Co-employment PEO (Professional Employer Organization) refers to a contractual partnership where both parties share specific employment responsibilities. The primary advantage of co-employment is that it helps organizations mitigate some of the employer’s costs and liabilities.
In a co-employment relationship, a PEO usually provides the HR support you need while making your business more compliant and competitive.
PEO Service Providers 173,000 small and mid-sized businesses, employing more than 4 million people.
If you don’t know what a PEO is, how co-employment PEO works, or if it could be beneficial for your organization, this article is for you! We will answer all these questions today. Let’s get started!
What is PEO?
PEO or Professional Employer Organization partners with small and mid-size businesses to provide outsourced HR management, including payroll, benefits, compliance, compensation, and training.
In other words, a PEO is someone who specializes in employee-related administrative duties (e.g., payroll, benefits, HR, and labor compliance).
How does co-employment PEO work?
Co-employment is a contractual agreement between the PEO and a company regarding employee management.
Please note that co-employment doesn’t mean that they’ll control your employees. Instead, it means that they’ll take care of employee administrative tasks.
As a client, you’ll maintain control of:
- All business decisions
- Operations
- Employees’ day-to-day tasks and core job functions
Your partner, i.e., the PEO, will offer these services:
- Human resources management
- Payroll processing
- Benefits management
- Issuing pay checks
- Preparing and filing payroll taxes
- Employees compensation coverage and claims management
- Time and labor management
- Safety and risk management
- Ensure Statutory Compliance
Is co-employment PEO beneficial?
Small businesses that use PEOs grow 7-9% faster than their peers that don’t. It also allows you to better utilise your human resources on high-value activities that help grow your business.
That said, here are some more ways co-employment PEO can benefit your business.
Ensure Compliance
When running a business, it is crucial to meet Statutory Compliance. If not, you risk getting into legal troubles, issues with trade unions, and more.
However, co-employment services in India help meet Statutory Compliance without much effort. You decide the pay scale for each employee, and your co-employer will ensure that you stay compliant with all the state and central employment laws.
Moreover, state and central payroll laws are complex and constantly evolving. If you don’t follow them, you may have to pay costly penalties. It is also possible that your employees talk negatively about your business online.
PEOs ensure that your organization follows all the rules and regulations, thereby preventing you from legal payroll troubles.
They’ll also take care of corporate tax, provident fund (PF), and the Employees’ State Insurance Scheme (ESIC).
Access to Fortune 500 Benefits
One of the primary reasons small and mid-sized businesses collaborate with PEOs is the high-quality service their employees will get. For example, when you leverage co-employment, your employees will likely receive:
- Medical coverage (including dental and vision)
- Retirement plans
- Life and personal accident insurance
- Short-term and long-term disability insurance
- Adoption assistance
- Commuter benefits
- Educational assistance
When your employees get these services, they’ll likely be satisfied as they won’t have to worry about additional expenses related to their health.
Also, since your PEO offers all these things, you won’t have to worry about:
- Enrolling employees
- Conducting nondiscrimination tests
Compensation and Claim Management
PEOs reduce the risk in co-employment by providing additional worksite employees coverage. Moreover, your company will be covered under a policy sponsored by the PEO. This means your partner will manage any claim against you.
For instance, in the case of a health insurance claim, the PEO will help:
- Investigate claims
- Communicate with injured employees
- Assist employees to return to work as quickly as possible
A reputed PEO will also take proactive measures to prevent workplace injuries, mitigating workers’ compensation claims. This could include:
- On-site evaluations
- Hiring safety specialists
- Regular safety training
Streamline HR Support
From right talent acquisition to onboarding, a good PEO can help you with all the HR-related tasks.
This is perfect if you don’t want to hire dedicated HRs in your organization. The PEO might arrange an HR expert or team to manage and provide strategic administrative services depending on your contract.
If you already have HRs in your company, you might use the PEO’s expertise or assistance when necessary. Plus, your employees can also make additional suggestions as and when required.
They will also be responsible for conducting regular surveys and employee feedback programs to make the workplace better and safer for everyone.
Improve the Onboarding Process
Onboarding is one of the crucial aspects of recruitment. If you don’t offer a seamless onboarding experience, you will likely see a decrease in the retention rate.
However, as an expert in managing HR activities, Global PEO Companies can help provide the best possible onboarding experience to new employees.
From giving them offer letters to help them get started, PEOs manage everything. But, again, note that you (the client) will decide each employee’s role and day-to-day activities.
Shared Liability
When you partner with a PEO, you’re essentially leveraging employee leasing services. This means employees will work for you but will be incorporated under the PEO’s tax ID.
They will also be responsible for training and retaining top talent. If someone leaves the organization, they will help you find the right candidate for the role. But, again, the onboarding process will be their responsibility.
Wrapping Up
Co-employment PEO can help minimise operational costs, prevent legal issues, and streamline HR processes. They can even help with employee leasing and finding the right talent for your business.
Since you’ve come this far, why not check how we can help you with co-employment? Write us at reach@husys.com or Call and talk to our team at +91 7204012636 for any queries!
