What is a Professional Employer Organization (PEO)?
A Professional Employer Organization, or PEO, enters into joint agreements with their partner clients in order to outsource or co-employ foreign workers. PEOs can essentially perform any and every HR-related function or process required to make this happen, including:
- Recruitment, hiring, and on-boarding
- Creating compensation packages and running payroll
- Statutory and supplementary benefits administration
- Guaranteeing compliance to relevant local labor laws
As a co-employment partner, PEOs share the responsibilities and liabilities of hiring, managing, and paying remote employees alongside their clients. Companies looking to build globally-distributed teams rely on PEOs to be able to quickly and compliantly launch HR processes in the markets in which they want to outsource. This allows them to work around the compliance issue that would otherwise require significant in-house resources and local legal expertise.
This means that finding a trusted PEO that offers what they need is key to successfully outsourcing from many countries, including Slovakia.
Known officially as the Slovak Republic, Slovakia is a landlocked country in Central Europe that is a premium outsourcing destination if you want to leverage the country’s business culture and currency. The labor force is highly educated and skilled, benefiting from university education and national advocacy programs that promote the development of professional attitudes and learning foreign languages, with key competencies including professional independence and teamwork. As a result, Slovakia’s top talent typically possesses good work ethics and linguistic skills.
One challenge stands in the way of accessing this highly appealing talent pool: compliance to Slovakia’s labor laws. The country’s complex and comprehensive employment legislation covers nearly every facet of labor practice, and finding a trusted PEO is a preferred strategic solution to this compliance problem.
What Are the Benefits of Using a PEO in Slovakia?
A PEO in Slovakia not only shoulders much of the work that goes into HR functions and processes, but also shields you from a lot of the risk inherent in compliance concerns related to outsourcing. From a high-level perspective, your partnership with a trusted PEO affords you the following competitive advantages, among others:
- Ensuring compliance with the employment laws: Almost every aspect of employment practice in Slovakia, from hiring to payroll to termination, is governed by local labor laws. With nearly every facet of outsourcing to the country fraught with risk, your partner PEO that guarantees local compliance can help protect you from those risks.
- Payroll processing and tax filing: As a significant part of HR that requires much due diligence especially when outsourcing, it is critical that your trusted PEO in Slovakia implements payroll processing and tax filing in a compliant, effective manner. This ensures you avoid costly fines and penalties while also protecting your relationship with remote employees by always paying accurately and on time.
- Risk mitigation: PEOs extend their in-country expertise and infrastructure to their partners, guiding their HR and payroll processes to remain compliant with local legislation. There is a lot of risk inherent in functions such as taxation and employee-related claims, and a reliable PEO can mitigate many of these risks for their clients.
- Inclusion of competitive benefits: Globally-competitive PEOs understand the need to not only meet locally mandated minimums, but exceed them. This is why the right PEO can help you make your offers and contracts more attractive to highly skilled talent by providing attractive supplementary benefits, such as private health insurance, on top of those guaranteed by local labor laws.
- Employment cost mitigation: Comprehensive HR processes and compliance issues can easily balloon employment overhead costs. Sharing these responsibilities with a trusted PEO can drastically reduce these costs. They not only help you avoid penalties through guaranteed compliance, but also provide the infrastructure and platform you need to quickly scale your globally-distributed teams.
Skuad’s services in Slovakia let you focus on growing your business instead of worrying about complying with local labor laws or needing more in-house resources to smoothly deploy payroll.
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What Are the Differences Between an EOR and a PEO?
Aside from a PEO, companies can also outsource using an Employer of Record, or EOR. There are plenty of similarities between the two approaches, as well as key differences, as you can see in the table below:
|An EOR is the legal employer of the outsourced employee, on behalf of its client.
||A PEO is a co-employer undertaking a joint agreement with shared responsibilities with its client.
|An EOR performs the recruitment, onboarding, management, and payment of employees — practically every HR process required.
||Under a joint agreement with its client, a PEO shares functions with its partner. This means the client has more control regarding which HR process is handled in what manner.
|EORs can hire employees without needing clients to legally incorporate a local entity.
||As PEOs are co-employers, they can operate only where their partner client is legally allowed to hire employees.
|Drafts contracts on behalf of their clients.
||Only assists clients in drafting contracts and agreements.
Hiring in Slovakia with a PEO
According to Slovakia’s Investment and Trade Development Agency, the country has seen “dynamic growth” in the number of Business Service Centers (BSCs) in the past 20 years. BSCs are established by multinational companies looking to outsource roles to skilled graduates and job seekers. The growth of outsourcing in Slovakia is reflected in the workers flocking to these BSCs and the general shared services and outsourcing sector, which has grown in headcount by an average of 5% annually from 2018 to 2020.
Naturally, a critical barrier to outsourcing teams to Slovakia is compliance with local employment regulations. Skuad’s services in Slovakia are key to unlocking seamless, completely compliant outsourcing in Slovakia and beyond.
Payroll in Slovakia Is Challenging. It’s Easy When You Use a PEO.
Payroll processing is a significantly tedious but ultimately crucial part of outsourcing to Slovakia. From a regulatory standpoint, payroll deals with financials and sensitive information, making it a minefield of compliance risk. From an employee experience perspective, improperly implemented payroll leads to inaccuracies and delays in pay.
Understandably, implementing payroll for remote teams can be overwhelming for companies that run payroll on their own.
If you want to run payroll smoothly, you need to understand which components are guided by what local legislation, including:
- Labor protections: Slovakia’s labor laws entitle employees to a number of protections and benefits unique to the region, such as mandated 13th and 14th-month salaries.
- Compensation structure: While employers typically don’t need to worry about meeting minimum wage requirements as they’re usually much lower than average, various other details of compensation structure such as taxation rates and deductions are governed by local labor legislation.
- Other areas of employment: These cover recruitment background checks, probation and pay variance during these periods, and termination.
Trying to manage all of these concerns in-house is bound to slow down growth for any size of business. Offloading these concerns to a trusted PEO is often one preferred strategy to successfully address all of these compliance issues while also maintaining your pace of growth. Skuad’s unified HR and payroll solutions does exactly that through a streamlined payroll platform that guarantees 100% compliance to local labor laws. Request a demo from Skuad’s experts to know more.
What a PEO in Slovakia Can and Cannot Do for You
Signing on with a PEO and sharing HR responsibilities and liabilities is a big decision you can’t take lightly. How much control is a PEO likely to have over processes and employees that are, ultimately, yours? Here’s a top level breakdown of what you can expect out of a PEO:
A PEO can:
- Run payroll processing and management for your remote teams, including handling tax filing and other concerns compliant to Slovakia’s labor laws.
- Assist you in the recruitment, hiring, and on-boarding of Slovakian employees.
- Reduce the overhead costs of building globally distributed teams while also mitigating inherent risks associated with the effort, namely in terms of compliance.
A PEO cannot:
- Be solely responsible for hiring employees for your company.
- Take full control of your company.
- Hire and terminate your employees without your involvement.
Businesses Big and Small Can Find Value in Partnering with a PEO in Slovakia
Building globally-distributed teams in Slovakia and other parts of the world entails a thorough understanding of the compliance concerns that you will inevitably face. However, even large organizations can experience difficulties maintaining compliance to the complex statutory components of outsourcing. Devoting in-house resources to guarantee compliance not only in Slovakia but in other markets will slow down international growth.
This is why organizations of any size will find value in partnering with a trusted PEO in Slovakia. They not only provide the local legal expertise required for compliance, but also offer the infrastructure and platform you need to further scale your outsourcing effort.
A PEO in Slovakia protects you from the risks of noncompliance and affords you the flexibility and means to accelerate international hiring. Skuad’s global HR and payroll processing solution makes it easy to hire, manage, and pay remote teams in Slovakia — and beyond — without worrying about compliance. Book a demo with Skuad today.