How does PEO pricing work in Australia?
When it comes to PEO pricing in Australia, there are a number of variables.
Take a look at some of the factors that influence the cost of using a PEO, plus information about how much PEOs charge in Australia and what you can expect in return for your investment with this type of organisation.
PEO cost variables and structure
The cost of your Australian PEO will depend on a few things, including:
– Your company’s size
– How much you pay your workers
– Workers’ compensation risks
– Employee benefits
– Payment structure
Some PEOs calculate their fee as a percentage of your payroll. Others charge a flat fee per employee.
If you use a percentage structure, bonuses and commissions may cause fluctuations in the cost. The percentage could be anywhere from 2-12 per cent of wages, depending on the number of employees you have and their salaries. If your team receives stable wages, using a percentage model may make sense.
With the flat, per-head fee structure, it doesn’t matter if an employee makes $30,000 or $1,000,000 annually – your PEO costs stay the same. Some businesses prefer this model, particularly when they have a number of people on a higher salary.
You can expect to pay anywhere from a few hundred dollars to a few thousand per employee. The price will be influenced by the number of people on your team, the level of management they need and the money they earn.
When it comes to Worker’s Compensation, if your people are working in a high-risk industry, there is more likelihood of complicated claims. This is why your PEO pricing might be slightly higher.
There may be additional fees for extra services which are not included in your overall agreement. Your PEO should explain these before you sign your contract (ask about added extras as part of your negotiations).
When you recruit a PEO, as well as asking about pricing, don’t forget to discuss termination costs. You don’t want to get stung with a hidden expense that you weren’t expecting.
What you get
PEO pricing in Australia generally covers the following services:
– Handling of employee benefits
– Recruitment of new hires
– Employee administration (such as issuing handbooks and sharing training modules)
– Compliance with industrial relations standards
– Handing of compensation claims
– Payroll requirements
– Distributing employee benefits
– Liaising with employees about payroll and HR-related matters
Why hire a PEO to oversee your business in Australia?
When asking the question “how much do PEOs charge in Australia?” you should also think about how much money a PEO can save your business.
Installing a locally-based provider to oversee elements like onboarding, HR and payroll can save you for the following reasons:
– You’ll have someone on your team who understands local employment laws
– Your team’s administrative tasks are reduced
– You won’t have to train someone on your team or expect them to understand the complexities of hiring people in Australia
– You’ll avoid litigation caused by a lack of understanding of Australian workplace relations
– Your Australian team will have a point of contact in their own time zone
– The ‘email chain’ is reduced between your Australian-based employees and their point of contact
– You can rely on your PEO to help you rapidly establish a presence in Australia, whether you are there or not
– You don’t have to pay for a full time headcount
– You are your team are able to focus on your core business
According to a study shared by NAPEO, “the average cost savings from using a PEO is $1,775 per year per employee, while the average PEO cost per employee is $1,395, yielding an annual ROI of 27.2 per cent.”
Not all PEOs are the same
Not every PEO provides the same value or cost structure. You need to speak to two or three different providers so you can understand which one will give you the best value.
The ideal PEO will create cost efficiencies that suit your business so you can develop a mutually beneficial partnership.
Looking for a PEO in Australia? Wondering how much it costs? Speak to Australia PEO today.
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