PEO/ Joint Employment

Find out how PEO/ Joint Employment works below and book a Demo today to find out NXSYS can help your business!

PEO/ Joint Employment workers

How it works

PEO/ Joint Employment – The Basics

PEO or Professional Employment Organisation, is where the Agency and the Payment Company become the joint employer of the workers. The Workers sign an employment contract that clearly specifies two employers: the Agency and Payment Company.

Under this arrangement, the Payment Company can invoice the Agency for all the employment costs without VAT. Money is then transferred to the Company without VAT, for processing salary payments. This is because, for the purpose of payroll, the two entities are deemed to be one.

Standard PAYE

The Agency pays the Payment Company all the employment costs, that includes Timesheet Earnings, Employer NI, Employer Pension, Holiday Pay and Apprentice levy. The worker gets paid just like a normal employee without incurring any reduction from the Timesheet rate. The Payment Company then charges the Agency a payroll processing fee.

Umbrella PAYE

The Agency pays the Payment Company the Timesheet Earnings only. The Worker bears the costS of employment such as Employer NI, Employer Pension, Holiday Pay and Apprentice levy etc. The Payment Company charges the Agency a payroll processing fee subject to VAT.