Multiplier Logo
Loading Animation Image

Global Work Glossary

Lost in a maze of global employment jargon? Find your way out with our handy collection of work and HR terminology

Search Icon
# A B C D E F G H I J L M N O P R S T U V W X Y Z

Co-Employment

What is Co-Employment?

Co-employment is a relationship between two or more businesses where they share legal and management responsibilities for employees. It typically involves a client company and a professional employer organization (PEO), where the PEO handles HR tasks, payroll, benefits administration, and compliance, while the client company directs the employees’ day-to-day activities and business operations.

Structure and Function

In a co-employment arrangement, the PEO becomes the employer of record for tax purposes and is responsible for administrative duties related to employment such as issuing paychecks and managing employee benefits. The client company retains control over work assignments, operational management, and company culture. This partnership allows businesses to outsource complex HR tasks and focus more on their core operations.

Benefits and Challenges

The benefits of co-employment include reduced administrative burdens, access to better benefits for employees due to the PEO’s bargaining power, and improved compliance with labour laws and regulations. However, challenges can arise in clarifying roles and responsibilities between the PEO and the client company, and there can be potential issues with employee loyalty and culture integration.

Legal Considerations

It’s crucial for businesses engaged in co-employment to clearly define the scope of responsibilities and liabilities in their contract with the PEO. They must also ensure that the arrangement complies with local and federal employment laws to avoid legal pitfalls related to worker classification, tax obligations, and benefits provision.

Co-employment can be a strategic choice for companies looking to streamline their operations and gain access to high-quality HR services without maintaining a large in-house HR department. As businesses grow and navigate complex employment landscapes, understanding and effectively managing co-employment relationships become increasingly important.

Ready to take the leap? Choose Multiplier as your EOR partner

Gain fresh perspectives

Take a look at our new blogs and e-books

making-work-work-embracing-globalization-and-innovation-in-2024

Making work work: Embracing globalization and innovation in 2024

Read more

Mp More Link Arrow Right
multiplier-named-leader-in-the-iec-group-global-eor-study-2024

Multiplier named Industry Leader and IEC Star in the 2024 IEC Global EOR Study

Read more

Mp More Link Arrow Right
Top Six Places in the USA and Beyond That Pay You to Live There

Top Six Places in the USA and Beyond That Pay You to Live There

Read more

Mp More Link Arrow Right
Footer 24x5 New Img2x

An all-in-one international employment platform