FranceDo you want to simplify managing your growing team in France? A Professional Employer Organization (PEO) can help you and relieve your staff of some of their time-consuming HR duties.
PEOs can help with payroll processing, benefits administration, and compliance management, allowing you to focus more on your core business operations.
However, it’s important to note that you can’t use a PEO in France unless you have an entity established there.
In this article, we look at PEO services in more depth before exploring how an Employer of Record (EOR) can help you hire, onboard, and manage staff remotely. This guide will look more at the differences between a PEO and an EOR to help you make an informed choice.
What is a PEO (Professional Employer Organization)?
A Professional Employer Organization (PEO) provides comprehensive HR services to your company.
Suppose you want a co-employment relationship and wish to retain substantial control over your business operations and legal exposure. In that case, a PEO might be the right solution for your business.
These are some of the services that a PEO can provide to you that will take time-consuming tasks off your plate:
- Payroll administration
- Benefits administration
- International payments
- Tax filing
- Unemployment insurance
- Compliance management
- Workers’ compensation
- Performance management
Benefits of using a PEO in France
PEOs offer services that help you comply with labor and employment regulations, saving your enterprise from penalties and fines that could damage your reputation and negatively affect your bottom line. Here we explore the other major benefits.
HR compliance
A PEO maintains necessary employee records and all HR documentation required by French law and complies with all applicable employment laws and labor regulations.
Streamlined HR
PEOs save you time by taking over your payroll, benefits administration, onboarding, and compliance, freeing you from repetitive paperwork and administrative hassles.
Employee onboarding
A PEO can help onboard new employees, facilitate new hire orientation, and introduce new hires to your workplace culture, policies, and procedures.
Benefits
PEOs pool together multiple clients to negotiate better rates for health insurance, retirement plans, and other employee benefits.
By outsourcing these functions, you can focus more on scaling your business.
Challenges and limitations of PEOs in France
While a PEO can help streamline your HR functions, you may encounter some challenges should you choose to work with one.
Compliance and legal complexities
PEOs can help manage compliance, but your company will still have some liability for employment-related issues. Disagreements about shared legal responsibilities can lead to ambiguities and potential legal complications.
For example, suppose a PEO isn’t compliant with labor laws or regulations or doesn’t remit proper taxes. In that case, your company will be liable, and you could face severe financial and legal penalties that could affect your brand reputation.
Management and control issues
Your company will share operational decisions concerning HR matters with the PEO. This will potentially slow down your decision-making and ability to take action independently. For example, if you decide to roll out a new performance review system, you would need to coordinate with the PEO to ensure it aligns with their existing processes.
Cost considerations
PEOs charge a sizeable fee for their services, which can be either a percentage of your employee payroll or a flat fee per employee. You could also experience hidden costs. For example, they may charge extra for benefits plan management or handling claims. Due to a lack of transparency in initial discussions, you might not be aware of these costs. These can become expensive as your company grows.
Alternatives to PEO: Introduction to Employer of Record (EOR)
While a PEO might be well-suited for some businesses, many companies prefer partnering with an Employer of Record (EOR) when expanding into France.
What is an EOR?
An Employer of Record (EOR) is an international workforce management service that is officially your workforce’s employer in a foreign country. The EOR takes on all legal, administrative, and compliance duties, including payroll processing, tax withholding, benefits administration, and adherence to local labor laws.
The EOR shoulders all the legal responsibilities and liabilities of employment in each host country, while you maintain control over your employees’ daily activities and your company’s strategic direction. This allows your business to enter new global markets without establishing local legal entities or navigating complicated regulatory landscapes.
Why consider an EOR in France
There are several reasons to work with an EOR rather than a PEO. Consider these when deciding which will best suit your company and specific needs.
Advantages over PEO
Total responsibility for compliance
An EOR is your employees’ legal employer for tax and compliance purposes. It manages all employment-related legal responsibilities, including compliance with local labor and tax laws, getting work permits, and ensuring regulatory compliance in any country where your employees are located.
Transparent management structure
Your company controls employees’ day-to-day management and supervision, including job roles, tasks, and performance evaluations. The EOR manages the legal and administrative aspects of employment.
Transparent cost structure, no hidden fees
EORs usually charge a flat monthly employee fee to handle payroll processing, benefits administration, compliance management, and other services. You won’t encounter any hidden or surprise fees along the way — all costs are clear from the start of your engagement.
Discover how Mindvalley, an edtech company, used Multiplier to hire workers in six countries, scaling without unexpected costs.
Deciding whether a PEO or EOR is better for your company
Choosing a PEO or an EOR for your French business depends on your company’s specific needs and circumstances. Consider the following:
When to choose a PEO
Here are some factors that make PEOs a good option for you:
- You want control over your HR function. A PEO gives you shared responsibility over tasks like benefits administration.
- You need extensive local, HR support. A PEO’s comprehensive ongoing HR support can help you handle your workload.
- You are already established in the countries where your employees are located. A PEO allows you to remain the legal employer of your employees.
When to choose an EOR
Perhaps the greatest advantage of using an EOR is the ability to expand into new markets internationally without opening new business entities.
Here are the other reasons why you might prefer the services that an EOR offers over those of a PEO:
- Operational control with outsourced administration. You want to maintain control over your operations but outsource payroll, benefits, HR compliance, and other administrative responsibilities.
- Complex labor laws. EORs understand local employment laws, ensuring compliance and mitigating the risk of penalties and legal disputes.
- Flexible workforce management. EORs can quickly scale operations to expand your workforce or presence in multiple countries.
- Risk mitigation. EORs are legally responsible for employment-related risks, protecting potential liabilities and compliance issues.
How Multiplier can help
Multiplier offers a robust EOR solution to streamline the global employment process if you’re looking to expand into France without opening a business entity there.
When you need to grow rapidly and compliantly without establishing local entities in each country, Multiplier can manage all aspects of employment, including payroll, taxes, benefits, expenses, and compliance with local labor and tax laws. We’re experts in navigating the intricacies and risks associated with multi-country employment.
Partner with Multiplier: Your alternative to PEOs in France
Let’s say you’re dealing with a lean HR staff and want to offload some of your more burdensome HR tasks. A PEO might be the right solution for you.
However, suppose you’re thinking about cross-border expansion and need a legal entity in a location you’re expanding into. In that case, a scalable and compliant EOR solution like Multiplier can empower your business to grow compliantly and confidently anywhere in the world and free your HR resources to focus on more strategic goals.
While an EOR and a PEO can help your business in many ways, an EOR is best suited to help you expand globally, without worrying about the compliance issues you might have with a PEO.
Book a demo with our experts to learn how Multiplier can assist with your global employment needs.
