The PEO option – already widely used in the US – provides a simple, transparent method of working that offers a new and fully compliant option for recruitment agencies.
Leading umbrella employment company, Parasol, has diversified its offering with the launch of Parasol Select, designed to support agency contractors across the UK.
Parasol Select was first launched in 2014 for a small number of Parasol’s agency partners, primarily supporting them with their payroll and employment related responsibilities, but is now being made available to the wider recruitment market place.
The PEO solution is expected to be a viable and popular option for contractors that are likely to fall inside IR35 when the off-payroll reforms are implemented in April 2021.
The model is designed to offer a simple, more transparent approach between hirers and agency workers to help recruitment agencies manage a range of new industry legislation, including the upcoming IR35 changes, elements of the Good Work Plan and the introduction of mandatory Key Information Documents.
Already widely used across the US, the PEO method of working will typically see a recruitment firm or agency partner with a PEO to provide a payroll and employment solution.
Similar to an umbrella employment solution, the PEO employs the worker on a contract of employment and so assumes the responsibilities of an employer including paying their employee for hours worked, HR responsibilities and HMRC compliance.
The PEO means a worker is provided with their actual gross pay rate from the beginning of each new assignment, which is the same gross pay rate quoted on their payslip every month, similar to that of a traditional employment set-up. For many contractors, this enables greater clarity and consistency on things such as take-home pay amounts, and those joining Parasol Select will also be able to benefit from Parasol’s vast expertise in finance and HR.
Amy Davies, Director of Sales at Parasol, said: “We’re pleased to be launching Parasol Select to the wider market as part of our continued efforts to offer as much support and guidance as possible for contractors and our agency partners.
“As we navigate a significant period of national uncertainty, on top of a range of new legislation that directly impacts our sector, we believe that the PEO structure represents an exciting employment solution that will benefit agencies and recruitment firms, while also proving attractive to contractors.
“After the public sector off-payroll reforms in 2017, we saw an increase in contractor agencies seeking on-payroll employment solutions, and we’re already seeing the same trend ahead of the off-payroll reforms in the private sector, which come into play on 6th April 2021.
“As such, we anticipate higher numbers of contractors engaging in PAYE structures and it’s important that we offer a variety of compliant options available.
“The benefits of agencies and end hirers using a PEO include saved time and resources because the PEO supplier bears all of the legislative responsibilities associated with employment, including HMRC compliance and HR responsibilities.
“For contractors, the PEO structure is also simple and hassle-free, requires minimal paperwork and is very similar to that of traditional employment, so we’re confident that Parasol Select will be a desirable choice for many.”
Established in 2000, Parasol is part of the wider Optionis Group, the UK’s market-leading professional services provider to contractors and small businesses. In 2019, the group was ranked in The Sunday Times Grant Thornton Top Track 250, recognising private mid-market growth companies with the biggest sales.