Introducing PEO – Your New Payroll Solution

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What has PEO, country music and portion size all got in common? They’re all big in America. Professional Employer Organisations (PEO) have been the preferred payment model for agencies engaging contractors in the states for quite some time, but it has gone relatively under the radar in the UK.

So, I bet you’re wondering just what is PEO? Why is it growing in popularity? What are the benefits to your business? Well, in this article we will answer just that - take a look below.

What is PEO?

PEO stands for Professional Employer Organisation. Simply put, a PEO is a supplier who provides a complete outsourced employment solution for recruitment agencies and other businesses.

The PEO employs the worker on a contract of employment and so assumes the responsibilities of an employer. This is particularly useful for businesses that do not have an internal payroll or HR function for outsourced contractors, as the PEO supplier bears all the legislative responsibilities associated with employment.

Working through a PEO means the worker is provided with their actual gross pay rate from the beginning of each new assignment, this gross rate will be shown on their payslips each month, similar to that of a traditional employment set up, enabling greater clarity when it comes to working out take-home pay amounts.

This is designed to save your business time and resources, whilst ensuring supply chain compliance. Which makes this solution great for recruitment agencies and end hirers.

Why is PEO becoming more popular?

After the public sector off-payroll reforms in 2017, there was a significant decrease in contractors working through their own limited companies. With this reform set to be extended to the private sector on 6th April 2021 this trend is expected to continue. Further enhancing the need for pay transparency, as set out in the Good Work Plan.

As such, we expect an increase in contractors needing to be engaged in a more traditional Pay As You Earn (PAYE) model in the next financial year. This has caught many recruitment agencies by surprise and a few questions you may want to ask yourself are:

  • Might your PAYE function struggle with a surge in expected volumes?
  • Do you want to avoid the extra costs and risks associated with running your own payroll?
  • Will partnering with a PEO solution provider help give you peace of mind by outsourcing those costs and associated employment responsibilities?

If you answered yes to any of these questions, the good news is that Parasol is here to help, with our new PEO Solution, Parasol Select.



The benefits of Parasol Select to your agency

Straight-forward payslips - Simple and easy payslips for you and your contractors

Decreased liability for the agency - Parasol Select is liable for all employment risk as they become the employer of the contractors

Compliance is taken care of - Parasol Select bears all legislative and HMRC responsibilities associated with employment, not you or the hirer

Reduced paperwork - We will manage timesheets, auto-enrolment, pension contributions, and other statutory payments

Cash flow improved - We can agree an invoicing timetable and payment terms to suit you, without affecting your contractors

Cost savings - PEO enables you and your hirers to maintain or increase contractor numbers while saving on internal cost, resource and time

Since 2014, we have been supporting a number of our agency partners with their payroll responsibility through PEO. We’re so excited to announce Parasol Select and roll it out to a wider audience.

For over 20 years Parasol has helped recruitment agencies do what they do best - recruit. There is an ever-changing landscape in recruitment. Parasol Select it’s another solution to your payrolling needs further demonstrating we really are with you all the way.” - Clarke Bowles

If you want to find out more about PEO and Parasol Select or find out what solutions Parasol has for your agency, simply request a callback and a member of our team will be in touch.