Should I hire a Professional Employer Organization (PEO) in Singapore?

What is a PEO?

A PEO, or professional employer organization, is basically an outsourced Human Resources department for your company. 

It is a full-service HR organization that takes care of all employee-related administrative tasks, including managing compensation, benefits, compliance requirements, and tax filing, on behalf of your business. 

A PEO is a partner company, or a “co-employer”, together with you. It does not act as the employer of your workforce per se (more on this below); your company is still the official hiring body of your workers, and must therefore be legally registered in the market you are operating in - in this case, Singapore.

What tasks do PEOs accomplish on your behalf? 

Different PEOs may specialize in different areas of HR, but generally, all PEOs can accomplish the following for your business:

• Payroll and Tax Filing
  PEOs can process your payroll and accomplish local taxes. Some may also include time and attendance keeping to their service, which helps reduce high volumes of data entry and management tasks for you.
• Benefits Administration
  PEOs can help arrange quality, cost-effective health insurance, retirement packages, and other employee benefits for your company. They can even usually handle the employee enrollment for these benefits, and process any claims for you.
• Compliance, Risk and Safety
  PEOs have compliance experts who help protect your business from fines and penalties in areas such as payroll taxes, reporting requirements, unemployment insurance, workers’ compensation, health and safety, and other HR compliance areas. In some instances, PEOs can also provide safety audits and training programs to help you limit insurance claims against you.
• Human Resource Support
  In case you already have a small or unspecialized HR team in your company, PEOs can bolster your team by providing the strategic and/or administrative support they need or have gaps in.They can also come in at a time when you are beginning to scale and need extra support to keep operations running smoothly.
• Talent management
  Some PEOs offer end-to-end talent management services, from recruitment and hiring, to employee training, engagement, and performance management.

Why choose a PEO in Singapore over Company Incorporation?

Foreign companies looking to establish their footprint in Singapore of course have several ways of doing so. They can establish a branch office, or incorporate a subsidiary company in Singapore. However, registering your business will of course take a bit more time and will require paperwork to be in place before you can even begin hiring and operating. On the other hand, partnering with a Singapore PEO is a quicker way to develop a workforce in Singapore, as they can offer you seamless hiring and employee management.

PEOs will hire employees on your behalf, and legally contract them to your business in accordance with Singapore’s labor laws. As a result, the burden of compliance with local employment regulation falls upon the PEO, rather than you as a co-employer. With a PEO, you maintain control over your workforce and business, but are relieved of a significant amount of legal and administrative burden.

Keep in mind that various PEO companies may have different packages and offerings, including more high-level strategic services. Take the time to research various PEOs and compare their capabilities prior to selecting one to partner with.

It is also important to know what an Employer of Record (EOR) is, as it operates similarly to a PEO and maybe another viable option for your business.

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PEOs versus EORs

An Employer of Record or EOR, also referred to as a global PEO, is much like a PEO in that it takes on all HR-related responsibilities on behalf of companies like you. The main difference is that, unlike a PEO which serves as your co-employer, an EOR is the legal employer per se of your workforce. In reality, you maintain a similar relationship with your workforce as you would without an EOR; but on paper, your workers are employed by your EOR. Your EOR would then sub-contract the workers out to you, in compliance with local laws.

An EOR offers many similar benefits to PEOs, with the key exception that with an EOR, there is no need for you to legally register or incorporate your business in Singapore. In essence, an EOR helps you build a distributed or offshore workforce in Singapore.

Advantages of Partnering with a PEO

Many companies are choosing to outsource different aspects of their business, as outsourcing in general, and PEOs specifically, can offer many business benefits. The most sought after are:

Quick Market Entry

A PEO allows you to create and develop your Singapore workforce quickly and efficiently, because they are already experts in this aspect of business within the Singapore context. This is particularly valuable for foreign individuals or companies who want to kick off their Singapore business operations as soon as possible.

There is no need for you to go through the time and effort of studying local labor laws and establishing HR processes - this can all be done for you even if you are just starting or incorporating your company. You and your core business team can stay completely focused on completing registration and kicking off operations, while your workforce is put together and managed in parallel by reliable professionals through PEOs.

Assurance of Legal Compliance

As experts, PEOs will handle all human resources, benefits, payroll, and tax needs for your employees in alignment with SG legislation. Singapore as a business environment is both highly welcoming and dynamic, but also strict when it comes to compliance. Having an SG compliance-ready HR team on your side helps assure you that there is nothing you’ve missed, and that all employment related requirements are met efficiently.

Saved Time & Effort

Hiring and people management are of course tedious, repetitive, and yet, highly critical aspects of business, especially for large teams of hundreds to thousands of workers. Having a PEO who has total oversight over every single employee means that you save time and effort - your PEO partner would already have tested and optimized processes in place to manage your hiring and employees according to your scale and other specific business needs.

Conclusion: Outsourcing your way forward

Whether you are registering your company in Singapore for the first time, or are already starting to hire for it, PEOs are definitely a good option to consider to ramp up your hiring speed and overall employee experience. They save you time and effort while guaranteeing efficiency and compliance.

Outsourcing and automating processes are always great way to improve speed and efficiency across all your business processes. 

If you’re looking to automate and ramp up your pre-employment background checking processes to improve your hiring efficiency and quality, consider Veremark’s suite of products and services.

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