Local PEO vs International PEO
When your company is looking to expand into the Australian market, if you want to be able to hire people without an entity, you need to work with a PEO (Professional Employer Organisation). This allows you to establish an international presence without the time and expense of setting up a company.
One of the decisions you need to make is whether you choose an international PEO or work with an organisation that’s based in Australia.
Here is some information to help you make a decision:
Your PEO options explained
If you have never worked with a PEO before, the terminology can take some time to be familiar with.
- An international PEO is based in one country but operates in a number of different regions. When you use an international PEO, it won’t have an established entity in the country where you wish to hire people but will instead rely on a local PEO itself.
- A local or domestic PEO is based in the country where you wish to hire employees. It acts as the Employer of Record and has the advantage of an on-the-ground presence.
What does a PEO do?
Whether you are working with an international PEO or a PEO in Australia, the provider will help you to decide how much to pay them, find and hire staff, figure out how much to pay them and pay them accordingly. It will support you with insurance, legal & training requirements, human resources and payroll services, while your management team takes responsibility for assigning daily tasks, setting KPIs and inducting the employee into your company culture.
Your PEO takes on the legal responsibility for employing people in Australia, acting as an on-the-ground extension of your business.
Why use an international PEO?
There is really only one advantage to using an international PEO, and this is if your business is rapidly expanding into a number of new markets at once. It may make sense to choose an international PEO because it has a presence in every country where you wish to operate.
Why use an Australia PEO?
For any company that wants to build a team in Australia, using a locally-based PEO makes sense.
The main advantage is working with a smaller company that has an in-depth understanding of the local market. Your Australia PEO will have connections with insurance companies, training and payroll providers, so they can get you the best service and the best price.
When you work with an international PEO, you will often find you are dealing with a larger company. As a result, you become ‘just a number’ and it can be difficult to access the personal service you need.
In addition, an international PEO often contracts work to a local PEO. This means that if an employee has a question, they will direct it to their manager, who will direct it to the international PEO, who will direct it to the local PEO. And then the answer has to make its way back to the right person! It’s easy to see why this ends up wasting a great deal of time and causing confusion.
Further benefits of using a PEO in Australia are:
- You have an operator in the exact same or roughly the same time zone as your employees
- Your local PEO is highly familiar with changing requirements in Australia for employment and compensation
- Your local PEO is smaller and more likely to be agile enough to meet your evolving needs
- Choosing an Australia PEO will help you to fast-track your presence in the Australian market without the need to establish an entity
Many Australians prefer to take a job when they have the knowledge that there is a point of contact who is based locally and understands the expectations of employees in Australia. If they have the choice between being hired by an international and a local PEO, they will probably prefer to keep things close to home.
Want to know more about the benefits of using a PEO in Australia? Contact APEO today.
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