What is a Professional Employer Organization (PEO)?

A Professional Employer Organisation (PEO) kenya is an entity that co-employs an individual with an employer. The PEO and the employer specifically share liability for the individual. Professional Employer Organisation in kenya almost always provide employee benefits.

PEO Services in Kenya helps companies hire employees in without establishing a legal entity. All human resources, benefits, payroll, and tax needs for the employees are managed by our Kenya PEO, while the new hires and headquarter teams focus on your business goals. Using an Kenya PEO is the fastest and most efficient way to develop a workforce in Kenya.

When hiring employees in Kenya, establishing a subsidiary or branch office is not always the best route, as it’s often a lengthy and expensive process. Hiring via a Professional Employer Organization (PEO), or Employer of Record, is a faster and often more effective option – especially when starting up in a new country.

We hires the employees on your behalf, legally contracting them through our subsidiary in accordance with Kenya labor laws. As a result, the burden of compliance is on us and the employees can begin work for your company in a matter of days. PEOs provide you with a streamlined option for hiring employees, testing markets, and responding to growing business needs in Kenya. With our Kenya PEO services, you get control without taking on legal entity liabilities, contractor risks, or sacrificing on talent or speed to market.

How does a PEO work?

PEOs are effectively outsourced HR departments. They specialize in managing HR-related tasks, while the employer continues to manage the day-to-day activities of the employees. For example, a PEO might handle payroll, taxes, and other employment benefits while the employer handles the operational aspects of the employee relationship.

What does the PEO services in Kenya include?

  • Human Resource (HR) Consulting
  • Payroll processing  
  • Employee health benefits
  • Compensation insurance  
  • Safety and risk mitigation benefits  
  • Employer payroll tax filling
  • Retirement Transportation (401 (k))
  • Employer’s practice and liability insurance (EPLI)
  • Training and development
  • Regulatory compliance assistance

How do Professional Employer Organizations in Kenya (PEO) work?

Clients and the PEO enter into a contractual co-employment agreement. The PEO becomes the employer of record (EoR) for tax reasons by reporting payroll taxes under its own tax identification numbers as a result of co-employment. The client company continues to direct the day-to-day activities of the personnel.

PEOs charge a fee for taking over the client’s human resources and payroll activities, which typically ranges from 3 to 15% of total gross payroll. This fee is in addition to standard employee overhead expenditures such as the employer’s contribution of FICA, Medicare, and withholding for unemployment insurance. An “administration fee” is the most prevalent term for this service charge.

The PEO, as a whole, is responsible for withholding the correct taxes, paying unemployment insurance taxes, and providing workers’ compensation coverage as the legal employer.

Workers’ compensation insurance coverage is one service that a PEO can give at a lesser rate than individual client companies can receive. In essence, a PEO acquires workers’ compensation coverage for its clients by obtaining insurance coverage that protects both the PEO and the clients’ businesses. This is legitimate because the PEO is the legal employer of the client companies’ employees. PEOs can also provide basic background checks and drug screening services.

What are the advantages of PEOs (Professional Employer Organizations in  Kenya)

Companies can profit from PEOs in a variety of ways. Workers’ compensation insurance, for example, may be more valuable to a blue-collar company than it is to a white-collar company. Choosing a PEO could help the client company with numerous benefits:

  • Save time and money by handling payroll and benefits administration  
  • Decrease legal duties and obligations to employees.
  • Provide a stronger total benefits package, attracting more qualified staff.
  • Better compliance assistance
  • Easy administration of Family and Medical Leave Act  

As a result, small and mid-sized enterprises and associations find the PEO model appealing, and PEO marketing is often targeted towards this group.