A contractual partnership in which a firm shares employment obligations with a professional employer organization is referred to as co-employment (PEO). This is beneficial to businesses that want to reduce some of the costs and liabilities of being an employer. However, this does not imply that employers relinquish control or ownership of their businesses. Businesses can continue to manage their personnel and day-to-day operations while the PEO handles HR-related responsibilities through outsourcing through co-employment.
Regarding workforce management, co-employment and joint employment are not the same. Only one person makes labor-related decisions in a co-employment agreement. Collaborative work, on the other hand, takes both parties’ input into account when it comes to wages, hours, new hiring, terminations, and so on.
What are the advantages of co-employment?
Co-employment arrangements are popular among small and midsized firms for various reasons, including high-quality, cost-effective health insurance. PEOs handle enrolment, claims, and other aspects of plan administration and provide coverage. Some even offer advantages in addition to health insurance, such as retirement savings plans, education reimbursements, and other perks.
The benefit of co-employment in payroll is that they can administer payroll components on behalf of the company, such as calculating wages and deductions, paying employees, and filing employment taxes with government agencies with the help of a PEO. Many PEOs can also integrate payroll with timekeeping and insurance services, reducing errors and eliminating repetitive data entry.
Risk and compliance professionals at PEOs stay on top of changing HR requirements and work with clients to design solutions that can help them avoid fines and penalties. Tax reporting, unemployment and workers’ compensation claims, & workplace policies are all topics of concern.
PEOs take away one hassle for businesses by providing workers’ compensation insurance coverage on behalf of their clients and handling any claims that may arise. To reduce workplace injuries and liabilities, they might conduct safety audits and offer employee training programs.
A PEO can help businesses that don’t have a dedicated HR team inside. Depending on the extent of strategic support necessary, organizations in a co-employment structure may have a specialized HR team. On the other hand, if they have their resources, they can continue employing them and working with the PEO when they require more expertise.
Benefit packages associated with co-employment make organizations appear more appealing to potential employees. Additionally they also help with staff onboarding, training, and performance management. Some PEOs also offer strategic services to assist firms in adapting to changing workplace demographics and the growing use of contract.