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What Is Employee Leasing?

Employee leasing is a human resources process that is similar to the hiring of temporary workers. But the difference between the two is on the subject of permanency.

A business that wants to explore using employee leasing will usually go about it by first contacting a professional employment organization or PEO in order to meet and discuss their specific employment requirements. The PEO or employment leasing company will go about the process by conducting interviews for staff recruitments or they can assume the responsibility for the existing staff in the company. The business can still opt to participate in the whole process of hiring but any hired worker will be officially working for the employee leasing company and not for the business.

Employees usually welcome the switch from being handled by the company to being handled by the employee leasing company because of the better financial situation. Because a PEO manages a large number of workers who work in different companies, any benefits like health insurance can be negotiated collectively. The big number usually means benefits and rates are better and lower, respectively. The benefits are also applied across the board, regardless of where the staff works and whether it is a big company or not.

Many business owners prefer the employee leasing arrangement because it simplifies handling employees. For example, the company won’t need to have accountants or human resource managers because this is handled by the PEO.

Employee leasing companies will usually earn by charging a fee on top of the workers’ salaries, which is similar to the arrangements of a temporary employment agency.

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