Transferring your employees from Deel’s Employer of Record (EOR) model to Deel’s Professional Employer Organization (PEO) means employees will move from being legally employed by Deel to being employed by your U.S. entity under a co-employment model with Deel PEO.
This article explains what to expect, key deadlines, and the actions required to ensure a smooth and timely transition.
In this Article
Understanding the EOR to PEO Employment Change
Key Dates, Payroll Alignment, and Submission Deadlines
How PTO Is Handled During the Transition
Benefits Changes When Moving to PEO
Client Responsibilities and Required Actions
What Employees Will Experience During the Transition
How to Prevent Gaps in Employment
Understanding the EOR to PEO Employment Change
Moving from EOR to PEO is not a direct transfer of an existing employment contract.
Under EOR, employees are legally employed by Deel.
Under PEO, employees are legally employed by your company and co-employed with Deel PEO.
Because the legal employer changes:
The existing EOR employment must end first.
Employees will receive a new PEO employment offer and complete onboarding as new hires under your U.S. entity.
Compensation, benefits, and policies are newly established under the PEO arrangement.
Key Dates, Payroll Alignment, and Submission Deadlines
To avoid payroll issues or gaps in employment, timing is critical when ending EOR employment and starting PEO employment.
What the key dates mean
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Payroll submission deadline (EOR payroll cutoff)
This is the last day you can submit changes for an employee’s final EOR payroll.
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This includes:
Terminations
Final pay adjustments
Bonuses or commissions
PTO payouts
If changes are submitted after this deadline, they will not be included in the employee’s final EOR payroll.
EOR end date
- This is the employee’s official last day of employment under the EOR model.
- It is the legal separation date when the employee stops being employed by Deel.
For EOR → PEO transitions, the EOR end date is typically the last day of the month, and the PEO start date should follow immediately to ensure continuity.
Required timelines based on the PEO start date
If the PEO start date is between the 1st - 15th of the month
Submit and finalize EOR resignations by the 15th of the previous month
Final payroll changes must be submitted by the 20th of the previous month
The employee’s EOR employment ends on the last day of the previous month
Early submission is required so the employee’s final EOR payroll can be processed correctly.
If the PEO start date is between the 16th - end of the month
Submit and finalize EOR resignations by the 1st of the same month
Final payroll changes must be submitted by the 4th of the same month
The employee’s EOR employment still ends on the last day of that month
Important things to know
All EOR offboarding documents must be signed before Deel can activate the employee’s PEO profile.
Any payments made before the PEO effective date cannot be recorded under Deel PEO.
Once an EOR resignation is submitted, no additional payments (bonuses, commissions, adjustments) can be added under EOR.
After the employee signs their resignation, you must log in to Deel and formally accept it to complete the offboarding.
How PTO Is Handled During the Transition
PTO does not automatically transfer when moving from EOR to PEO.
For U.S.-based employees
During offboarding, employees will choose one option in the platform:
Carry over PTO to the new PEO employment (requires employee consent), or
Receive a payout of their unused PTO in their final EOR payroll
For non-U.S.-based employees
PTO cannot be transferred to PEO
A standard termination process applies, including PTO payout where legally required
Benefits Changes When Moving to PEO
Benefits under EOR do not carry over to PEO.
Under PEO:
Your company must complete benefits underwriting to access new plans
Employees can only view and enroll in PEO benefits after their EOR employment has officially ended
New waiting periods and plan rules may apply
Client Responsibilities and Required Actions
To ensure a smooth transition, you are responsible for:
Submit EOR resignations for all transitioning employees before the required deadlines
Accept each EOR resignation in your Deel admin account after the employee signs
Ensure employees sign offboarding documents and PTO election forms promptly
Provide updated compensation details, employment information, and benefit selections for PEO onboarding
Inform employees about the upcoming change and the expected timeline
- Inform employees that if they submitted time off under the EOR profile, they will need to resubmit their time off under their PEO profile.
What Employees Will Experience During the Transition
Employees will typically experience:
A resignation notice from their EOR employment
Completion of offboarding tasks, including PTO selection
A new PEO employment agreement and onboarding steps
New benefits enrollment and policy details
Resubmission of pre-existing EOR time off requests under the PEO profile
When dates are aligned correctly, employees should experience no break in employment.
How to Prevent Gaps in Employment
To maintain continuous employment and payroll coverage:
The EOR end date and PEO start date must align
Offboarding and onboarding documents must be completed on time
Payroll deadlines must be followed
Moving from EOR to PEO is essentially offboarding from one employer and onboarding with another - your company. By finalizing resignations on time, communicating early with employees, and preparing benefit and PTO decisions in advance, you can complete the transition smoothly with no payroll interruptions.