SingaporeManaging HR tasks can cost you considerable time and resources as you scale your business in Singapore. But Professional Employer Organizations (PEOs) can take over these responsibilities for you by sharing the legal employment of your people.
When PEOs perform HR tasks like benefits administration and payroll management, you can use the freed resources to develop and retain employees. The only issue is that you need to have a local office set up to be able to use a PEO.
The Employer of Record (EOR) arrangement offers an alternative. Here, you can manage HR in another country without setting up a local subsidiary.
Learn about the PEO service, its limitations, alternatives for global expansion, and how to pick between a PEO and an EOR solution in this article.
What is a PEO (Professional Employer Organization)?
A Professional Employer Organization or PEO co-employs your human resources while taking over HR responsibilities like management of payroll, benefits, and compliance. You can rope in a PEO to hire in your country of operation to offload administrative responsibilities such as:
- Core HR tasks like payroll processing, tax filings, and more
- Benefits administration
- Compliance with local labor and tax laws
- Risk management
- HR consultancy
Benefits of PEOs
PEOs offer services that help you comply with labor and employment regulations, saving your company from penalties and fines. Here are the other major benefits.
Simplified HR
PEOs take over your payroll, benefits administration, onboarding, and compliance, freeing you from repetitive paperwork and administrative hassles.
Streamlined compliance
PEOs partially assume the responsibility of keeping up with Canadian laws. This reduces the risks of penalties and damage to brand reputation.
Employee onboarding
A PEO can help onboard new employees, facilitate new hire orientation, and introduce new hires to your workplace culture, policies, and procedures.
Benefits
PEOs pool multiple clients together to negotiate health insurance, retirement plans, and other employee benefits.
Challenges and limitations of PEOs in Singapore
Relying on PEOs also comes with obstacles that can stall your scaling strategy and hurt employee experience.
Compliance and legal complexities
PEOs don’t fully assume legal liability. This means legal violations can still cost you, in terms of legal fees, staff costs, marred reputation, and lost market. You’re also still the legal employer of your staff which means risk falls on you.
Management and control issues
Working with a PEO can result in ambiguities regarding the division of roles and responsibilities. You may lack a clear approval chain, which can lead to delayed decision-making.
Cost considerations
Contracts with PEOs usually entail hidden fees. These manifest in requests for onboarding new employees, scaling, customizations, or terminations. Lack of price transparency can further burden your staff.
Alternatives to PEO: Introduction to Employer of Record (EOR)
While a PEO might be well-suited for some businesses, many companies prefer partnering with an Employer of Record (EOR) when expanding into Singapore.
What is an Employer of Record (EOR)?
Employers of Record (EOR) are specialized HR services that assume the role of legal employers for your workforce in foreign countries. This helps with international expansion.
With EORs, you don’t have to set up a legal entity in the jurisdictions you seek to hire talent from. Besides taking over HR tasks, they also take the liability to adhere to local employment laws.
This means your company is relieved of legal liabilities and HR administrative burdens. But you still control the functional relationship with your employees and can redirect resources to employee engagement.
Why consider an EOR in Singapore?
An Employer of Record comes with several benefits when it comes to hiring from Singapore. They are ideal for companies looking to expand and leverage a global talent pool. EORs have several benefits over PEOs which we explore in this section.
Compliance responsibility
The EOR assumes the responsibility of adhering to local laws for your employees. This relieves you of the burden of having an HR or legal team dedicated to legal adherence in every jurisdiction you have employees from. This significantly cuts compliance-related costs and risks.
EOR lets you enter the market faster, with your focus redirected to business from administrative tasks.
Simplified and clear management structure
PEOs share responsibility for managing HR, but the contours of control may not always be clear. With an EOR, the division of roles and responsibilities with is more obvious… You control your business operations and oversee your employees’ day-to-day, but you don’t need to worry about compliance issues and a huge number of HR tasks.
Transparent cost structure
Unlike most PEOs, EORs mostly charge a flat fee. Meanwhile, a transparent pricing structure lets you budget more accurately.
MoEngage, a customer engagement platform uses Multiplier to employ 50 workers across 19 countries, including Singapore. The firm secured suitable talent with specialized skills across the world while ensuring 100% compliance.
Deciding Between PEO and EOR
Choosing between PEO and EOR depends on many factors, including company size, industry, workforce strength, business and HR strategies, and budgetary constraints. Here we take a look at how you can find the right solution for you.
When to choose a PEO
Here are some factors that make PEOs a good option for you:
- You want to maintain control over your HR function. A PEO gives you shared responsibility over tasks like benefits administration.
- You need a lot of local, HR support. A PEO’s comprehensive ongoing HR support can help you handle a growing workload.
- You want to remain the legal employee of your workers. PEOs are suitable if you are already established in the countries where your employees are located.
When to choose an EOR
Perhaps the greatest advantage of using an EOR is the ability to expand into new markets internationally without opening new business entities.
Here are the other reasons why you might prefer the services that an EOR offers over those of a PEO:
- Quick market entry. An EOR can handle all the legal and administrative tasks that allow you to set up operations without needing to establish legal entities.
- Operational control with outsourced administration. If you want to maintain control over your operations but outsource payroll, benefits, HR compliance, and other administrative responsibilities, a PEO is a great solution.
- Complex labor laws. EORs understand local employment laws, ensuring compliance and mitigating the risk of penalties and legal disputes.
- Flexible workforce management. EORs can quickly scale operations to help you expand your workforce or presence in multiple countries.
- Risk mitigation. EORs are legally responsible for employment-related risks, protecting potential liabilities and compliance issues.
How Multiplier can help
Multiplier offers a complete EOR solution to streamline the global employment process if you’re looking to expand into Singapore without opening a business entity there.
Multiplier manages all aspects of employment, including payroll, taxes, benefits, expenses, and compliance with local labor and tax laws, providing a seamless experience for you and your employees — all in one intuitive platform.
EOR vs PEO: Making the right choice for your business
A PEO provides several benefits to organizations keen to outsource their HR functions so they can redirect resources and attention to managing employees.
Yet with PEOs, you become co-employers to your employees, which still makes you liable for legal violations. Then there are hidden costs associated with additional services.
On the other hand, an EOR solution acts as a legal employer of your people in Singapore, and the clear division of responsibilities brings predictability in the decision-making processes and better alignment on company goals.
The decision to choose between EOR and PEO must account for your market context, company size, and workforce strategy. Yet, if you plan to expand swiftly into multiple marketers without setting up local entities, an EOR is the right choice.
Start scaling up in Singapore with Multiplier. Book a demo today.
