EOR vs PEO in Bangladesh: which model applies to you?
Employer of Record and Professional Employer Organisation are often used interchangeably. In Bangladesh only one of them exists in law, and choosing the wrong label can leave you without a valid employer.
What is the difference between an EOR and a PEO?
An Employer of Record is the sole legal employer of your staff in a country where you have no entity; a Professional Employer Organisation co-employs staff alongside a client that already has its own entity, sharing HR and payroll duties. The EOR model works without a local company; the PEO model requires one, and Bangladesh law does not recognise co-employment.
The distinction matters more in Bangladesh than in the United States, where the PEO model originated. Under the Bangladesh Labour Act 2006 every worker has one employer, identified on the appointment letter and identity card that s.5 makes mandatory. There is no statutory mechanism for two companies to share employer status. A foreign company without an entity therefore cannot "co-employ" anyone; it needs an Employer of Record that is the employer outright. A foreign company that has incorporated does not need co-employment either; it needs payroll and HR outsourcing, which is what "PEO" services in Bangladesh actually deliver.
How do EOR, PEO and payroll outsourcing compare in Bangladesh?
EOR: no client entity needed, provider is the sole employer, fixed fee per employee. PEO (as marketed locally): client entity required, client remains employer, provider runs payroll and HR. Payroll outsourcing: same as PEO but scoped to payroll only. Contractor management: no employment at all, with misclassification risk.
| Criterion | EOR (Nexus Payroll) | "PEO" / HR outsourcing | Payroll outsourcing | Contractor management |
|---|---|---|---|---|
| Client needs a Bangladesh entity | No | Yes | Yes | No |
| Legal employer | Nexus Payroll Limited | Client's entity | Client's entity | None |
| Who signs the appointment letter (s.5) | Nexus | Client | Client | Services agreement only |
| Statutory liability (Labour Act, NBR) | Nexus | Client, provider as agent | Client, provider as agent | Client if reclassified |
| Time to first hire | 5–7 business days | After incorporation | After incorporation | Days |
| Nexus fee | USD 299 / employee / month | USD 89 + USD 49 | USD 49 / employee / month | USD 39 / contractor / month |
| Best for | Foreign companies without an entity | Subsidiaries and liaison offices | Entities with in-house HR | Project-based specialists |
What goes wrong when a company picks the wrong model?
The common failure is a foreign company signing a "PEO" agreement, believing it has a compliant employer, when no Bangladesh entity holds the employment contract. The employee then has no valid appointment letter, tax withholding trail or Provident Fund membership, and the foreign company can be treated as an unregistered employer with a permanent establishment in Bangladesh.
Two questions settle it. First: whose name is on the s.5 appointment letter and identity card? If the answer is not a Bangladesh-registered company, the arrangement is not compliant. Second: who deposits the withheld income tax with the NBR, and under whose e-TIN? Nexus Payroll answers both with its own name and registration numbers, which are printed in the footer of every page on this site.
This page is informational and reflects Bangladesh law as we understand it on the review date. It is not a substitute for licensed legal or tax advice in Bangladesh or in your own jurisdiction. Statutory figures change; confirm current values with your adviser before relying on them.
EOR vs PEO FAQ
Is there such a thing as a PEO in Bangladesh?
The term is used loosely by some providers, but true co-employment has no basis in Bangladesh law. The Labour Act recognises one employer per contract. What is marketed as "PEO" in Bangladesh is usually either payroll and HR outsourcing for a company with its own entity, or an EOR under another name. Ask any provider which entity's name is on the appointment letter.
We have a Bangladesh entity. Do we need an EOR or a PEO?
Neither in the strict sense — you need payroll and HR outsourcing. Your entity stays the employer; Nexus Payroll runs payroll, withholding, Provident Fund, benefits and HR administration as your agent. That is functionally what a PEO delivers in the United States, without the co-employment construct that Bangladesh law does not provide.
Can we switch from an EOR to a PEO-style arrangement after incorporating?
Yes. The employees transfer from Nexus Payroll's contract to your new entity's contract with continuity of service, and we continue as your payroll and HR provider. Nothing changes for the employees except the employer name on the payslip, and you keep the same account manager in Dhaka.
Not sure which model you need?
Send us a two-line description of your situation — entity or no entity, how many people, which roles — and we will tell you which service applies and what it costs.