What is a Professional Employer Organization (PEO)?
Stepping into new employment territory is a risky business for many international employers. The local skill base may not be readily accessible to many international employers because of a widespread and persistent lack of knowledge in local hiring practices.
In response, many international employers approach a professional employer organization (PEO) to help resolve a wide range of employment challenges — from talent attraction to generating automated payment invoices, and everything in between.
A PEO is, jargon aside, a form of co-employment. A PEO and an employer share employment responsibilities that cut across HR functions and activities.
Kuwait, a country long known to be foreign-investment friendly, has already made solid public policy steps to maximize in-country human potential. To engage Kuwait's skill base end-to-end, a PEO is indispensable, more so if you're an international employer hailing from a labor jurisdiction — with all associated payroll laws, regulations, regulations, and more — that's very different from Kuwait's.
In short, a professional employer organization in Kuwait is your must-have employment service to help you manage onboarding, payroll, payment, and many more employment activities.
What are the benefits of using a PEO in Kuwait?
Using PEO services in Kuwait comes with many benefits.
The following is far from an exhaustive list but is indicative of what value — and unmatched legal expertise — you get as an international employer hiring a PEO.
Ensuring compliance with employment laws
Understanding local labor laws is crucial not only to be able to hire and pay employees and independent contractors but also to continue doing business in Kuwait compliantly, sustainably, and competitively. This way, you avoid the combination of regulatory fines and business damage that follows non-compliance.
In addition to the basic Kuwait company registration steps that you as an international employer need to follow, employing a local skill base requires complying with in-country tax laws and regulations. These include Kuwait income tax and Kuwait corporate tax rate — both of which require the expert knowledge of Kuwait tax rates that an established PEO has.
Kuwait's unique Labor Code of 1964 (amended repeatedly since inception) regulates private employment, as opposed to Kuwait's de facto public employment mode for locals.
Payroll processing and tax filing
Here is where a PEO adds maximum value for employers.
By sharing employment expertise ranging from payroll management to tax filing, PEOs enable employers to make compliant payments, process pay slips, generate invoices, and more.
Hiring a PEO is similar to engaging a consultant or mentor. A PEO's extensive in-country knowledge and expertise not only spare international employers recurring and burdensome admin work but also deal with compliance complications that, if not addressed properly and promptly, may lead to serious legal consequences and irreparable business damage.
This is an area that many international employers neglect, even though it's important. When establishing a business in a new country, or anywhere, enterprise emergency planning should be a top priority.
Businesses, small and big, may not have enough resources or in-house expertise to keep hiring and paying employees and independent contractors, let alone doing business as usual. To solve this problem, companies can reach out to a PEO to handle risk mitigation and compliance from end to end. That way, you can stay focused on your core business.
The risks international employers may encounter come in every size and from every corner. These include but are not limited to tax non-compliance, creeping payroll costs, and employee or independent contractor misclassification.
Provision of competitive benefits
The value an established PEO brings to international employers extends well beyond basic employment benefits and payroll management processes.
In addition to complying with statutory compensation, for example, a PEO can provide unmatched competitive benefits packages. These carefully crafted and compliant built-in benefits that PEOs design, plan, and roll out have a major edge: attracting highly skilled local workers.
In a global race to attract and retain talent, you as an international employer need to maximize your return on human capital investment. That is why hiring an established PEO that knows the ins and outs of international hiring is your best choice.
Employment cost mitigation
One major employment risk is cost. Ultimately, all employers want to maximize their return on human capital, but only at an acceptable price cap.
The basic dilemma in cost mitigation, especially in international employment arrangements, is about balance: getting the best-in-class and best-in-industry employees and independent contractors while optimizing labor costs. Employing workers independently is a major risk that international employers may be uneasy about, more so if they are small or their in-country operations are limited.
Here, again, is where an established PEO comes in.
In Kuwait, a series of developments, including an increasing shift to automation, are changing how labor cost is calculated. The availability of automation — particularly in the public sector, which is a major employer of Kuwaiti citizens — means that Kuwait's human capital needs to provide proven value to employers to merit the costs of entering a new labor market.
Deciding who to hire in person and how to calculate and optimize labor costs in an international labor market is a job for an expert and established PEO.
Using Skuad's PEO services in Kuwait not only helps you streamline your employment operations but also leverages your overall hiring strategy.
What are the differences between an EOR and a PEO?
As noted, getting into a new labor market is a complicated process that an established PEO can help you handle.
PEOs are not the only form of employment service out there. The table below shows the differences between an EOR (employer of record) and a PEO.
|Hired to carry out employment services end-to-end by managing HR functions and activities as part of an integrated employment service, and held liable for delivered services agreed on in a co-employment contract
||Hired to carry out a limited range of HR functions, depending on service contract, and not held liable for delivered services agreed on in a co-employment contract
|Manages HR functions strategically with full responsibility, and has the sole decision in hiring employees and independent contractors
||Conducts HR functions at a functional level and a limited scope, with a lesser say in hiring employees and independent contractors
|Brought on board due to extensive employment expertise and knowledge cutting across different jurisdictions and worker classes
||Brought on board due to expert niche knowledge of one or more labor markets
|Primary, if not sole, party to crafting contracts end-to-end and held fully liable for all consequences resulting from non-compliance
||Not much involved, if at all, in crafting contracts and not held legally liable for any contract-related matters
Hiring in Kuwait with a PEO
The Kuwaiti government is taking investment in education and innovation seriously. Climbing from US$6.8 billion in 2013 to US$10.5 billion in 2019, a 7.5% year-on-year rise, education and innovation have gotten a huge boost.
Tapping into a new layer of the local skill base is worthwhile, but may be challenging. As an international employer, you want to start with a hiring campaign to attract talent.
But at what cost, and with what data at hand?
These are a couple of questions you as an international employer should have crystal-clear answers for if you're serious about employment in Kuwait. The most efficient way to address them may be to hire a PEO.
With extensive expertise in local labor laws and best-in-market practices, including the most cost-effective packages, a PEO is your golden gateway to an optimized employment practice in Kuwait.
The range of PEO services Skuad provides is unmatched and includes such winners as:
- Digital employee and independent contractor onboarding in a matter of minutes
- Streamlined mass payouts in 160+ countries and 100+ currencies with zero onboarding fees
- Meticulous compliance
To have your employment questions answered immediately and accurately, look no further than an established PEO like Skuad.
Payroll in Kuwait is challenging. It’s easy when you use a PEO.
The payroll complexities you're likely to run into as an international employer might be well outside of your area of expertise. Here, once again, is where an established PEO comes in.
Understanding payroll inside out, an established PEO saves you the time and trouble of figuring out taxable and non-taxable compensation components.
In many jurisdictions, including in Kuwait, in-country tax laws and regulations require employers to withhold parts of their employees' or independent contractors' salaries or wages including social insurance, health insurance, allowances, and additional benefits.
Assuming you're not going to misclassify your employees as independent contractors or vice versa, you may not be able alone to fully comply with required withholdings — unless you have a prohibitively expensive legal team aboard to help.
Once again, an established PEO proves to be indispensable.
Reach out to us at Skuad to make hiring in Kuwait a breeze. You can carry out your day-to-day business activities without giving hiring a second thought.
What a PEO in Kuwait can and cannot do for you
Here is what matters most:
A PEO can:
- Manage your payroll operations end-to-end expertly and compliantly
- Manage talent from acquisition to growth at unmatched cost-competitive pricing
- Co-manage your skill pool by contributing expertise to optimize hiring costs and minimize risks
A PEO cannot:
- Be your sole legal representative managing your skills base
- Control your HR operations while providing agreed-on employment services
- Be solely or primarily responsible for shared employment activities
Businesses big and small can find value in partnering with a PEO in Kuwait.
Take no chances with the employment decisions you make to maximize returns on human capital investment.
With Skuad, you are a step away from making employment at your organization an embedded process you don't even need to give a second thought.