What is a Professional Employer Organisation (PEO)?

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What is a Professional Employer Organisation (PEO)?

09/01/2023  |  Tamlyn Wood Categories: BlogGlobal Expansion

For many businesses, offering comprehensive HR services can be a daunting challenge – especially for small companies and those wishing to hire international talent or already managing a global workforce.

Keeping abreast of employment laws in other countries is often difficult, which has led to an increasing number of organisations turning towards Professional Employer Organisations (PEOs). These providers offer various outsourced HR and payroll tasks that quickly perform complex activities, allowing employers the time to focus on furthering their business objectives.

In this article, we’ll help you understand what is a Professional Employer Organisation (PEO), the benefits of opting for a PEO, how PEO solutions work, and what you should consider before opting into working with them.

So, What is a PEO?

Businesses looking for comprehensive HR and administration support should consider partnering with a Professional Employer Organisation (PEO). These organisations offer specialised services, such as payroll processing, managing benefits in certain countries, and onboarding assistance to help companies meet local employment laws, customs, and industry best practices. PEOs make it easier for businesses of any size to stay compliant while ensuring that all administrative procedures are handled efficiently.

How Does a PEO Work?

When working with a PEO, your business will enter into an agreement that splits the responsibilities of managing HR processes between you and the Professional Employer Organisation. The relationship is known as ‘co-employment’, where both parties have specific duties outlined in their contract. These include payroll processing, filing taxes, hiring employees; the list goes on!

Even though it’s a co-employment and two sets of eyes oversee the operations, all the legal responsibility for staff remains squarely with the business itself. Ensuring compliance with local employment laws during the recruitment or dismissal stages must be adhered to by whoever oversees those areas within your company infrastructure.

What are the Benefits of a PEO solution?

Companies looking to expand their operations into international markets can reap many benefits from partnering with an experienced Professional Employer Organisation (PEO). PEOs make it easier for businesses to set up local entities, manage complicated HR functions, and save valuable time. Companies also gain access to lower HR overheads, simplified payroll processes and tax preparation guidance, and assistance in regulatory compliance and legal risk management.

By choosing a PEO solution, companies can benefit from an improved employee experience through robust, established packages that many small businesses may need help to offer. Simultaneously, companies can focus more energy on productivity growth and setting industry benchmarks!

However, when seeking the help of a PEO, it is essential to remember that all legal responsibility remains with you as the business owner. For startups and SMEs, this can be complex since setting up local entities in each jurisdiction for employees’ work may require more time than most companies have available. An alternative option would involve using an Employer of Record (EOR) solution: an easy way to ensure your hiring compliance without sacrificing any necessary legwork!

What are the Different Types of PEOs?

Deciding on a PEO for your business can have huge implications and largely depends upon the size of your team. Working with a local Professional Employer Organisation would be the best option for local companies looking to save money on administrative costs or benefit from other workplace services. On the flip side – if you are an organisation managing employees across multiple states or countries, selecting one of today’s leading global PEO solutions may be just what you need! Let us dive into both types to discover their advantages.

Local PEOs

For companies looking to manage their local talent, local PEOs provide the perfect solution. Depending on which country they operate in, these organisations can offer a range of services designed specifically for local employment needs – from consultancy advice to labour dispatching and even direct employee hiring, like an EOR usually does. Different countries may refer to them as something else (for example, in China, they’re known as Foreign Enterprise Service Company). No matter what it’s called, taking advantage of a PEO helps manage teams effectively!

Global PEOs

If you wish to grow your business internationally, choosing a Global PEO solution may be better. Global PEOs can seamlessly manage all aspects of HR and payroll, no matter how far-reaching those operations become. This way, businesses save money while ensuring compliance with international labour laws — the perfect solution for worldwide success!

PEO vs EOR

PEOs and EORs may look similar, but their services are different. An EOR becomes the legal employer of its client’s global talent, while a PEO provides HR support to its clients without assuming responsibility for compliance with local employment laws. If you’re looking at these options, it’s essential to understand how they serve your business differently so that you can make the most informed decision!

Then, what about your Internal HR teams?

Working with a Professional Employer Organisation (PEO) can be an effective way to free up the valuable time of your in-house Human Resources team. It will allow them to focus on more beneficial tasks for long-term success, like developing employee programs and services, creating inspiring company culture initiatives, or recruiting top talent without sacrificing operational efficiency.

Bradford Jacobs makes building and managing a global team simpler than ever. Our PEO solution covers everything from payroll to employee benefits, so you can rest assured that your business is compliant in over 120 countries worldwide! Our team of experts will guide you through the entire process while our transparent pricing and simplified invoicing ensure clarity from start to finish – no surprises here! Contact us today, and let’s make it happen together.