PEO Services: A Flexible Employment Solution

Services provided by a Profession Employment Organization (hereinafter “PEO services”) are quickly becoming the most demanded services on the labour market. Employers are increasingly searching for new business solutions to minimize their costs as well as risks and, as a result, PEO services become an irreplaceable instrument especially for global companies conducting their business activity worldwide.

The cases in which an employer may be interested in such services are many. For example, the employer might have a temporary project abroad and needs to relocate company specialists to another country. Even though the relocation process may sound easy in theory, in practice it is not often the case.

Employers face many complex issues related to employment, taxation, salary payment and other legal aspects of other countries. Oftentimes, without in-depth knowledge of local legislation some of these issues may seem impossible to solve hence requiring the involvement of a third party.

Eurofast’s specialists from Bulgaria, Romania, Georgia, Bosnia and Herzegovina, Ukraine and FYR Macedonia commented on the popularity of PEO services among businesses in their specific countries and described the reasons of the services’ attractiveness to the employers as well as the obstacles that must be overcome.

Anna Pushkaryova

Georgia. Country Director

anna.pushkaryova@eurofast.eu

PEO services are not yet developed and popular enough in Georgia, however the below mentioned benefits and advantages of this great HR solution (which is already successfully applied worldwide) give hopes for its quick expansion in Georgia in the near future. In particular, we as Eurofast already receive requests for respective services in Georgia, mainly from our international professional networks.

One benefit of PEO services is the flexibility of the HR management function. By utilizing PEO services, the client is being released from the labour obligations because all legal and tax obligations are vested upon the contractor providing these services. The client’s HR documentation work decreases, and the preparation of numerous payslips is avoided, thus, allowing the client to concentrate on the main business activity. Additionally, both HR management expenses as well as tax burdens decrease. The delegation of the HR function to the contractor mitigates the risk of imposition of respective fines to the client as a result of a possible violation of the country’s labour and migration legislation.

Maryna Shuliak

Ukraine. Payroll and Business Development Consultant

maryna.shuliak@eurofast.eu

PEO services are becoming more and more popular among the Ukrainian employers. However, it should be mentioned that these services are not a novelty and they have been already commonly used in Ukraine for many years. There are few reasons why PEO services are interesting for employers. One scenario of particular interest is when a client doesn’t have a legal entity on the territory of Ukraine, but does conduct a business activity in the country therefore creating a need for specialists’ employment. For already-established Ukrainian companies, the benefit of using PEO services includes the elimination of many expensive and time-consuming elements of an in-house HR management.

It is also worth mentioning that along with usual employment services, employers often require services on payroll, tax compliance, reporting, HR administration and related issues, which often make sense to be outsourced to a single external provided, thus further minimizing expenses. Last, but not least, in light of the current transformation of the Ukrainian legislation (including labour legislation) and the constant effort of employers to be up to date on the important changes and consequently, the option of leasing employees is particularly convenient as it alleviates the risk of potential breaches of ever-changing laws.

Ivan Pishmanov

Bulgaria. Chief Accountant / Acting Manager

ivan.pishmanov@eurofast.eu

PEO services are the services which are becoming more and more popular on the Bulgarian labour market, mirroring its popularity in Western European.

As more and more foreign companies are entering the market with the aim to reduce costs, PEO services become a great option to relieve the burden both of the in-house payroll function as well as of the related HR administrative function. Employers value the full access and control over the employees hired but also the fact that the PEO company is responsible for everything else.

Igor Vujasinovic

Bosnia and Herzegovina. Senior Accountant

igor.vujasinovic@eurofast.eu

PEO services have become very popular in the last few years in Bosnia and Herzegovina and consequently the market is more and more in need of this alternative business approach. PEO services dramatically reduce the expenses and provide a full scope of employment services, allowing clients to avoid complications of figuring out the local labour laws, registering branch offices or doing payroll calculations for their employees.

PEO services allow companies to expand their business operations with minimal expenses, as well as without administrative complexities or interfacing with, different State and Tax Institutions

Iulia Lascau

Romania. Managing Partner

iulia.lascau@euglobal.eu

Flexibility and adaptability are very important attributes for success of a business in these challenging times. The labour market is in a continuous dynamic process and the specific requirements of companies become more and more sophisticated.

PEO services provide exceptional benefits to clients. Some of these include the ability to quickly fluctuate staff numbers during I peak demand periods (such as during vacations of own employees or other seasonal events).

For employees, the PEO-providing can also simplify the job search and help with matching people with certain expertise with open positions existing in client’s companies. The recent changes in the Labour legislation in Romania (law 12/2015) provide the obligation of payment of temporary employee at the same level of salary with the regularly-employed ones for the same job description.

Elena Kostovska

FYR Macedonia. Executive Administrator

elena.kostovska@eurofast.eu

With the growing popularity of FYR Macedonia as an investment destination, one can note the trend of the evolution of needs and requirements of non-resident companies considering investing in the country. PEO services in particular have seen a sharp rise in demand by foreign countries entering FYR Macedonia.

The need for employee leasing is currently the highest among foreign companies who have decided not to incorporate a legal entity in the country but do have needs to hire staff on the territory of Macedonia (either local or foreign). Even though company incorporation is fast and easy, non-residents are usually concerned with the high penalties and fines imposed by state authorities in cases of non-compliance, and utilizing PEO services completely remove this obstacle. Furthermore, the ability to swiftly wrap up a limited-duration project in FYR Macedonia (by simply concluding the cooperation with a PEO provider, as opposed to terminating labour contracts and — even more problematic — liquidating a company) is a major benefit for companies that have a limited presence in the country.

Eurofast in recent years has become a leader in outsourced payroll and employment services offering practical and responsive advice to a wide spectrum of clients including multinational and locally listed companies, mid-market companies and large private entities.

We are fully aware of the varying tax and legislative systems of the different countries we operate including the risks associated with cross border transactions. This is why Eurofast adds value to your operations by delivering a full range of technical services, with partner led personal service with a focus on clients specific requirements in the country of operation.

Our aim is to ensure remuneration plans work in practice not just theory, wherever you deploy your people.

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