Let’s start at the beginning, should a company be considering expansion beyond their country of origin, they may require some additional support from a legislative, tax and regulatory perspective. This is where the services of an Employer of Record (EOR) and Professional Employer Organization (PEO) become relevant. Both services focus on the same broad area, assisting companies as an outsourced HR function as they expand into new markets. However there are some subtle differences to be aware of when choosing a partner to assist global expansion. By the end of this article, you will hopefully get a deeper understanding of how each service can help your company expand into the African market.
Before we touch on the factors that make these services different, let us talk about why people often mistake them for one another.
Both EOR and PEO services are forms of HR outsourcing that aim to assist client companies in their expansion in Africa. As such, both an Africa EOR and an Africa PEO will offer services such as:
While they offer the same core services, they mainly differ in the way they handle their service agreement with their clients, based on whether the client has an established, legal entity in the country of expansion.
This seems like a very simplistic distinction. However, the outcomes of this decision can have an impact on the legal operation of an organization, as well as the time and administration that is required to expand the business into any country, particularly an African country. For instance, the following considerations may assist organizations in making a more informed decision.
|Question to Ask||Employer of Record||Professional Employment Organisation|
|Is there a registered entity?||When you do not have a registered entity in country- it is best to partner with an EOR.||When you do have a registered entity in country- it is best to partner with a PEO.|
|Who is the legal employer?||The EOR becomes the legal employer of any talent you wish to hire.||The organization remains the legal employer of the employee|
|Who takes liability?||The EOR takes full liability for employees and will always ensure financial, local, and legal compliance.||The employer takes full liability for the employees, this includes financial, tax and legal compliance|
Choosing who to partner with mostly depends on your context, needs and the resources at your disposal.
Legal entity: If you already possess an established entity in the African country you are expanding to, a Professional Employer Organization may be a better fit for your company.
Employee contract: A PEO will manage all HR functions, but the hiring organization remains the legal employer of these employees. The PEO will offer support and guidance on how to remain compliant, however, the hiring organization retains responsibility for legal and financial compliance.
Return on Investment: PEOs are typically engaged if the primary need is to lessen HR departments’ workload around onboarding, payroll, tax deductions and benefits administration. Whilst the lack of shared liability increases the risks for the employer, it offers a more cost-effective option when there is an already existing entity in the target country.
Legal entity: Do you possess a registered entity in the African country you wish to expand to? If not, then an Employer of Record could provide you with an already established unit on the market.
Employee contract: An EOR will become the legal employer for any new candidates that will be joining your workforce. However, the hiring organization still owns any management decisions made regarding its employees.
Return on Investment: An EOR offers a holistic service for any entity that does not have a presence in the country of expansion. Partnering with an EOR ensures efficient management of various elements of an HR function, which is often very complex and difficult to navigate based on the different regulations in African regions. Further, the EOR takes full liability for the compliant facilitation of employee contracts and payroll.
Whether you require an Employer of Record or a Professional Employer Organization for your operations in Africa, you can trust Africa HR Solutions in providing you with tailor-made services to facilitate your expansion on the African continent. Here is what you can expect from us:
If you wish to learn more about what we have up our sleeves to help your company in it’s next big step, contact us and get a quote now!
Kevina Takoordyal has a BA Hons Business Management from the University of Glamorgan, UK, with MBA in leadership and Innovation, MBA General, PMP Certified, and Agile Scrum Master. She currently works as the Head of Operations at Africa HR Solutions Ltd with more than 20 years of proven leadership capabilities in Operations, Business Development, People Management, Process Optimization, and Project Management in the Financial Services, BPO, Banking Industry, and Heath Care Industry. In Senior leadership roles with an international footprint across Europe working and extensive Pan- African experience from a compliance, finance, and operations angle, Kevina comes across with a panoply of cross-functional skills. Kevina also serves on a few Boards, Non-Independent Executive at MioD and for NGOs on a voluntary basis, a coach and mentor to aspiring female leaders across Africa and Mauritius.
Kevina is a firm believer in Servant Leadership with a strong focus and commitment to uplifting others, with the ability to deliver through a highly engaged – diverse team, and works towards consistently synergistic value creation. While being a focused and adaptive thinker and Kevina is actively participating in panel discussions on Innovation, CX, Digital transformation.
Kevina serves as Project Assessor for the National Youth upskilling program. She has been recognized as Global Talent in a few companies, Ceridian, and International SOS Ltd whereby she has been awarded a few scholarships and had the opportunity to be mentored by Senior Vice President in the US. Award Winner in various fields and at a national level and recognized including Super Achiever Leader Award in Africa in 2016, Awarded Africa Women Leader 2018.
A qualified lawyer who joined Africa HR Solutions in July 2020, Mark Du Preez has experience working in private practice for a reputable law firm in South Africa. He also played commercially focused roles at a leading private bank, wealth management company, and outsourcing firm in South Africa and Mauritius.
Mark has played a pivotal role in Africa HR Solution’s risk mitigation strategy, which positively impacted P&L performance over the years.
He currently leads the Partnerships function of the company including relationships and oversight with in-country partners (ICPs) across Africa.
Alex has more than 15 years of experience in the global, strategic development of both enterprise and consumer brands in categories including technology, transport, enterprise software, entertainment, and travel.
With experience in roles on both agency and corporate side, he has worked across international brands and has led the development and execution of multi-discipline campaigns across EMEA, NORAM and Asia Pacific.
His focus is on driving meaningful business impact through brand differentiation and building high-functioning, digitally oriented, and analytically driven capabilities. He is motivated by working with, and developing dynamic people, teams, and organizations.
He leads, manages, develops and mentors the Key Account Management department, including line management responsibility for the team of Key Account Managers and Key Account Administrator who represent the Company as the primary communication link between all relevant stakeholders, including clients, third party in-country partners and internal functions.
Originally from Mauritius, he holds bachelor’s degrees in International Business, Finance and Management from the University of Nevada, Reno.