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Professional Employer Organisations in the UK

PEO's becoming more prominent in the UK, taking the lead from the USA

PEO's becoming more prominent in the UK, taking the lead from the USA

Professional employer organizations (PEOs) are becoming increasingly popular in the UK, particularly as more businesses look to outsource their HR functions and reduce their administrative burdens. Historically, PEO’s have been the go-to employment model for many in the USA.

PEOs can offer a range of services, from payroll management to benefits administration, and can also take on certain employment liabilities on behalf of their clients. However, when considering using a PEO, it is important to understand the insurance implications involved.

One of the key advantages of using a PEO is that they can provide access to group insurance policies at a lower cost than individual policies. This can include health insurance, life insurance, and disability insurance. PEOs typically negotiate rates with insurers based on the size of their client base, which can result in lower premiums for individual businesses. Additionally, PEOs can handle the administration of these policies, including enrolment and claims processing, which can save businesses time and effort.

However, it is important for businesses to understand that when they work with a PEO, they are essentially sharing employment responsibilities with the PEO. This means that the PEO may take on certain employment liabilities, such as workers’ compensation claims when in the US or similar, or lawsuits related to employment practices. As a result, it is important to ensure that the PEO has adequate insurance coverage to protect both the PEO and its clients.

Businesses should carefully review the insurance policies offered by the PEO to ensure that they are sufficient for their needs. This may include verifying that the PEO has workers’ compensation insurance (or employers liability and associated covers in the UK) in place and that it provides liability coverage for claims related to employment practices. Additionally, businesses may want to consider obtaining their own insurance policies to supplement the coverage provided by the PEO.

It is also important to understand that when a business works with a PEO, it is essentially sharing its employment relationship with the PEO. This means that the PEO may be considered the employer for certain legal purposes, such as tax and employment law.

Should you require insurance coverage for your PEO, you may realise that the insurance market in terms of appetite is limited, whilst the UK catches up with the USA. We have access to some markets, that have appetite for PEO’s so we would be happy to assist with your insurance requirements.

Please reach out to us using the contact form here.

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