A Professional Employer Organisation, PEO for short, has been hugely popular for many years in the United States contractor market due to the additional benefits this solution can provide, such as health insurance, simplified workings for gross take-home pay, as well as an alternative to an umbrella solution.
Here in the UK, PEO’s have grown in popularity since the off-payroll reform for the public sector in 2017 and more recently with the private sector changes in April 2021.
How does a PEO work?
A PEO provides an umbrella alternative employment solution for recruitment agencies or end clients by employing a contractor directly, taking care of the employer responsibilities such as employment rights, payroll, payments to HMRC, pension contributions, and benefits.
Contractors are provided with their gross pay rate from the start of an assignment which gives greater transparency when working out take-home pay. There are no employment costs or deductions from their rate. They receive a straightforward payslip with their gross pay through the Pay As You Earn (PAYE) model.
For an agency or end client to operate this solution internally creates a huge amount of extra cost, time and resources, plus the added stress and pressure on top of the usual business as usual.
That’s where ICS PEOple comes in, offering reduced payroll costs, a compliant workforce and an efficient employment solution.
ICS PEOple is the PEO solution that delivers a compliant, inside IR35 solution, employing the contractor directly and offering employment rights, benefits, payroll, tax payment and pension contributions.
ICS PEOple will elevate pressure within an agency or end client, allowing them to concentrate on what they do best.
Once the contractor has completed the registration process, ICS PEOple will receive confirmation of the contractor’s number of hours worked from the agency or end client at the agreed timescales (monthly or weekly).
An invoice is then raised and issued back to the agency or end client for the gross rate plus employment costs (employer’s National Insurance, Apprenticeship Levy, employer’s pension) and margin.
Once payment for the invoice is received from the agency or end client, ICS PEOple then deducts tax & National Insurance and pays to directly HMRC along with gross pay to the contractor. The contractor receives a ‘traditional’ payslip rather than an Umbrella payslip. See the ICS PEOple Guide for more information.
Contact ICS PEOple today
For more information about ICS PEOple contact one of our experts today by calling 0800 195 3750 or email firstname.lastname@example.org and see how we can save you time and money by providing you with a compliant employment solution.