A contract transition occurs when clients change an independent contractor (IC) contract to an employer of record (EOR) contract or Direct Employee Global Payroll.
- An EOR employee is legally employed by the EOR organization (Deel), which acts as the official employer. The EOR handles all legal, compliance, and administrative aspects of the employment relationship on behalf of the client company
- A Direct Employee - Payroll is an employee hired and paid through Deel's Global Payroll service. These employees are employed directly by the company utilizing this service
- A PEO employee is someone who is employed under a co-employment relationship between their organization and a Professional Employer Organization (PEO). In this case, Deel acts as the PEO.
How to Transition a Contractor to a New Worker Type
✅ Step 1 - Select the Contract to be transitioned
From the homepage, select the People icon, followed by the All People tab, and click on the contractor’s name. Next, click on the three vertical dots and select Change Worker Type.
✅ Step 2 - Start the Transition
Select the worker type and click Next to begin transitioning. Please note that if the contractor has any equipment that cannot be transitioned, clients will need to collect the equipment and update the contract before proceeding with the transition.
✅ Step 3 - Provide the Contract Information
Clients will be asked to provide:
- Employee’s personal details – This information will be pre-filled using data from the existing contract. Please review and ensure it's correct.
- Job details – Some information here will also be pre-filled. Please review it and confirm its accuracy.
- Compensation and dates – The ability to transition a contract will depend on the job scope and compensation.
- Benefits and extras – Any existing benefits associated with the worker will be carried over to the new contract unless otherwise requested.
If transitioning to EOR, after all is added and confirmed, click Generate Quote.
The new contract details will be reviewed, and follow-up will be provided within 24 hours.
By clicking Continue, the worker type change will be initiated, and the worker will be notified to complete the necessary onboarding steps, which include signing the contractor release agreement. Signing this agreement is a critical step in transitioning from contractor to employee.
✅Step 4 - Set an end date for the contract
Once the contractor has signed the agreement, the client can complete the worker type change via the worker's profile by clicking Complete worker type change and setting an end date to the contract.
Specific Requirements and Differences for Each Worker Type
When transitioning to Global Payroll
To transition an employee to Global Payroll, the client must have an entity with Global Payroll activated.
Onboarding & Offboarding
After the new contract is created, the client or employee needs to complete the onboarding process to compliantly receive their salary.
When transitioning to EOR
Clients will need to review and accept the scope of work. Additionally, they will have the option to sign the EOR MSA if required.
Once all details are provided by the employee and agreements signed, click Complete worker type change from the worker's contract overview.
Onboarding & Offboarding
After the contract is created, the employee will receive an invitation to complete the onboarding process. After the contract is active, the old HRIS entry will be marked as inactive.
When transitioning to PEO
To transition an employee to PEO, the client must have an entity with PEO activated.
Onboarding & Offboarding
After the new contract is created, the employee needs to complete the onboarding process to compliantly receive their salary. The employee’s profile will automatically update from Direct Employee to PEO employee one day before the PEO start date.