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What is employee leasing?

Searching for the perfect temporary candidate, or your next work contract, can be overwhelming. But employee leasing could be the answer you’ve been looking for. 

Employee leasing benefits both candidates and the companies they work for when it comes to temporary staffing solutions. It can even be more valuable than traditional employment contracts. 

Here’s everything you need to know to help inform your next move.  

What is employee leasing? 

Employee leasing is when a recruitment agency supplies a business with workers. Usually on a short-term basis, or for a longer project-based term. It’s also referred to as temporary staffing in some countries. 

When entering a leasing arrangement, the candidate works for you, but they are employed by the recruiting company—as the term ‘leasing’ implies. Once the candidate’s leasing contract ends, they stop working for you and return to the care of their recruitment agency. 

Employee leasing vs co-employment 

Employee leasing means a recruitment agency provides your business with the short-term contract staff you need and manages all the relevant HR administration. 

Co-employment agencies (also known as Professional Employment Organisations or PEOs) focus on being more collaborative. For example, PEOs might handle all the HR administration while your company manages recruitment and hiring. Depending on the agreement, companies can split responsibilities differently.  

To make things more confusing, because co-employment evolved from employee leasing, both terms are often used interchangeably. 

How does employee leasing work? 

Finding the right talent 

Typically the recruitment agency goes to market to find the best candidates for their clients. Once found, these candidates are brought on as employees of the agency and leased out to the client to help with their projects. 

Day-to-day work 

All candidates remain employees of the recruitment agency and are paid by them for hours worked, but they receive work instructions from the clients they are leased to. This work is governed by special rules and regulations. It is only permitted to agencies that have been issued the respective licence. 

End of the work period with the client 

Once the client has finished their project and no longer requires the assistance of leased employees, the candidate will be offboarded and returned to the care of their recruitment agency. 

What are the advantages of employee leasing? 

For both candidates and employers, there are various reasons why entering an employee leasing agreement could be a great move. Let’s look at some examples. 

Employer benefits 

For employers, there are several benefits to partnering with a recruitment agency that offers employee leasing services, including:

1. No employer responsibilities

By going through a recruiting agency to lease employees, you avoid the complications and responsibilities of a traditional employment relationship with your leased employees.  

For example, because you are not their employer, you are not liable for any payroll or relevant employment taxes. That is all handled by the recruitment agency.

2. Short-term labour solution

Businesses often find themselves facing short-term and seasonal labour challenges. If you need help in the short term, it may be impractical to hire extra permanent staff. Employee leasing offers a quick and often cost-effective solution to this problem.

3. Reduced HR workload

With employee leasing, you don’t have to spend time or money on recruitment and hiring tasks, such as advertising for candidates, sorting through applications and conducting interviews.  

The recruiting agency will manage all of this, allowing you to work on other, more strategic activities and save costs usually associated with hiring new staff. 

4. Qualified candidates

No matter what qualifications are required for the role you need to fill, a recruitment agency will have access to a large database of workers. This means they can find someone with relevant skills and expertise in your industry more quickly than you can.

5. Improving conditions for permanent employees

By onboarding leased employees on a temporary basis, you may help boost your permanent employees’ work satisfaction. They will likely appreciate that you have brought in more people to help get the job done instead of increasing the workload for internal employees. 

Happy industrial worker indoors in factory wearing orange hard hat

Candidate benefits 

For candidates, there are also many compelling reasons to enter an employee leasing agreement, such as: 

1. Superior benefits packages

Leased employees are provided with all the benefits of a traditional employee (retirement plans, medical benefits, etc.), which in some cases contractors cannot access, depending on the region they work in. In addition, leased employees continue to be employed by their recruitment agency after a project ends. Recruitment agencies can source benefits from the best providers due to their large talent pool, which benefits you when working with them.

2. Attractive salary

In some cases, an employee leasing agreement may include more attractive pay packages than those available through regular contract work, due to the size and efficiency of a recruitment agency who have greater negotiating leverage.  

3. Better job security 

Candidates remain employees of the recruitment agency even after a project with a client ends. Because of this, candidates can expect their recruitment agency to find them a new opportunity when their current role ends. This ensures a consistent source of work for candidates in leased employee contracts.   

What questions should candidates ask about a leased position? 

These questions can help guide your employee leasing experience and ensure everyone is on the same page. 

  • How long is the contract? 
  • What happens when the contract is over? 
  • What is the company culture and position like? 
  • What are the typical hours? 
  • How much is the contract pay rate? 
  • Are there benefits available? 
  • How will this position help me professionally? 

How recruitment agencies help with employee leasing 

A recruitment agency is a valuable resource for both candidates and employers, and they are equipped to handle all the formalities of a leasing agreement.  

For employers, recruitment agencies use their extensive databases and industry connections to identify top candidates and negotiate terms. This can relieve a huge amount of pressure on a recruitment team and shorten the time spent searching for ideal candidates. They also take typical responsibilities off an employer’s shoulders, such as HR, tax and payroll workload. 

For job seekers, agency recruiters support your transition to a leased employee by acting as your employer, providing job security where normal contract work cannot. In many cases, this includes a superior pay and benefits package. 

In either case, it’s important to pick a recruitment agency with an established, relevant talent pool, and experienced recruiters who have an in-depth understanding of your industry. 

Interested in employee leasing? Consider Energy Resourcing! 

If you’re looking to partner with a recruitment agency, consider Energy Resourcing for your employee leasing needs.  

We connect the right candidate with the right job across a variety of different sectors and offer an unmatched level of expertise in every interaction with our clients and candidates. Energy Resourcing has the relevant licences to conduct employee leasing agreements in all regions we offer this service. 

In short, a recruitment agency like ourselves can help you achieve your short-term and project-specific goals, no matter your staffing requirements.  

Contact us today!  

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