracking all in one place. You'll get country guides and compliance alerts too. If you're fully remote and hiring one person here, two people there, Oyster can handle that well. They'll manage the operations smoothly. They won't advise you on when to set up entities or help if you're trying to consolidate providers. This can work for remote-first companies with small HR teams who need things to just work. Not great if you already have entities in some countries and need someone to coordinate both PEO and EOR.

ADP TotalSource: If You Already Have a US Company

ADP TotalSource is a US-only PEO covering all 50 states, typically charging 2% to 8% of payroll. For 15 employees averaging $80,000 (about €75,000), you'd pay €24,000 to €96,000 annually. ADP handles payroll, gets you access to better benefits, manages HR compliance, and shares employment risk with you. You keep your entity and remain the employer. If benefits shopping is eating your team alive and you want someone else handling state compliance, ADP can take that off your plate. They're US-only though. This can work if you're staying in the US market. Won't help if you need to coordinate US operations with international hiring.

Insperity: US PEO with Actual HR Advisors

Insperity covers all 50 US states and charges 3% to 12% of payroll based on what you need. For 20 employees at $85,000 average (about €80,000), expect €48,000 to €192,000 per year. They'll co-employ your team, run payroll, manage benefits, and you get actual HR advisors who can help with performance issues and planning. You keep your entity while they handle the HR heavy lifting. If you're past the startup phase in the US and need real HR guidance, not just payroll processing, Insperity can provide that. You get dedicated advisors, not just a help desk. Good for US companies with 50 to 500 employees who want an HR partner. Not built for international needs or consolidating global providers.

A Decision Framework You Can Actually Defend

Use an EOR when you don't have a local entity, need to hire 1 to 10 people in the next month, and your lawyers are nervous about contractor risk. You're looking at €500 to €800 per employee each month. Example: You just signed a client in Germany and need two engineers there next month.

Go with a PEO when you have your own entity (or you're about to set one up) and you're serious about staying in that market. You'll want 10 to 15 employees minimum and a 3+ year plan. Costs run 2% to 12% of payroll. This means you're past testing and into building.

Start with EOR then switch to your own entity plus PEO when the market matters long-term but you need people now. Use EOR to hire fast (1 to 4 weeks), then plan your entity setup when you hit 10 to 15 employees in straightforward countries or 25 to 35 in complex ones. Give yourself 18 to 24 months for the transition. Start planning at employee number 5.

Keep most people as contractors but use EOR for the risky ones if you have 20+ contractors concentrated in a few locations. Make sure they're real contractors though: multiple clients, own equipment, setting their own hours. Convert the ones who look like employees before an audit forces your hand. Get legal review every quarter to stay ahead of enforcement.

Bring in specialist employment lawyers when you're in finance, healthcare, or defense. Also when you're firing executives, dealing with works councils, or need written legal opinions for your board. Your provider's standard guidance won't be enough. Budget €15,000 to €50,000 per year for each major country where you need this protection.

Work with Teamed when you're dealing with multiple scenarios across different countries and no one owns the big picture. If you're managing contractors in one system, EOR in another, and entities in a third, the real cost isn't just the fees. It's the reconciliation headaches, the incomplete data when your CFO asks for headcount, and the compliance gaps no one catches until the audit.

Questions We Hear from CFOs and Heads of People

What is the most important strategic difference between a PEO and an employer of record for mid-market companies?

With a PEO, you need your own entity first. They become co-employer and share the HR load. Costs run 2% to 12% of payroll. An EOR becomes the actual employer when you don't have a local company. That's €500 to €800 per employee monthly. The real decision: when are you committed enough to that market to set up your own entity?

When should a European company use EOR services instead of setting up a local entity in a new country?

Use EOR to test a market with 1–10 employees or to regularise high-risk contractors while evaluating long-term presence. Consider entity transition when projected headcount reaches 10–15 employees within 18–24 months in low-complexity jurisdictions (UK, Netherlands) or 25–35 employees in high-complexity markets (Brazil, India).

How do US, UK, and EU regulatory trends affect PEO vs EOR decisions?

Contractor rules keep getting stricter. California's ABC test, UK's IR35, and the EU Platform Work Directive (each country implements differently) all push toward employee models. In California alone, misclassification can cost you $5,000 to $25,000 per person (about €4,700 to €23,500). That's before back taxes and legal fees. Check with employment counsel for the latest enforcement patterns.

At what point should we plan to move from EOR to our own entity and possibly a PEO?

When a market shifts from pilot to core with a stable, growing team of 10–15+ employees expected within 18–24 months and a 3+ year commitment. For a UK team of 10 employees, EOR at €700 per employee monthly totals €252,000 over three years; entity setup at €25,000–€30,000 plus €4,000 per employee annually totals approximately €145,000–€150,000 over three years (estimates; actual costs vary by jurisdiction).

What is mid-market and why does it matter for PEO vs EOR strategy?

Mid-market means 200 to 2,000 employees or €12M to €1.2B revenue. You're big enough that regulators notice you, but not big enough to have specialists for every country. You can't run on spreadsheets anymore, but you also can't afford SAP implementations and teams of lawyers in every market. That's why one good advisor often beats trying to build everything in-house.

How can we consolidate multiple EOR and PEO vendors into unified global employment operations?

First, figure out what you actually have. Count your systems. List who's employed how in each country. Find where you're blind. Then decide where you want to be: ideally one main provider per employment type, with structures that match your actual risk and headcount. A typical first pass at consolidation takes 4 to 8 weeks, basically two pay cycles to avoid disruption.

Why Getting the Model Wrong Costs More Than Picking the Wrong Vendor

This isn't about picking an HR tool. It's about deciding who carries liability, how you'll scale, and what you'll tell auditors in two years. The wrong employment model will hurt more than the wrong software ever could.

Here's what works: Plan your transitions a year ahead. Know when you'll convert contractors, when you'll leave EOR, when you'll need entities. Consolidate providers so you're not burning time on reconciliation. Find an advisor who sees your whole picture, not just one country at a time. The companies that do this spend less and sleep better.

Too many providers is the cost that sneaks up on you. Picture this: contractors in Upwork, EOR employees in Deel, your German entity in local payroll, everything else scattered. Now it's month-end and Finance needs a global headcount report. Or audit asks about employment status across all markets. The coordination alone can burn €60,000 to €180,000 a year if you're in 5 to 15 countries. That's before you count the compliance risks from gaps between systems.

What you really need: One advisor who knows your situation in every country. One place to see who's employed where and how. Someone to tell you when it's time to convert contractors, leave EOR, or set up entities. And help executing those transitions without tax surprises, employee complaints, or audit findings.

If you remember one thing:

Talk to the experts at Teamed. We can help you map out what you have, where you're exposed, and where you're headed. You'll get a plan you can actually explain when your board asks why you're doing what you're doing.