EOR, PEO and co-employment glossary

Employer of Record

The model where the provider is the sole legal employer.

• Employer of Record (EOR)An Employer of Record (EOR) is a third-party organisation that becomes the legal employer of your workers in a given country, handling payroll, tax, benefits and compliance whilst you direct their day-to-day work.
• Global Employment Organisation (GEO)A Global Employment Organisation (GEO) is a third-party provider that employs workers in other countries on a company's behalf, handling payroll, contracts, tax, and compliance without requiring a local entity.
• Global Employment PlatformA Global Employment Platform (GEP) is a software-led service that brings employer of record infrastructure, payroll, benefits administration and compliance management into one system, letting a company hire, pay and manage employees in multiple countries through a single interface.
• Legal EmployerA legal employer is the entity that a country's tax and labour authorities recognise as a worker's employer, responsible for withholding and remitting payroll taxes, filing statutory returns, and meeting employment-law obligations, regardless of who directs the person's day-to-day work.
• Entity-Free HiringEntity-free hiring is employing people in a foreign country without setting up your own legal entity there, achieved by engaging an Employer of Record that already holds the local registration and becomes the legal employer while you direct the work.

PEO and co-employment

The shared-employer model and the terms that define it.

• Professional Employer Organisation (PEO)A Professional Employer Organisation (PEO) is a firm that shares employment responsibilities with a client company through a co-employment contract, handling payroll, HR and benefits while the client retains day-to-day control of its workforce.
• Certified PEOA Certified PEO (CPEO) is a Professional Employer Organisation that has met the US Internal Revenue Service certification standard, including financial audits and bonding, so that federal employment-tax liability for wages it pays sits with the CPEO rather than its client.
• Co-employmentCo-employment is a contractual arrangement where a business and a Professional Employer Organisation share defined employer responsibilities, such as payroll, tax filing and benefits administration, for the same workforce.
• Worksite EmployeeA worksite employee is a worker who is co-employed by a Professional Employer Organisation and a client company, working at or for the client's business whilst the PEO holds statutory employer status for payroll and compliance under the co-employment agreement.
• Client Service AgreementA Client Service Agreement (CSA) is the master contract between a Professional Employer Organisation and its client that sets out how employer responsibilities are divided, which HR and compliance functions the PEO takes on, and how liability is allocated between the two co-employers.
• Joint EmploymentJoint employment is a situation where two separate businesses share enough control over the same worker's terms and conditions that both are treated as employers in law, making each of them liable for wage, hour and other employment obligations toward that worker.

Choosing between them

What actually separates the two, and what it costs.

• EOR vs PEOAn Employer of Record (EOR) becomes your workers' sole legal employer in a new country; a Professional Employer Organisation (PEO) shares employment responsibilities alongside your own existing legal entity.
• EOR Service FeeAn EOR service fee is the recurring charge an employer of record bills for acting as the legal employer of a worker, usually quoted per employee per month, and separate from the actual salary, taxes, and statutory costs of employing that person.
• Owned-Entity ModelThe owned-entity model is an approach in which an Employer of Record employs workers through its own locally registered legal entities in each country it operates in, rather than routing employment through third-party in-country partners it does not control.
• In-Country PartnerAn in-country partner is a locally registered company that an employer of record contracts with to employ workers in a market where the EOR holds no entity of its own, so the client's employment relationship runs through that third party.
• Switching Costs (Payroll Provider)Switching costs, in global payroll and EOR, are the total financial, operational and compliance burdens of moving from one provider to another, from data migration and parallel pay runs to re-onboarding staff and the risk window where employer responsibility could lapse.

Adjacent provider models

Narrower arrangements that solve part of the same problem.

• Agent of Record (AOR)An Agent of Record (AOR) is a third party that contracts, classifies and pays independent contractors on your behalf, keeping the engagement compliant without converting the worker into an employee.
• Contractor of RecordA Contractor of Record (COR) is a third party that formally engages an independent contractor on a client's behalf, handling the contract, invoicing and local tax paperwork, without making the worker an employee or taking on employer-of-record obligations.
• Staffing AgencyA staffing agency is a firm that recruits workers and places them with client companies on a temporary or contract basis, acting as their legal employer for the placement, but usually operating within a single country and focused on sourcing people rather than global compliance.
• Umbrella CompanyAn umbrella company is an intermediary that employs contractors and pays them through payroll on behalf of recruitment agencies or end clients, most commonly in the UK, acting as the legal employer for tax purposes while the contractor works on assignments the client directs.
• HR OutsourcingHR Outsourcing (HRO) is the practice of paying a third-party provider to run defined HR functions, such as payroll, benefits administration or compliance reporting, without handing over legal employer status, which stays with the client company.
• Administrative Services OrganizationAn Administrative Services Organization (ASO) is an HR outsourcing provider that runs payroll, benefits and HR administration for a client that stays the sole legal employer, with no co-employment and no transfer of employer liability.

How these terms relate

These models differ on one axis: who is the legal employer. An EOR, also called a global employment organisation or platform, becomes the sole legal employer in a country where you hold no entity, so it carries the full compliance scope. A PEO instead co-employs: you keep your own entity and legal-employer status, and share defined duties through a client service agreement, which is why worksite employee and joint employment matter there. That single difference drives the rest: the EOR versus PEO choice, the service fee, whether the provider uses its own entity or an in-country partner, and the switching costs of changing later. Around the edge sit adjacent models for narrower jobs, an Agent of Record or Contractor of Record for contractors, staffing agencies, umbrella companies and broader HR outsourcing. Naming them precisely is how you avoid buying the wrong one.

Related glossaries

• Employer of Record glossary
• Worker classification glossary
• Global HR compliance glossary