Employee Leasing

The Human Resource Department is expected to take care of record keeping and payroll accounting etc. It is also responsible for spelling out employee dos and don’ts and the benefits which are applicable to the newly hired employees. A popular solution to the rigmarole involved is the practice of employee leasing. Employee leasing is the process of hiring permanent workers from a professional employment organization. This organization first defines the employment needs of the company, sets up the interview process for recruiting new staff and takes responsibility for the staff support. This eliminates the need for the company to extensively participate in the hiring process.

In the case of an employee, being enlisted with an employee leasing company is a better deal because the professional employment organization negotiates better future health insurance and other benefits. In this way, irrespective of the size of the company, the employees enjoy standard level and quality benefits. Also, the remuneration and the performance reviews or assessments are taken care of by the employee leasing organization and not the company. In fact, this two-way beneficial solution to the need for accountants and human resource managers optimizes the entire exercise. The services of the employee leasing agency come for a fee, which is often less than the cost of hiring human resource experts.

However, employee leasing is not the perfect solution for some companies. These workers are not completely controlled by the management and hence, communication could be a problem. The conflicts, if any, have to be sorted out by the representatives of the employee leasing agency. Also, the termination of such workers, especially if they are not productive, is not simple. Employee leasing is in fact a relationship between a Professional Employer Organization, a worksite employee and a client company. The tripod involves a co-employment relationship, where the professional employer organization and the client company share ‘employer’ responsibilities and liabilities, via a contract.

In employee leasing, the professional employer organization takes on the responsibility and liability involved in the whole business of employment. This business includes risk management, human resources, compliance with the labor law and payroll and profession tax. On the other hand, the client company handles the product development and production, marketing and sales, etc. The third leg of the tripod is the understanding between the professional employer organization and the worksite employee. This understanding covers complete benefit plans and administration, responsibility and liability for payment of wages and compliance with all rules and regulations governing the payment of federal and state taxes.

In the whole process of employee leasing, the employer pays employment tax and employee benefits and the professional employer organization assumes responsibility and liability for payment of state unemployment tax. In many countries the professional employer organization is recognized as the ‘employer’ and in some others, the organization is looked upon and dealt with as the ‘employer of worksite employees’. This is because the professional employer organization provides workers’ compensation coverage as part of the deal. The agency-like approach of the professional employer organization makes it easier for the employee and the employing company, both successfully achieving their individual goals and co-existing.

Employee leasing is now a very common practice the world over. The workers enroll with the employer organization to be able to benefit from the coverage offered in bulk, while the companies seek their services to meet the company-requirement of a certain level and number of workers. The professional employer organizations meet the requirements of both and earn a commission. The whole set up is industry-enhancing and an immediate solution to labor restrictions. The only governing concern, in this case, is the professional employer organization. There are a number of resources operating online and offline from where you can tap the professional employer organization resource. As part of the management, it pays to check out the commission package, while as the worker, it pays to enquire about coverage.