Finding the best workers for your company is not an easy task. The process of recruitment and hiring can be very time-consuming and use up a lot of your resources. Outsourcing options can be much faster, more effective, and provide qualified workers with the specific skills you need. One of the most common employment outsourcing methods is using leased employees.
This article will explain what a leased employee is and how they can benefit your company. We’ll also address concerns over potential compliance issues of these employees so that you can decide on a plan with total confidence.
Leased Employees: What Are They?
A leased employee is a worker who performs services for a client company on behalf of a third-party leasing/staffing firm. The client company and the staffing firm will have an arrangement where the firm supplies the client with employees who can work on either a short-term basis or fixed term.
A leased employee only performs project-specific or temporary work for the client company.
During their work arrangement, the client has complete control over how and what work is performed. This specification makes this type of employment solution different from others like independent contractors.
This kind of employment arrangement can be difficult to manage for a Human Resources department unfamiliar with the requirements involved in such a system. HR managers may accidentally exclude leased employees from essential benefits. Alternately, the HR department may not know how to properly integrate leased employees in the performance management or payroll system.
The leasing firm handles administration aspects such as payroll, tax deduction, pension plan, HR services, etc.
Employee leasing is not the same as partnering with a PEO or Employer of Record (EOR), which is explained further in the FAQ section.
Six Benefits of Employee Leasing
Streamlined HR Processes
Instead of spending a lot of time training human resources managers on new systems or hiring workers to handle your HR needs, you can have them all expertly taken care of by the leasing firm.
Cut Down on Time and Expenses
A leasing firm generally asks for a flat fee, allowing you to effectively put your budget towards expanding your workforce quickly and risk-free.
Be Assured of Legal Compliance
If you are expanding into a new market, the chance of compliance mistakes can be especially high and costly. By using leased employees, you won’t have to worry about that, as the leasing firm will be responsible for all legal aspects of the workers.
Secure Specialized Workers
With employee leasing, you can have the right staff with the professional skills necessary for a project without spending time searching through hiring sites and talent pools.
Unlike employees hired through traditional means, it is much easier to change or dismiss a leased employee if you find that they aren’t a suitable match for your company.
Because of the large available talent pools of employees in a leasing firm, you can find workers to fill empty positions in a matter of days.
Leased Employees: FAQ
Q: Is a leased employee considered an official employee?
A: A leased employee performs all the work duties of a regular employee. The difference is that they will not be on the employer’s payroll; legally, they are employed by the leasing firm or agency.
Q: What’s the difference between a leased employee and a temporary employee?
A: A temporary employee is one kind of leased employee. Most of the time however, a leased employee is a full-time worker, just like any other employee. On the other hand, employee leasing can also be used for short-term projects and contract work.
Q: Is a PEO partnership the same as an employee leasing company?
A: Unlike a leasing agency, a PEO does not provide staff to a company. A PEO assists by handling many of the responsibilities around HR and employment functions. However, it does not directly hire employees for you.
In a PEO arrangement (sometimes called co-employment), the employer retains full control over all aspects of hiring, managing, and dismissing employees. You can learn more about this in our article on the topic.
Q: Are leased employees eligible for a pension plan?
A: Yes. In most cases, the leased employee will go under the client company’s pension plans. There are some situations where the employer may be able to avoid a leased employee 401k plan in the US, but these are the exceptions.
Q: Who is responsible for the employee in a leasing arrangement?
A: Generally, the leased employee is officially hired by the leasing firm or agency. There is also the option for leased employees to be jointly employed by the client company and leasing firm. However, this arrangement will need to be explicitly stated in the contract.
How INS Global Can Help You
Adding leased employees to your workforce can be an excellent opportunity to bring new skills and talent to your company. It is not without its downsides, though. You need to be careful when choosing which leasing agency to supply you with workers as the risks can be damaging.
A leasing firm or agency that isn’t entirely legally compliant could bring your company risks of fines and fees. You also want to ensure that the leasing firm handles the employee’s HR functions correctly. Otherwise, you may be saddled with extra tasks and responsibilities that will take up more time and energy.
Having a partner like INS Global can make the process much smoother and reduces the possibility of unwanted mistakes or costly risks. We have over 15 years of experience delivering GEO (Global Employment Outsourcing) solutions to companies without local legal entities like global PEO employee leasing and EOR services.
You need a quick and effective payroll and HR system to focus on bringing your company closer to its success goals. That’s why we offer services in more than 80 countries worldwide. Furthermore, our advisors are available to support and counsel you no matter where you’re located.
Contact us today to learn more about meeting your global expansion needs.