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Subscribe now. Employee leasing is an arrangement between a business and a staffing firm, who supplies workers on a project-specific or temporary basis. These employees work for the client business, but the leasing agency pays their salaries and handles all of the HR administration associated with their employment.
Because an employment contract is legally binding for both parties, problems can arise when changes need to be made regarding the employment relationship. Legally binding. There is exposure to risk if any parts of the agreement are broken.
There are three main types of employment contract: permanent employment contracts, fixed-term contracts and casual employment contracts.
A written employee agreement offers a more thorough listing of employer-employee rights, rules, and obligations. With a written contract, the employer may agree to work at the company for a specific period of time. The employer may also agree to retain the employee for a specific period of time.
All employment contracts are a type of employment agreement, but not all employment agreements result in formal employment contracts. Employment or employee contracts are typically formal, legally binding written documents that specify the terms and conditions of an employment relationship.
While a letter agreement may be shorter than other contracts, it generally includes the same kinds of terms as a traditional contract (e.g., description of the goods, services or purpose of the relationship, time of performance, financial terms, etc.).
Employee leasing and working with a PEO are not the same thing. PEOs operate under a co-employment model, which is different from the typical employee leasing arrangements. During a co-employment arrangement, the PEO is listed as a co-employer.
Drawbacks of employee leasing Less control: One of the greatest risks of employee leasing is that you're delegating an important part of your business to an outside company that doesn't know your business as well as you do. You lose control of your processes, systems and benefits.
PEOs commonly become the employers and “lease back” the company's employees on a long-term basis. PEOs that “lease” employees to customers may then be able to procure things such as group benefits and workers' compensation coverage at reduced rates, due to their larger numbers of employees.