PEO vs Employer of Record (EOR) in Uzbekistan: Which is right for your organization?

Table of contents:

• Introduction: Understanding PEO vs Employer of Record (EOR) in Uzbekistan

• What is an Employer of Record (EOR), and what is a PEO in Uzbekistan?

• Key differences between PEO and Employer of Record in Uzbekistan

• Advantages and disadvantages of using Employer of Record and PEO in Uzbekistan

• Cost comparison: How much do Employer of Record and PEO services cost in Uzbekistan?

• Operational differences in Uzbekistan: Payroll, benefits, equipment, and workspace

• Hiring flexibility: Employees vs independent contractors in Uzbekistan

• Conclusion: Which is Right for Your Organization in Uzbekistan?

• Ready to hire in Uzbekistan? Let Team Up make it easy

Introduction: Understanding PEO vs Employer of Record (EOR) in Uzbekistan

If you’re exploring hiring in Uzbekistan, you’ve probably run into two terms that get thrown around a lot: PEO (Professional Employer Organization) and EOR (Employer of Record). While they both help companies manage employees, they operate very differently, and in Uzbekistan, the distinction is critical.

A PEO works under a co-employment model. Your company remains the legal employer, while the PEO handles payroll, benefits administration, and HR tasks. The catch? To use a PEO in Uzbekistan, you must already have a local legal entity. Without one, there’s no co-employment relationship, making PEOs impractical for foreign companies entering the market.

An EOR, on the other hand, becomes the legal employer on your behalf. This means the EOR handles all compliance, contracts, payroll, taxes, and statutory benefits while you manage the employee’s day-to-day work. For companies that don’t want to, or can’t, establish a local entity in Uzbekistan, the EOR is the compliant, fast-track solution.

In this article, we’ll break down the key differences between PEO and EOR in Uzbekistan, explore the pros, cons, and costs of each model, and give you a step-by-step framework for deciding which approach fits your business.

By the end, you’ll know exactly which model makes sense for hiring in Uzbekistan, legally, efficiently, and without surprises.

What is an Employer of Record (EOR), and what is a PEO in Uzbekistan?

When you’re hiring in Uzbekistan, understanding the distinction between a PEO and an Employer of Record (EOR) isn’t optional; it’s essential. These two models handle employment in very different ways, and choosing the wrong one can cost you time, money, and legal headaches.

Employer of Record (EOR) in Uzbekistan

An EOR in Uzbekistan is a service that legally employs your staff on your behalf. The EOR assumes all compliance, payroll, taxes, and statutory benefits responsibilities while you continue to manage the employee’s day-to-day work.

Key responsibilities of an EOR include:

• Employment: The EOR is the official legal employer of record, issuing contracts that comply with Uzbek labor law.

• Payroll: Handles salary disbursement, income tax withholding, and social security contributions.

• Compliance: Ensures all employment regulations are met, filings are submitted on time, and statutory benefits like annual leave, sick leave, and social insurance are provided.

• Benefits: Administers mandatory benefits according to local law and any optional perks.

• Legal Liability: The EOR assumes legal employer responsibilities, protecting your business from fines or audits related to employment law violations.

Professional Employer Organization (PEO) in Uzbekistan

A PEO works under a co-employment model. Your company remains the legal employer, while the PEO provides support for HR administration, payroll processing, and benefits management.

Key characteristics of a PEO in Uzbekistan:

• Employment: You remain the legal employer. The PEO does not assume legal responsibility for your employees.

• Payroll: Handles salary administration, deductions, and reporting, but ultimate responsibility remains with your company.

• Compliance: Advises on local labor regulations, but compliance liability stays with your entity.

• Benefits: Supports benefits administration (health insurance, allowances, etc.) but cannot provide statutory compliance on your behalf.

• Legal Liability: You carry all legal responsibility, including payroll taxes, statutory benefits, and labor law compliance.

Comparing EOR vs PEO in Uzbekistan

Function / Responsibility	EOR Uzbekistan	PEO Uzbekistan
Legal Employer	EOR assumes full responsibility	Your company remains an employer
Payroll	Managed by EOR; fully compliant	Managed by PEO; liability remains with you
Compliance	Full compliance with labor law and filings	Advisory only; you’re responsible
Benefits	Mandatory statutory benefits are provided	Admin support only; you handle legal compliance
Legal Liability	EOR assumes risk	You retain all liability

Bottom line: If your company does not have a local entity in Uzbekistan, an EOR is the only fully compliant route. A PEO only works if you already have a registered company and are prepared to shoulder all legal obligations yourself.

Key differences between PEO and Employer of Record in Uzbekistan

When hiring in Uzbekistan, understanding the differences between a PEO and an Employer of Record (EOR) isn’t just academic; it’s practical. The distinction affects your legal liability, payroll, compliance, and employee benefits. Here’s a clear comparison to help you decide which model works for your business.

1. Legal status and responsibility for employees

• EOR: The EOR is the legal employer, meaning they assume responsibility for contracts, statutory compliance, and labor law obligations. Your company manages the work but is shielded from most legal risks.

• PEO: Your company remains the legal employer. The PEO provides administrative support, but liability for compliance and legal responsibilities stays with your entity.

2. Payroll processing

• EOR: Handles all payroll administration, including salary calculation, tax withholding, and social security contributions. Employees are paid on time and are fully compliant with Uzbek law.

• PEO: Supports payroll processes, but the legal responsibility and risk of errors remain with your company. Any mistakes in tax withholding or contributions are your liability.

3. Compliance and payroll tax management

• EOR: Fully manages compliance, including income tax filings, social security contributions, and statutory obligations. This reduces audit risk and ensures adherence to Uzbek labor law.

• PEO: Offers guidance and administrative support, but your company must ensure taxes, social contributions, and filings are correct. You retain compliance risk.

4. Employee benefits

• EOR: Provides mandatory statutory benefits such as social insurance, paid annual leave, sick leave, and maternity leave. Optional perks can also be administered through the EOR.

• PEO: Can help manage benefits, but statutory compliance and legal obligations remain your responsibility.

EOR vs PEO: Uzbekistan comparison table

Function / Responsibility	EOR in Uzbekistan	PEO in Uzbekistan
Legal Status	EOR is a legal employer	Your company remains a legal employer
Employee Responsibility	EOR assumes full responsibility	You retain liability
Payroll Processing	Fully managed by EOR	Admin support; errors are your responsibility
Compliance & Tax Filings	Fully handled by EOR	Advisory/admin only; liability stays with your company
Statutory Benefits	Provided and compliant	Admin support only; legal compliance remains yours
Risk Exposure	Minimal for your company	Full legal and compliance risk

Advantages and disadvantages of using Employer of Record and PEO in Uzbekistan

Hiring in Uzbekistan comes with opportunities and risks. Choosing the right model, EOR or PEO, can make a huge difference in compliance, speed, and access to talent. Here’s a clear breakdown to help decision-makers weigh the benefits and limits of each approach.

Advantages of using an Employer of Record in Uzbekistan

1. Access to the Talent Pool: Uzbekistan’s labor market is growing fast, with skilled professionals in tech, finance, and marketing. Using an EOR lets you hire employees legally without setting up a local entity, giving you immediate access to this talent. You can onboard local experts and expand quickly while staying compliant.

2. Risk Mitigation: With an EOR, the legal employer responsibilities—contracts, payroll, taxes, and statutory benefits—are handled by the provider. This reduces your exposure to fines, misclassification issues, and compliance errors. You get the team you need without risking audits or penalties.

3. Ease of Onboarding: The EOR manages the administrative and legal processes of hiring. From drafting bilingual employment contracts to setting up payroll and social contributions, onboarding becomes faster, smoother, and legally sound.

For a deeper look at all the benefits an EOR brings in Uzbekistan, check out our Top 5 Reasons Companies Choose an Employer of Record in Uzbekistan (EOR-08).

Advantages and limits of PEO services in Uzbekistan

Advantages:

• HR Administration Support: PEOs help with payroll, benefits administration, and HR management for employees under your local entity.

• Co-Employment Model: You retain legal control while outsourcing administrative tasks.

Limits:

• Entity Required: A PEO cannot hire on your behalf without a registered local company.

• Compliance Liability Remains Yours: Payroll mistakes, tax filings, or benefits mismanagement are still your responsibility.

Legal risks of hiring without an Employer of Record

Trying to hire directly without an EOR provider in Uzbekistan or a local entity exposes your company to serious risks:

• Misclassification: Contractors treated as employees can trigger fines and backpay claims.

• Non-compliance: Errors in payroll, taxes, or social contributions can lead to audits and penalties.

• IP and Contract Issues: Without properly drafted contracts, intellectual property and legal protections may not hold up under Uzbek law.

An EOR mitigates these risks, providing a compliant, reliable way to hire without opening a legal entity, making it the safer choice for most international companies.

Cost comparison: How much do Employer of Record and PEO services cost in Uzbekistan?

Let’s talk about what really matters to founders, finance leads, and HR managers: the cost of hiring in Uzbekistan. Understanding the differences between EOR and PEO pricing structures can save you from surprises and help you plan your budget accurately.

EOR pricing in Uzbekistan

An Employer of Record charges a flat, all-inclusive monthly fee per employee, covering everything from payroll and tax filings to social contributions and statutory benefits. For example, many providers in Uzbekistan charge around €199 per employee per month on top of the employee’s salary.

What this covers:

• Payroll processing: salary calculations, deductions, and timely payments

• Compliance management: ensuring tax and social security filings meet local regulations

• Statutory benefits administration: paid leave, maternity leave, social insurance

The key advantage is predictability. One invoice covers all the employment-related costs, so finance teams can forecast budgets without juggling multiple service charges or worrying about hidden fees.

PEO pricing in Uzbekistan

A Professional Employer Organization (PEO) typically charges either:

• A percentage of the employee’s salary, or

• A flat monthly fee per employee

While it may appear cheaper initially, PEO fees often exclude:

• Local compliance risk coverage (your company is still liable)

• Optional benefits administration

• Any additional HR services beyond the basic payroll support

This means costs can fluctuate and finance teams might need to reconcile multiple invoices, making budgeting less straightforward compared to an EOR.

Factors influencing costs

Whether you go with a PEO or an EOR, several factors can affect pricing:

• Payroll size and complexity: more employees or higher salaries increase service fees.

• Benefits offered: statutory benefits are required, but optional perks add to the cost.

• Compliance management: the level of regulatory support, tax filings, and reporting included.

Bottom line

• EOR: predictable, all-in fee; legal and compliance risks handled; one invoice for payroll, benefits, and taxes.

• PEO: potentially lower upfront fees if you already have an entity, but compliance and legal liability remain with you, and extra services may increase costs unexpectedly.

Operational differences in Uzbekistan: Payroll, benefits, equipment, and workspace

When hiring in Uzbekistan, operational execution can be just as important as legal compliance. How you manage payroll, benefits, equipment, and workspace directly affects your team’s productivity and satisfaction, and whether your company stays compliant. Here’s how Employer of Record (EOR) and PEO models differ in practice.

Payroll compliance in Uzbekistan

An EOR handles payroll end-to-end, ensuring salaries are paid on time and all taxes are withheld correctly. This includes:

• Income tax deductions (progressive, up to ~35% depending on salary)

• Employer social contributions (~20–22%)

• Monthly filings with the Revenue Administration and Social Security authorities

With an EOR, payroll compliance is automatic. Finance teams get a single, predictable invoice covering all employment-related costs, and your company is shielded from errors or fines.

A PEO can administer payroll as well, but your company retains the legal liability. Mistakes in calculations, tax filings, or social contributions remain your responsibility.

Employee benefits

EOR-provided benefits in Uzbekistan cover statutory requirements:

• Paid annual leave (14–20 days depending on tenure)

• Sick leave and maternity leave

• Social insurance contributions

Optional perks like private health insurance or equipment allowances can also be managed through the EOR.

PEO benefits are more limited. While a PEO can assist with benefits administration, legal compliance stays with your entity, and you’re responsible for statutory obligations. This can increase risk if local labor laws aren’t followed precisely.

Equipment Policies

When hiring through an EOR, the provider can manage equipment provisioning, such as laptops, monitors, and other tools required for remote or office-based employees. This ensures employees have the right setup without you needing to set up a local entity or logistics network.

With a PEO, equipment management is generally advisory. Your company must provide devices and ensure compliance with any related regulations.

Workspace Options and Remote Work

EOR employees in Uzbekistan can work fully remotely, from home, coworking spaces, or the client’s office, depending on your preference. The EOR manages compliance around workplace policies and can advise on local regulations for office setups.

PEO arrangements assume employees are tied to your local entity’s operational framework, which can limit flexibility for remote-first teams.

Key Takeaways

Operational Area	EOR Uzbekistan	PEO Uzbekistan
Payroll	Fully managed, compliant, EOR assumes liability	Admin support only; liability remains with your company
Benefits	Mandatory statutory + optional perks managed	Admin support; compliance responsibility with your entity
Equipment	Provided/administered by EOR	Company provides, PEO may advise
Workspace & Remote	Flexible remote work options supported	Tied to local entity policies; less flexibility

An EOR in Uzbekistan doesn’t just handle legal compliance; it simplifies operations for finance, HR, and IT while giving employees the tools, workspace, and benefits they need to perform. This combination of legal, operational, and logistical support is why EORs are the preferred solution for companies hiring without a local entity.

Hiring flexibility: Employees vs independent contractors in Uzbekistan

When expanding into Uzbekistan, one of the first questions companies ask is: “Can I hire contractors instead of full-time employees?” The answer isn’t as simple as it sounds. The distinction between employees and contractors is significant under Uzbek labor law, and missteps can lead to fines, backpay claims, or compliance headaches.

Hiring independent contractors through an EOR

Yes, an Employer of Record (EOR) in Uzbekistan can hire independent contractors, but there’s a caveat.

The EOR typically focuses on full-time employees, providing payroll, benefits, and compliance management. Contractors can be engaged, but the arrangement must be clearly defined to comply with local regulations:

• Contract terms: Contractors must have well-defined scopes, deliverables, and payment terms to avoid being classified as employees under labor law.

• Compliance: The EOR ensures that any engagement is legally compliant, reducing the risk of misclassification or tax violations.

• Flexibility: This allows you to supplement your core team with contractors for short-term projects without overcomplicating payroll or benefits administration.

Direct contractor hiring vs EOR engagement

• Direct contractor hiring: If you hire a contractor directly, your company assumes all responsibility for classification, contracts, and tax compliance. Misclassification is a real risk, especially in Uzbekistan, where authorities increasingly scrutinize contractor arrangements.

• EOR engagement: The EOR provides a buffer for compliance risk. Even if you hire contractors through the EOR, the provider ensures contracts, payments, and tax obligations align with local law. This reduces your exposure to fines or misclassification claims.

PEO and contractor Flexibility

PEOs in Uzbekistan offer limited flexibility for independent contractors. Since a PEO requires a local entity and operates under a co-employment model, your company still bears the legal responsibility for classifying workers correctly. Contractors are generally treated as employees for legal purposes if they meet certain criteria (full-time hours, tools, and supervision), so the PEO cannot shield you from misclassification risk.

Key Considerations for Decision-Makers

Hiring Type	EOR Uzbekistan	PEO Uzbekistan
Full-time employees	Fully managed: payroll, benefits, compliance	Admin support only; liability stays with your company
Independent contractors	Can engage, compliance ensured; contracts and taxes handled	Limited; misclassification risk remains with your company
Flexibility	High–hire employees or contractors with legal protection	Moderate – mainly employees; contractors risk being reclassified

Hiring through an EOR in Uzbekistan gives you the flexibility to combine full-time employees and compliant contractors while minimizing legal risk. In contrast, direct contractor hiring or relying on a PEO exposes your company to potential compliance issues.

Conclusion: Which is Right for Your Organization in Uzbekistan?

Hiring in Uzbekistan doesn’t have to be a guessing game. The choice between a PEO and an Employer of Record (EOR) comes down to a few practical factors:

• Company size and expansion stage: Small pilot teams or companies entering Uzbekistan for the first time benefit from the speed and simplicity of an EOR. Larger companies with an established local entity may consider a PEO for HR administration while retaining legal control.

• Compliance needs: If you want full compliance coverage—payroll, taxes, social contributions, and statutory benefits—an EOR reduces risk. PEOs provide administrative support, but your company remains liable.

• Cost sensitivity: EOR fees are predictable and all-inclusive, while PEO costs may appear lower upfront but can fluctuate depending on additional services or compliance errors.

• Hiring goals and flexibility: EORs allow you to hire employees or contractors legally and quickly, including remote teams, without a local entity. PEOs are limited to employees under your registered entity.

Actionable advice: If you don’t yet have a local entity in Uzbekistan, or you want to scale quickly without compliance risk, an EOR is almost always the right choice. If you already have a legal presence and are confident in handling compliance internally, a PEO may be suitable, but weigh the risk carefully.

Ready to hire in Uzbekistan? Let Team Up make it easy

Hiring in Uzbekistan doesn’t have to be slow, risky, or complicated. With TeamUp’s Employer of Record (EOR) services, you can legally hire employees or contractors in weeks, not months, without setting up a local entity.

We handle payroll, taxes, social contributions, statutory benefits, and compliance, so you can focus on managing your team and growing your business.

Take action today:

• Get a custom quote: See exactly what it costs to hire your team in Uzbekistan.

• Compare top providers: Find the EOR partner that fits your business goals. Check our providers comparison (EOR-02).

• Start hiring fast and legally: Onboard your first employees in Uzbekistan without the legal headaches.

Don’t wait. Hire smarter, stay compliant, and grow your team with confidence.