Marketing91

  • Home
  • Categories
    • Marketing
      • Advertising
      • Branding
      • Sales
      • Retailing
      • Consumer Behavior
      • Distribution
      • Market Research
      • Pricing
      • Product Management
      • Strategy
      • Segmentation
      • Targeting
      • Positioning
      • Services Marketing
      • Articles
    • Digital Marketing
      • Blogging
      • SEO
      • E-commerce
      • PPC
      • Email marketing
      • Social Media Marketing
      • Facebook Marketing
    • Brands Analysis
      • Marketing Mix
      • SWOT
      • Strategies
      • Competitors
      • Lists
      • Expensive
    • Management
      • Customer Management
      • Communication
      • Leadership
      • Decision Making
      • Delegation
      • Organizational Management
      • Motivation
      • Personal Development
      • Project Management
      • Risk Management
      • Team Management
      • Time Management
    • Careers
      • Interviews
    • Business
      • Business Models
      • Logistics
      • Supply Chain
    • Human Resources
    • Skills
  • News
  • Academy
  • About Us
    • Contact Us

What is Staff Leasing and What Are Their Risks?

June 29, 2021 By Hitesh Bhasin Filed Under: Human Resources

staff leasing is defined as a process of hiring an employee temporarily for an indefinite time with or without using any staffing agency.

Table of Contents

  • What Is Staff Leasing?
  • Why should the Employer’s Lease?
  • What Are the Risks of Staff Leasing?
  • Conclusion

What Is Staff Leasing?

It is a contractual arrangement in which the leasing company, which is also known as a professional employer organization or PEO, is the one who recruits. Usually, the business owner and the leasing company share employment responsibilities.

However, the management control over the work by the employees is retained by the business owner.

The leasing company takes up other responsibilities like employment taxes and wages. The business owner is responsible for writing a cheque to the leasing company, which covers taxes, payroll, benefits, and other fees.

The PEO takes care of the rest. The leasing works on both the parties’ coordination and mutual agreement, including the employees, to be leased. Therefore transparency in every aspect of the hiring process is essential for all three parties involved.

Why should the Employer’s Lease?

Why should the employer’s lease

The following are a few of the reasons why an employer may lease the staff instead of hiring directly:

  1. Recruitment costs are reduced drastically, which helps HR to focus on essential issues. Depending on the type of job, some PEO’s have a ready-made pool of employees who may be available to work immediately. This will save time and make the process faster.
  2. One of the critical aspects of managing taxes, payroll, reporting, etc. is removed in leasing employees. These things not only cost an organization but also take up a lot of resources and involve multiple people to do the job.
  3. Employers are not required to have unemployment insurance if there are no employees. Therefore this will reduce the expense of the employers. Apart from unemployment insurance, there are many other expenses that full-time employees have to be given, including paid leaves, medical insurance, Sick leave, etc. All such expenses are avoided if the employer decides on staff leasing.
  4. In many cases, employees may get benefits since the leasing company can pool multiple employers. This may result in higher negotiating power for many things like insurance.
  5. The PEO handles all the tasks, and therefore you will not have to handle any administrative expertise. The leasing organization can help the company to conduct performance reviews as well.
  6. Since the company requires top talent, it should work with the staffing provider so that there is no compromise on it.
Also Read  Performance Management: Meaning, Objectives, and Benefits

What Are the Risks of Staff Leasing?

The following are some of the risks which are associated with staff leasing:

  1. The employer has no control over the wages, so the leasing party should ensure no wage payment problems. This is because the employer does not handle business administration. Therefore, if anything happens with the wage or if any employee receives unsatisfactory wages, the blame goes on the employer even if he does not handle that part of the employees.
  2. The organization usually does not have any control over the benefits which are offered to the employees. In some cases, the organization may want to extend the benefits that they provide to their permanent employees to the leased employees. But they will not be able to do so because of the contractual obligations with the PEO.
  3. There will be a copayment situation in some cases, and the employer will bear some liability and responsibility of the employees. This means that even if the PEO handles the admin work, the employer will still have an obligation to control some aspects and check for accuracy so that there are no problems with the admin aspects.
  4. In some cases, staff leasing organizations get their employees from other countries. Offshore employees may not work well with every business. While offshore employees may be economical when it comes to working for businesses, they may not be relevant or practical for your kind of work every time.

Conclusion

Staff leasing is a popular process in many industries and startups since it is a time-saving method to get employees.

While it has various advantages like reduced costs, reduced liabilities, etc. they may also come with some other disadvantages.

If an organization is planning to use this approach, then proper research should be conducted before diving in the leasing market.

Liked this post? Check out these detailed articles on Topic of Human Resources

Alternatively, check out the Marketing91 Academy, which provides you access to 10+ marketing courses and 100s of Case studies.

Marketing91 Academy

About Hitesh Bhasin

Hi, I am an MBA and the CEO of Marketing91. I am a Digital Marketer and an Entrepreneur with 12 Years of experience in Business and Marketing. Business is my passion and i have established myself in multiple industries with a focus on sustainable growth. You will generally find me online at the Marketing91 Academy.

Related posts:

  1. What is Employee Leasing? Definition, Concept and Examples
  2. Staff Turnover – Definition, Meaning, Types, Causes, Benefits
  3. 8 Qualities of Employees Which Most Management Teams Look For
  4. Top 10 Types of Assessment
  5. What is Golden Handshake: Examples, Advantages, and Disadvantages
  6. Fringe Benefits: Examples & Fringe Benefits excluded from Income Taxes
  7. Open Door Policy – Meaning, Benefits and How it works
  8. Diversity Training – Definition, Meaning, Process and Objectives
  9. Developing A Competency Framework (with Steps)
  10. Base Pay – Definition, Working, and Factors

Join the Marketing91 Academy

Marketing Masterclass

Management Masterclass

Management Masterclass

Communication Course

Communication Masterclass

View All Courses
Economics Masterclass

Economics Masterclass

Sales Masterclass

Sales
Masterclass

Advertising Masterclass

Advertising Masterclass

View All Courses
Leadership Masterclass

Leadership Masterclass

Branding Masterclass

Branding
Masterclass

Strategy Masterclass

Strategy
Masterclass

View All Courses
Not found what you are looking for? Search this website.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Advertisement
Recent Posts
  • Informational Power: Definition, Sources and Importance
  • Reward Power in Leadership: Definition and Examples
  • Expert Power: Definition, Examples and Development
  • Legitimate Power: Definition, Examples, Advantages and Disadvantages
  • Nike, Adidas, Shein, and Temu Sent Letter From House China Committee About Forced Labor
Advertisement

Marketing91

MORE INFO

  • About Marketing91
  • Marketing91 Team
  • Privacy Policy
  • Cookie Policy
  • Disclaimer
  • Terms of Use
  • Editorial Policy
  • Advertise
  • Contact us
  • Sitemap

WE WRITE ON

  • Marketing
  • Business
  • Management
  • Brands
  • Digital Marketing
Search
[email protected]

Copyright © 2023 Marketing91 All Rights Reserved