Partnering a professional employer organization, or PEO, has become a very popular option for small and mid-size businesses that need help managing the wide range of administrative tasks.
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The main difference between PEO and Staff Leasing Company (SLC) lies in their relationship with the workers and their job permanence.
PEOs only provide services for client companies and existing employees of that company. Once the contract between PEO and the client company is terminated, employees stay with the company, but their ties with PEO stop existing. They usually don’t provide the company with a supply of new employees.
On the other hand, employee leasing companies provide the company with new employees, usually for temporary projects. After these employees complete the work for the company, they head back to the SLC which assigned them with these short-term jobs. Temporary Staffing Service is also worth mentioning — similar to SLC, they provide client companies with additional staff. Temporary Staffing Service recruits the workers for companies in special situations, such as seasonal shortages, temporary shortages of employees with specific skills, or when full-time employees are absent.
It would be more accurate to say that an Employer of Record is a specific solution commonly offered by a PEO. In addition to EOR solutions, a PEO also often offers recruitment, payroll outsourcing, HR strategy and other company services.
In this case the Employer of record also known as the Professional Employment Organization does not engage in recruitment, but rather form in their staff list staff who are already working for the client. Essentially the staff is the same and continues to work for the same company as before. This type of assignment is suitable with companies who are in a good financial condition, but need to reduce the headcount for different reasons – stock market listings, initial public offering (IPO), specific corporate policy and other.
One company provides another with part of its functions / services. The client company uses the provided services, not just the labor of the employees. This is suitable solution to be used for secondary functions such as maintenance, cleaning, support activities, which are not fundamental for the particular business and may vary in terms of workload.
Outsourcing of activities such as registering and administration of labor contracts, supplements and annexes, payroll, administration of remunerations, compensations and benefits, bonuses, sick leaves, vacations and other as a form of service provided by the consultant internally to the client company. It is suitable for smaller companies, where the number of administrated personnel cannot justify the capacity for a dedicated payroll position or when strict confidentiality of information is required.