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PEO and the Oil Industry

News

Enjoying the current economic boom happening in the Eagle Ford Shale may only be the beginning of the progressive and steady global expansion in the oil industry. But are you ready?  Recently there has been some very exciting news for the Oil and Gas industry that may create even greater opportunities for those ready and poised.  In December of 2013, Mexico’s President Enrique Pena Nieto enacted new legislation that in essence will end the 75 year old monopoly held by the state owned oil company Petroleos Mexicanos (PEMEX).   This enactment will mean that very soon outside investors will finally be able to enter into competition for refining, petrochemicals and hydrocarbon transport.  As a result, some economists are suggesting the output of PEMEX could catapult to as much as 60 percent by 2025.  The dramatic increase in drilling could boost the country’s GDP growth from 2013’s 1.2 percent to as high as 6 percent in the coming years according to the International Business Times.

Obviously what this means to the Oil and Gas industry, particularly in the southern region is that there will be more exciting opportunities and potential contracts.  But as we all know it’s one thing to land a contract and it’s another to be prepared for the demands of that contract; especially in foreign countries whose laws, policies, employment and labor regulations, tax requirement and red tape are as foreign and complicated as the language they speak.  One of the biggest challenges for U.S. based businesses is in the fact that they and their work force will be obligated to comply with these laws, regulations and in understanding how to comply, and maneuver safely through all of these demands especially with regards to labor.

If labor can’t be properly supplied then the contracts are dead before they even get started.  Furthermore, it is estimated that skilled U.S. petroleum and engineering workers will be in demand in Mexico for at least 10 years. This staffing void is the result in part from future demand resulting from the release of the monopoly allowing foreign entities to participate in oil exploration/production and the shortage of skilled Mexican workers in this industry.  While the current young employees coming out of the Mexico tech schools and universities are well prepared to enter the industry it is projected that there will be a shortage of trained petrochemical personnel and it may take at least the 10 year period for Mexico to catch up in training and development to produce an adequate, local workforce.

Wouldn’t it be nice if there was an expert resource providing international solutions and service that had the expertise and experience in dealing with international labor laws, taxation and compliance requirements, regulations and having the knowledge of the cultural environment that could take care of all of the complexities and demands of placing your employees at those foreign worksites?  Wouldn’t it be a huge advantage as well as provide you with peace of mind if you could just concentrate on the things that you knew best and what made you successful in the first place?  The last thing anyone wants to do is put themselves in position to land an international contract only to be faced with fines an penalties that far out weigh the opportunity, revenue generated and possibly losing any chance of obtaining another contract in the future.

Well there are services that do just that called Professional Employer Organizations (PEO).  Although most PEO services only specialize within the frame work of the US and its laws and regulations there are some very specialized companies that provide PEO or ASO/HRO (Administrative and Human Resource support) services that can handle not only the oil industry in the Eagle Ford Shale region but also in Mexico or other international markets where your opportunities exist.

As I mentioned in last months article (March 2014).  The PEO will provide four core services such as 1) Payroll, which includes easy to used yet sophisticated online software systems for reports, time and attendance, employee electronic on boarding, 401k and retirement programs, and tax services.  2) Workers Comp, which includes risk management, safety training, consultation, and claims management.  3) Benefits, which ranges from major medical health insurance, voluntary products, retirement plans, and employee assistance programs.  4) Human Resources support from labor information and guidance for the employer, employee handbooks, employee training, and consultation.  But that is only the starting point for a top PEO service.  Recruiting is vital to most businesses and is an ever-evolving process.  It is critical for employers to find skilled employees and to keep them long term. Your skilled workers and labor force are a huge asset to your company. Recruiting services can range from direct hire solutions that start from the initial job descriptions to posting ads, multi- point worldwide applicant searching and interviews and up to and including new hire processing. Additional services available may also include background checks, drug screening and employee assessment testing when required.

But let’s take it to another level to the international stage.  To have someone with extensive knowledge of the international landscape and can ensure that the employer and the employee networks are equipped with everything needed to succeed in the international market are paramount.  To have access to global human resource services, payroll and taxation administration, global recruiting and expatriate demobilization services puts your business on a whole new level of performance.

For example, let’s look at your securing a contract in Mexico and what a PEO or an expert resource in international ASO/HRO service would be able to do for you.

First and foremost, the services that may be provided by the PEO are specific to the worksite country and are tailor made to support or dove tail into your existing organization, staff and administrative capabilities. The international PEO or ASO/HRO firm will benefit you by providing you with information and resources that will ensure that you are compliant with the immigration and visa requirements, labor laws, employer obligations and taxation liabilities.

One of the first employer related functions that could be taken off the shoulders of the employer may be recruitment for both Mexican nationals as well as US citizens to staff the Mexico work site project.

Once the candidate employees have been selected the international service provider could provide assistance to ensure that all employer and employee agreements are structured to be in compliance with and in agreement to Mexican labor law and regulations, including translation services, provide required insurance coverages including workers compensation and employee health benefits and assistance in obtaining background checks. It is suggested that no employee be hired without a background check as certain offenses will prohibit that employee from obtaining the required visa and the ability to enter another country.

The next step available in the process would be to assist with the acquisition of travel and work visas for each employee.  Immigration law and work visa rules and requirements are very specific. The PEO may provide information, guidance and resources to you and your employees to acquire the necessary work visas.  This process can be very lengthy with multiple document requirements from both the employer and employee.  Many of the required documents must be submitted in Spanish. After the work visas are acquired the international PEO or ASO/HRO company can provide information to the employee in regard to medical/immunization requirements, transportation, in country laws and cultural or social information.

Once the employee is working at the new worksite in the foreign country the international PEO or ASO/HRO company can provide you and your employees with HR support, payroll administration, taxation calculation, required tax deposit requirements and benefit administration.

The details of placing an employee on an international work contract may seem daunting to say the least; however, that’s no reason to miss an opportunity when there is strong support to help you through all of these challenges.  And a PEO brokerage firm can find the right service to compliment your business needs and expectations.  The bottom-line a PEO service wants to help set you up for success. 

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