Employee leasing

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.

History

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.

Examples of Employee leasing

• One example of employee leasing is when a company needs extra employees for a short-term project or to perform certain tasks. In this case, the company will outsource the employees from a third-party provider that specializes in employee leasing. The third-party provider will provide the employees with the necessary skills and qualifications to complete the task. The third-party provider will also cover the payroll costs and all other administrative tasks related to the leased employees.
• Another example of employee leasing is when a company needs a specialized employee for a specific position. In this case, the company can outsource the employee from a third-party provider that specializes in employee leasing. The third-party provider will provide the employee with the necessary qualifications and experience to complete the job. The third-party provider will also cover the payroll costs and all other administrative tasks related to the leased employee.
• A third example of employee leasing is when a company needs to fill a long-term vacancy. In this case, the company can outsource the employee from a third-party provider that specializes in employee leasing. The third-party provider will provide the employee with the necessary qualifications and experience to complete the job. The third-party provider will also cover the payroll costs and all other administrative tasks related to the leased employee.

Limitations of Employee leasing

• Employee leasing can result in a lack of control over the quality of the services provided. The company must rely on the outsourcing service provider to ensure that the work done satisfies their standards.
• The lack of knowledge of the environment in which the leased employees work can lead to labor disputes between the outsourcing service provider and the leased employees.
• It can be difficult to find a reliable and trustworthy outsourcing service provider that meets the company's requirements.
• The company must be aware of all the legal obligations of the employee leasing process, such as worker's rights, health and safety regulations, etc.
• The cost of employee leasing may be higher in the long run if the quality of work is not monitored.
• Employee leasing may lead to a lack of consistency and continuity in the projects undertaken by the company.
• The company may not have access to all the resources of the leased employee, such as experience, skills, and abilities.

Other approaches related to Employee leasing

• Remote Working: Remote working consists of employees working from home or from another remote location, instead of from the physical office. It allows for more flexibility in working hours and often leads to less stress and improved productivity.
• Flexible Working: Flexible working is a type of arrangement between an employer and an employee, which allows the employee to change their hours or days of work to suit their personal needs. This could include part-time or shift work or working from home or remotely.
• Outsourcing: Outsourcing involves hiring a third party to perform tasks or provide services that would otherwise be done in-house. This can include tasks such as customer service, accounting, IT, web design, and other services.
• Contractor Hiring: Contractor hiring is the process of hiring an independent contractor to perform specific tasks or jobs on a short-term basis. This type of arrangement allows employers to access skilled labor and expertise without having to hire a full-time employee.
• Job Sharing: Job sharing is an approach to employment in which two or more people share the responsibilities and duties of a single job, typically on a part-time basis. This type of arrangement can provide an employer with the flexibility to adjust staffing levels and can also reduce labor costs.

In summary, 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. Other approaches related to employee leasing include remote working, flexible working, outsourcing, contractor hiring, and job sharing. All of these approaches are designed to provide employers with more flexibility and cost savings.

Employee leasing — recommended articles

Alternative staffing — Flexible staffing — Contingent staffing — Teleworking — Cafeteria system — Business process outsourcing — Illegal work — Internal transfers — Conditions of employment

References

• Murthy, B., & Murrmann, S. K. (1993). Employee Leasing: An Alternative Staffinlg Strategy. Cornell Hotel and Restaurant Administration Quarterly, 34(3), 18-23.
• Jansonius, J. V. (1985). Use and misuse of employee leasing. Labor Law Journal, 36(1), 35-41.