Co-Employment | Meaning and Definition

What is Co-employment?

Co-employment is characterized as a partnership between an employer and a Professional Employer Organization (PEO) or a corporation that specializes in employee leasing, in which both parties share duty and obligation for the workers. Co-employment might well be considered by a firm to ensure that it has people with specialized capabilities, to make it simpler to hire industry specialists, and to refill declining workforces. The technique has a number of drawbacks, including the possibility of increased unemployment as a result of reduced labor demand, misunderstanding between two organizations working with the same staff, and employees not knowing who to contact when an issue develops. 

Despite popular belief, co-employment does not imply that employers relinquish control or ownership of their company. Clients maintain control over their personnel and day-to-day operations, while the PEO handles HR-related activities, including payroll, compensation management, and compliance. 

Benefits Of Co-Employment 

  • Employers who are having trouble finding time to process payroll or who are being punished for mistakes typically find co-employment to be a pleasant relief. PEOs can handle portions of payroll for their clients, such as computing salaries and deductions, paying employees, and submitting employment taxes with the appropriate government authorities. Many can also integrate payroll with timekeeping and insurance services, reducing mistakes and reducing repeated data entry.


  • Businesses that do not want to have specialized HR personnel might outsource their HR obligations to a PEO. Depending on the amount of help necessary, customers may have a dedicated HR specialist or team providing strategic and administrative services in co-employment agreements.
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