What is PEO?
The concept of Professional Employment Organization ( PEO) also known as known as Employer of Record (EOR) and staff leasing enables foreign companies to hire employees without the burden of registering and administering a local company or even local companies to minimize the administration of new hires. This concept provides much-needed flexibility, simplicity and transparency for temporary employments.
Why use a PEO in Romania ?
- Romania is a great place to invest right now as it provides a multitude of incentives; using a staff leasing enables foreign companies to focus on the core business without dealing with local employment issues.
- Flexibility and adaptability – very important attributes for success of a business in these challenging times;
- Romania has a pool of skilful and knowledgeable IT professionals – highly demanded by resident and non-resident companies;
- Romania are subject to the Law on Agencies for Temporary Employments which prescribes the criteria these companies must fulfill as well as their obligations towards clients and employees, thus ensuring compliance;
Situations in which using PEO services are recommended:
- Unforeseen need for additional personnel – due to activity increase, project development with unknown duration, maternity leaves etc;
- Headcount limitations – following decisions made at headquarters, in case of multinational companies;
- Opportunity costs – when the market conditions impose quick decisions regarding employment, and internal approval procedures lag behind;
- Budget restrictions – in some situations the salary budgets are limited while the budget for subcontracting services might be more flexible;
- Testing the foreign market; easy entry and exit if needed.
Benefits of using PEO services
- Eliminates the burden associated with personnel administration and offers the possibility to allocate more resources for business development;
- Ensures compliance regarding the overall timely and accurate human resources administration.
- Access to specialized consultancy services regarding salary and labor legislation;
- Flexibility and adaptability according to the client's needs;
- Reduced risks associated with the salary calculation process and the safety of accurately applying the most recent labor legislation provisions;
- A greater control over budgeting.
Who Should Use a PEO?
- Any company can use a PEO to help outsource HR, finance, legal and administrative tasks. But small- and medium-sized businesses have the most to gain by working with a PEO. This is because small- and medium-sized businesses can focus on managing core business functions while outsourcing the HR administrative burden to a PEO. In addition, not all businesses have direct expertise when it comes to HR, legal, or tax requirements. These areas of business are easily outsourced to PEOs, which specialize in these functions directly;
- The infrastructure and cost of hiring employees directly may outweigh the advantage of having companies in each country when expanding abroad. Large companies, mid-size companies, and even small companies are likely to engage PEO's across borders to facilitate international expansion;
- PEO services can also be used by local companies that may occasionally have certain projects that require specific employees for a limited period of time but do not want to go through the hassle of hiring specialists they don't normally use.
Clients considering Employer on Record services are advised to seek professional assistance tailored to their specific needs. Depending on the scope of the project and expected duration of it, Employer on Record services may prove to be the right decision for many foreign investors. Eurofast can assist in determining the cost effectiveness of both scenarios as well as provide advisory services related to payroll and employment services.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.