What is PEO?
A PEO (Professional Employer Organisation) is a partner that helps businesses handle many of their HR responsibilities by sharing certain employee duties.
In a PEO arrangement, the business and the PEO act as co-employers. The business manages day-to-day work, while the PEO takes care of payroll, benefits, compliance and the legal side of employment. This set-up often lets smaller companies offer better benefits, stay on top of changing regulations, even across different locations, and free up time to focus on business growth.
Many organisations also find that working with a PEO helps boost staff satisfaction and retention.
Things to know
- The PEO acts as a co-employer, handling payroll, benefits and compliance, while the business retains control over daily work and staff management
- Using a PEO can give employees access to more competitive benefits, such as health insurance or retirement plans
- PEOs help businesses navigate complex HR laws and reduce risks around employment regulations
- PEO arrangements are most common with small and mid-sized businesses, but can suit organisations of any size
FAQs
What does PEO stand for?
PEO stands for Professional Employer Organisation.
How does PEO work?
A PEO enters into a co-employment agreement with a business, taking on HR administration while the business manages staff day-to-day.
Why should a company use PEO?
PEOs are ideal for employers that want expert support with HR, payroll and benefits, especially if they’re growing or working across multiple locations.
What’s the difference between a PEO and an outsourced payroll provider?
A PEO offers broader HR and compliance services in addition to payroll and takes on more employment-related responsibilities.
Are PEOs regulated?
Yes. PEOs must comply with employment laws and are often subject to additional regulatory requirements depending on location.
