Global PEO (Professional Employer Organisation) Explained in Detail
February 2nd, 2023
Growing your company can be a challenging but rewarding experience. Getting more work than your team can handle is a sign that your business is doing great and that it might be time to increase the number of people working for you.
As companies face the challenge of finding the right personnel and dealing with all the bureaucracy that comes with recruiting and hiring new people, a Global Professional Employer Organisation (GPEO) is an invaluable ally.
This article is for you if you need clarification on what a GPEO is and how these companies can help. We will examine what a GPEO is, how they work, and the advantages of working with one.
What is a Global Professional Employer Organisation?
Global PEOs can recruit, hire and pay people, often seconding them back to your company. Through this method, you can delay the creation of a local country corporation until such times as you either need one or trigger Permanent Establishment. As a result, GPEOs can be an excellent tool when expanding abroad or to different tax jurisdictions.
How Do Global PEOs Work?
Don’t forget, the GPEO is the employer: not you!
As a result, GPEOs carry out all of the legal duties of an employer, including:
GPEOs can work with you to find the right professionals for your organisation. As the legal employer, they are responsible for the entire recruiting process, albeit taking on board your wishes in terms of recruiting strategy.
The expertise provided by Global PEOs ensures that you have a smooth land & expand journey.
Payroll and taxes
One of the most challenging jobs for any employer is handling payroll and employment taxes. Since every country has its own tax and labor laws, managing payroll abroad can be incredibly challenging.
As the legal employer, the GPEO is responsible: not you..
If you choose to work with a Global PEO, please make sure that they are experts in the market you are looking to expand to and adept at not only operating as a GPEO but identifying when it is time to convert to your own corporate and carry out that transition in a compliant and effective manner.
Irrespective of your industry sector, as the legal employer, the Global PEO must ensure full compliance with all aspects of risk management. This would include training programs, inspections and internal audits.
If you already have an HR team in place at your HQ, your chosen GPEO should take on board your cultural requirements to align, where possible, its own employees with those seconded to you.
The Benefits of Working With a Global PEO
With a long list of functions and responsibilities, GPEOs offer various benefits for companies deciding to use their service.
Provision of specialist on-the-ground HR departments
As the legal employer, the Global PEO is the expert in that given jurisdiction’s employment laws.
Help with the expansion of your business
Ensure that you are in the right location and that your business can succeed. Use this option to test the water before plunging in and setting up your local country corporation. Your GPEO must be your expert in monitoring for Permanent Establishment. Be careful: few are!!
Cost-effective in the start-up phase
Global PEOs can provide the solution that you need for that initial period.
Don’t spend your valuable monies until you are sure you have chosen the right location with the right team.
How to Choose a Global PEO
Having learned what Global PEOs are and how they can benefit your business, it is time to choose a company to partner with.
The work of GPEOs is complex and crucial for the success of your business. Therefore research is essential. Make sure the company you are hiring will be able to provide you with the services you need, as well as ensure they have the competence and expertise to guide you through complicated processes and that final transition to your own operations.
Remember, if you get this wrong it will have a direct impact upon your fundraising, M&A or Exit due diligence!
Here are a few things you should check before making a decision.
Since Global PEOs are wholly responsible for the local employees.
Asking for references and recommendations from trustworthy companies is always a good idea. Businesses with similar challenges might be able to offer you insight into how the GPEO works and what they can or can’t do for you.
Your business needs
As we discussed, Global PEOs can do a lot for your business. Before choosing a company, list your priorities and needs and check if not only can the GPEO offer you the necessary services but whether your chosen location accommodates Global PEO as a legal offering.
Choose a GPEO that provides you with the confidence you need to know that your legal risks and exposure are maintained at a minimum level.
Experience in your industry
Every sector has its specific needs and requirements. This is especially true when dealing with benefits, training, or regulations. A Global PEO must be prepared and have the experience necessary to deal with your industry.
Make sure the company you want to hire is fully aware of the necessities of your sector and the labour laws for people working in your industry. Previous experience with similar companies is a good sign.
Final Thoughts on Global PEOs
Good employment practice is key to ensuring a solid culture and high levels of staff retention.
Ensure that your chosen Global PEO buys into this and practices what it preaches.
As with many other business decisions, partnering with a Global PEO is not something to do on a whim and requires a lot of consideration. Make sure you choose the right expert to take you through the whole journey.
Having learned what can be the responsibilities of a Global PEO and the benefits of choosing this path for your business growth, we hope we have provided you with the necessary tools to develop and improve your business.