Employee leasing is a type of leasing consisting in delegating some of the employees employed in an outsourcing company to perform a specific job for the client on a given position. Enterprises provide outsourcing of their employees for a given period of time to an external service provider. This is due to the need to reduce costs. Thanks to this, although employees are still physically present in the original company and continue to work in their positions, all administrative services are taken over by a service provider who becomes their legal employer. Seconded employees appear on the payroll of the outsourcing company and it is responsible for recruiting new people, issuing redundancies, approving holidays. In case of indisposition of a given employee, he / she must provide himself / herself with a replacement to work in a harmonious manner. In this way, the company's current needs determine the number of employees, the cost structure is improved and the profitability ratio per employee increases.
The use of employee leasing is recommended when, for example:
- Periodically the demand for employees in a given company increases
- the planned budget does not give the opportunity to create new jobs
- we have a project to implement, but there is a lack of suitably qualified employees in the company
Employee leasing is derived from Western Europe and consists in renting employees to other business entities.
Employee leasing or temporary work began its dynamic development in the early 90s of the last century in Western Europe. During this period, the number of people employed by temporary work agencies has steadily increased every year by around 10%. In 1997, the International Labor Organization (ILO) legalized the functioning of temporary work agencies. In the same year, in Italy, the deadline for temporary work was introduced into the legal system, thanks to which it was already possible to use it legally in this form of employment. Greece followed this law as well, which legally regulated the date in 2001. As of today, this mode of employment is already a permanent element of the European labor market, because every country in the European Union already allows the use of this form of employment. At present, there are approximately 4 million people employed annually as part of employee leasing in the European Union. The largest number of temporary employees are employed by companies from the Netherlands, Germany and France. Some countries have lists of sectors in which temporary work is prohibited. An example is France, where the law does not allow for employee leasing in the state administration sector.
Responsibilities of an external service provider
Most of the obligations resulting from the labor law are taken over by the company dealing with employee leasing. Her duties are:
- Calculation and payment of wages
- Checking the level of absence
Employees are insured against accidents and damage that may be caused to third parties by the External Agency.
Benefits achieved by the company
In a company that uses employee leasing, the profitability ratio calculated per employee increases and the cost structure is improved. Labor costs are reduced. The external service provider is charged with the obligations resulting from the labor code and the administrative and advisory service of a selected group of employees. Employee leasing allows you to test future employees before hiring them permanently without having to pay costs. Ensuring the uninterrupted functioning of all company departments.
Benefits achieved by employees
Employees get the opportunity to enter the labor market and earn a living. It is also possible that the company will decide after a while to permanent employment of previously leased people.
Employee leasing also brings tangible benefits to the employees themselves. First of all, temporary employment gives them a chance to enter the market and the opportunity to earn a living. It also happens that companies decide after a while to hire permanently leased people. Leasing allows companies to check future employees without incurring costs.