What is a PEO and how does it work in the UK?
A Professional Employer Organisation employs workers on a business's behalf. In the UK the model varies, so always check who the legal employer is.
A Professional Employer Organisation, or PEO, takes on employment of workers for another business and handles the payroll and HR that come with it. The business directs the work; the PEO deals with the employment.
PEOs in the UK are not one model
The term comes from the United States, where PEOs usually work on a "co-employment" basis. UK law has no equivalent statutory concept, so UK arrangements differ between providers. The most important question to ask is simple: who is the legal employer?
How Kingsley Crest's PEO works
- Kingsley Crest is the legal employer, and each worker has a contract of employment with us.
- We pay workers through PAYE.
- We handle onboarding, offboarding, holiday pay, sickness, disputes and employment tribunals.
- Every worker gets KC Rewards+ as standard.
- Your business agrees the services, fees and responsibilities with us in a services agreement.
Who uses a PEO?
Growing recruitment agencies that want their temporary workforce employed and supported without building an HR function, and businesses taking on a workforce for a project or a period of growth.
Things to check with any PEO
- Who is the legal employer, and what do the contracts say?
- Which HR tasks are included, and which are not?
- How are fees charged?
- How do the April 2026 PAYE liability rules apply to the arrangement?
Read more on our PEO solutions page, or compare PEO with payroll outsourcing.
Frequently asked questions
Is a PEO the same as an umbrella company?
Not usually. An umbrella company typically employs individual contractors on agency assignments. A PEO employs a business's workforce and handles the HR around it.
Does a PEO remove all of a business's legal responsibilities?
No. Responsibilities depend on the contracts and the law. Always check how responsibilities are split before you start.
Need help with this? Our payroll and compliance team can talk it through with you. See our PEO service.
Last reviewed 9 October 2026. General information, not legal or tax advice.