EOR and PEO are both used for “someone else handles payroll and compliance,” but the legal structure is different. For Africa, that difference determines who the employer is, who carries liability, and whether you need a local entity. Here’s the distinction and when each applies.

EOR (Employer of Record): The EOR is the legal employer. The employment contract is between the worker and the EOR’s local entity. The EOR withholds and remits tax and social contributions, runs payroll, and carries employment liability (wrongful termination, benefits, audits). You direct the work and pay the EOR; you’re the “client” of the EOR. You do not need your own local entity. This is what most “hire in Country X without a subsidiary” offerings are — Deel, Remote, Multiplier, etc. In Africa, EOR is the standard when you don’t have (or don’t want) a local company and need a compliant employer fast.

PEO (Professional Employer Organisation): A PEO typically co-employs with you: you and the PEO share employer responsibilities under a co-employment or client-service agreement. You usually already have (or set up) a local entity; the PEO runs payroll, benefits, and compliance for that entity’s employees. The PEO doesn’t replace your entity — it partners with it. Co-employment structures and PEO branding are more common in the US than in Africa. In many African jurisdictions, the legal and tax framework is built around “one employer”; co-employment is less standard and sometimes unclear. So “PEO” in the US sense doesn’t map neatly onto Africa. What you’ll find in Africa is either (1) EOR — they employ, you don’t have an entity — or (2) payroll/HR outsourcing — you have an entity, they run payroll and maybe benefits for your employees. The second is not PEO in the US sense; it’s outsourced payroll and sometimes HR admin.

Practical takeaway for Africa: If you don’t have a local entity and want to hire someone in South Africa, Nigeria, Kenya, etc., you need an EOR. The EOR is the employer; you pay the EOR; no local company required. If you already have a local entity and want someone else to run payroll and compliance for that entity’s employees, you’re looking at payroll outsourcing or an HR services partner — not “PEO” in the US co-employment sense. Use the term “EOR” when you mean “they employ, we don’t have an entity”; use “payroll provider” or “HR outsourcer” when you mean “we have an entity, they run payroll.” That keeps the structure clear and avoids confusion with US PEO models that don’t directly apply in most of Africa.