PEO vs. Employee Leasing: Which is Best? | INS Global

PEO vs. Employee Leasing: Which is Best for You?

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Key Takeaways

For companies looking to expand their overseas presence, Global Employment Outsourcing (GEO) may be a cost efficient and safe solution. There are several different ways that a company can manage this process. Two of the most popular options are via using either an international Professional Employer Organization (PEO) or Employee Leasing agreement.

Here, we’ve summarized the main similarities and differences so you can decide which may be the best fit for your needs.

 

What is an Employee Leasing Company?

An employee leasing company is a third-party partner that shares a number of employer responsibilities with you. More like an EOR (Employer of Record), this allows you to provide simple and effective HR services to your employees. Typically, these responsibilities center around crucial HR functions such as payroll, employee benefits, insurance, regulatory compliance, and recruitment management.   

A staff leasing service will provide you with workers as needed. This is typically on a short-term basis or for a defined fixed term. This leaves you more time to focus on managing the tasks your employees will perform to further your success.

Throughout the entirety of your agreement, the employee leasing company remains the legal employer of the workers hired in this way. They take care of all regulatory requirements and manage all potential compliance risks. Because of this, you can avoid the steps required to set up and manage HR systems for short-term employees.

                                        

What Is the Difference Between Employee Leasing and a PEO? 

While employee leasing and PEO agreements may appear similar, there are distinctions. It’s vital to be aware of these differences as an employer.

So what does PEO stand for? PEO stands for Professional Employer Organization, or third party outsourcing partner, that provides HR services for your employees on your behalf. They can even hire your employees for you in another country, saving the trouble of forming a new entity there.

A PEO agreement is a form of co-employment. The PEO services provider takes on some, but not all, employer responsibilities. They can provide HR or employment functions like those an employee leasing company offers, but in a more limited way.

Crucially, under a PEO agreement, you remain the legal employer for all staff hired in this way. This means the final responsibility for risk management and compliance assurance falls to you.

 

What are the Advantages and Disadvantages of Employee Leasing?

 

PEO vs. Employee Leasing: Which is Best for You? | INS Global

 

Advantages 

Reduced Costs

By leasing employees from a professional provider, you reduce the budget amounts usually set aside for other costs. These could include recruiting, onboarding, monthly payroll management, and providing benefits packages.

 

Compliance Assurance

An experienced employee leasing provider means a higher level of compliance assurance due to specific expertise and industry tools. This benefit is even more significant for companies dealing with labor regulations in multiple countries.

Knowing you are operating correctly with workers comp or benefits payroll is essential to your company’s safety. Not knowing local compliance requirements is the most likely reason for errors and costly fines.

 

Scalable Solutions

An employee leasing agreement gives you access to qualified professionals whenever you need them. Under such an agreement, you can hire workers for specific jobs with no costs or problems associated with downtime.

Furthermore, when leasing employees through a third party partner you can use their resources to attract the right talent globally.

 

Reduced HR and Management Requirements

Your long-term employees involved in HR can save work hours otherwise be spent on necessary day-to-day services. This means they can be more cost effective by performing tasks related to company growth.

 

Disadvantages

Motivation Challenges

Employees leased through such an agreement may need more time to understand and be shown their role in your company’s success. This is particularly true if they are being specifically hired for a defined period of time.

 

Employer-Employee Separation

This employment solution requires greater attention to communication and team building. Staff hired in this way may not automatically feel like a part of the team. Particularly in the case of remote workers, your company’s communication strategies must be solid and efficient.

 

A Sense of Less Employee Control

Business owners hiring employees this way may feel a sense of less control over their staff members. This is likely due to the continued relationship with the employee leasing company.

Your company has complete control over all of their employees’ day-to-day operations under an employee leasing agreement. Though it may take some time to become confident with the arrangement.

 

What Responsibilities Do I Maintain as an Employer?

Employee leasing allows you to hand over responsibility for all the most complex aspects of HR and employee management to experts. Instead, your primary responsibilities as an employer are ensure these team members are working on that will further your success.

Each month you’ll simply provide the employee leasing company with the details they need to organize payroll, including hours, bonuses, or leave. They will then take care of all of the system creation, management, and paperwork.

 

What Should I Look for in a PEO or Employee Leasing Provider?

The critical nature of the details involved in global employment means the right PEO or employee leasing partner is vital.

A PEO arrangement will mean you have a partner familiar with all aspects of compliance assurance in every market you operate in. This often requires in-depth local knowledge and resources that can let them manage processes quickly and safely.

In addition to this, the best GEO providers understand the importance of long-term partnerships. They provide the support and resources that can help companies grow for many years. So it’s good to check the references available to see if they’re the right fit for your specific needs.

 

Get INS Global Expertise for Overseas Employment Solutions

INS Global is an innovative provider of PEO,GEO, and Human Resources solutions in over 80 countries worldwide. For more than 15 years, INS Global has helped companies reach their global expansion potential. This is through providing streamlined, safe, and effective HR and employment outsourcing services.

Providing your employees with correct financial statements or workers compensation insurance no longer has to mean teams of dedicated HR staff. A PEO client service agreement gives you the tools you need to provide perfect payroll administration at your convenience.

Our teams of global mobility advisors are based around the world to provide constant support. They offer you their local resources and knowledge to assist you in staying compliant so that you can succeed.

Contact our team today to learn more about how INS Global can help you with your global employment needs.

 

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