PEO stands for Professional Employment Organisation; a type of business in the US, but generally used as a payroll product name here in the UK. It’s one of a handful of payroll options available to recruitment agencies to outsource their payroll function. Based on PAYE, and providing a partnership approach to employing workers, there are plenty of benefits for all parties.
The model originated in the USA to offer cheap healthcare cover for smaller employers. Small companies found it hard to get cheap life and medical cover for their employees, so a PEO combined all the small companies together to assimilate a large group organisation and hence gain life and medical cover at corporate rates.
People Group has led the way in the sector, bringing the model over to the UK and innovating and modifying it to create a solution that is perfect for the UK market.