Whether you’re starting a new business or expanding your existing one, one thing is certain—you need a skilled and experienced workforce to achieve your goals. However, finding and retaining these employees can be a daunting task, especially if you are operating on a tight budget. This is where staff leasing comes in.
This guide will take you through everything you need to know about staff leasing, including the types, benefits and how it works.
Let’s Dive Deeper Into Staff Leasing
Staff leasing, also known as employee leasing or professional employer organization (PEO) is a business arrangement where a company outsources its employee management tasks to a third-party organization.
Essentially, the third-party firm becomes responsible for handling the HR functions including the administrative tasks of employment such as payroll, benefits, and taxes. Your primary concern as an employer will be the daily operations of the leased employees.
How Does This All Work?
Before using this solution for your business, consider consulting with a PEO of your choice. Discuss your goals, including the qualifications you seek and the staffing firm should ideally walk you through the whole process.1
The following are essential components you may come across before, after or in the midst of staff leasing:
- Contract signing: The contract should outline the terms of the agreement, including the scope of services to be provided by the PEO, the number of employees to be leased, and the duration of the contract.
Clarify each party’s liability and insurance obligations, For example, the PEO may be responsible for providing workers’ compensation or liability insurance for leased employees, and it’s important to clarify these details in the contract.
- Employee agreements: The employees of your company will sign agreements with the PEO to become employees of the PEO. The PEO becomes the employer of record for your company’s employees, which means it assumes responsibility for employment-related taxes, workers’ compensation, and other administrative tasks.
- Payroll Processing: Here the PEO handles payroll processing which includes calculating and distributing paychecks and ensuring compliance with tax regulations.
- Benefits administration: Benefits administration involves a PEO assisting your company with benefits selection, enrollment, premium payment, claims processing, compliance, and reporting.
Here you will select the benefits you want to offer your employees, and the PEO handles the administration of these benefits on behalf of your company.
- HR management: Support for HR related tasks such as recruiting, performance management, and compliance with state and federal employment laws will then be provided by the PEO.
- Risk management: Here a PEO assumes responsibility for managing employment-related risks on behalf of your company. The PEO manages risk related to employment, such as workers’ compensation claims and compliance with safety regulations.
The PEO may also provide you with safety training to your employees and develop safety policies and procedures.
- Regulatory compliance: The PEO helps ensure that your company is in compliance with all applicable employment laws and regulations.
They stay up-to-date on changes to employment laws and regulations, and help your company comply with these changes. This can include compliance with laws related to employment taxes, minimum wage requirements, anti-discrimination laws, and other regulations.
Most importantly, the PEO will provide you and your company with ongoing support and guidance on HR-related issues, including best practices, regulatory changes, and employee relations.
What Type of Staff Leasing Should You Choose?
Staff leasing arrangements come in different types, and you can choose the one that best suits you company needs:
1. Full-time Leasing
In a full-time leasing arrangement, the PEO will become the employer of record for all of your company’s employees. The PEO handles all HR functions, including recruitment, benefits, and compliance issues.
However, your company retains control over the employees’ day-to-day activities, job responsibilities, and performance management. This type of arrangement is ideal for companies that require a large, full-time workforce but do not have the resources or expertise to manage HR functions in-house.
2. Part-time Leasing
In a part-time leasing arrangement, the PEO will provide part-time employees either on an ongoing or as-needed basis to your company. You will then retain control over the employees’ day-to-day activities, job responsibilities, and performance management.
But with this type of lease, the PEO handles HR functions such as payroll, benefits, and compliance. If you need a small, part-time workforce but do not want to manage the administrative side of HR functions, this is for you.
Part-time leasing allows companies to remain flexible in their workforce management and adjust their staffing levels according to their needs.
3. Project-based Leasing
In a project-based leasing arrangement, the PEO provides employees for a specific project or time-frame. Here, the PEO is responsible for recruitment, payroll, taxes, benefits, and compliance, while your company retains control over the employees’ day-to-day activities, job responsibilities, and performance management.
This type of arrangement is ideal for companies that need to ramp up their workforce for a specific project but do not want to incur the costs of hiring and training full-time employees.
This type of arrangement allows companies to scale their workforce according to their project needs without committing to long-term employment contracts.
The Best Parts of Staff Leasing
If you’re planning to apply this initiative to your business and you’re wondering what’s in it for you, here are the benefits you stand to gain:
Cost savings: Staff leasing will enable you to reduce your company’s labor costs significantly. By outsourcing HR functions to a PEO, you’ll be able to save money on recruitment, benefits, and compliance costs.
Access to skilled workforce: Staff leasing enables companies like yours to access a pool of skilled and experienced employees. This is especially beneficial for small and medium-sized businesses that may not have the resources to attract and retain top professionals.
Reduced administrative burden: Staff leasing allows you to focus on core business activities since the employee leasing firm already takes care of the HR functions.
Improved employee benefits: Staff leasing companies may offer a wider range of benefits than a company could offer on its own, as they can leverage their buying power to negotiate better rates with benefit providers.
Reduced liability: When you hire employees through a staff leasing company, the leasing company assumes many of the legal and financial liabilities associated with the employment relationship, reducing the risk for you.
Flexibility: Staff leasing offers the ability to quickly scale up or down a company’s workforce as needed, without the long-term commitments of hiring new employees.
Generally speaking, staff leasing can be a good option for companies that want to reduce costs, streamline HR-related tasks, and access specialized expertise.
However, it’s important to carefully consider the terms of any staff leasing agreement and ensure that the third-party company has a good reputation and track record before entering into such an arrangement.
SOURCE THE RIGHT PEOPLE WITH RASO360
Raso360 will help you accelerate your business through our pool of talented and skilled employees, without the administrative burden and cost of hiring them directly.
Don’t let HR management slow you down. Contact us today to learn more about how our staff leasing services can help you streamline your operations and take your business to the next level.
- Miller, Bridget. “What Is Staff Leasing?” HR Daily Advisor. 19 Sept. 2019. Web. 22 Feb. 2023. https://hrdailyadvisor.blr.com/2019/09/18/what-is-staff-leasing/