Employee Leasing

The Advantages of Employee Leasing

Many companies are turning to employee leasing to help them in some areas of their business. This is becoming increasingly common for HR-related tasks. Before we look at some of the advantages of leasing employees, let’s understand what it exactly means, for although it’s been around for a few decades, many business owners and managers may not know how leasing employees works.

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Essentially, employee leasing means that outside contractors, more often than not Professional Employer Organizations (PEOs) ‘lease’ their employees to businesses for a temporary period.

What is Employee Leasing?

First of all, PEOs share the employment of the leased employees with the various businesses
that they send their employees out to work at. This means PEOs take care of hiring, managing, training and developing these skilled workers. The burden of employee management is immensely reduced through employee leasing.

Also, PEOs hire the best in the business in the area of Human Resource. So businesses get the best specialists to handle issues like payroll, legal compliance, benefits, compensation and more. Under employee leasing, employees are often more careful in performing their duties as PEOs conduct frequent review. This allows companies to focus on the core areas of their business, rather than worry about motivating their employees and ensuring they’re meeting their goals and objectives.

Other advantages of PEOs

Along with employee leasing, PEOs offer companies that avail their services many other additional benefits. PEOs cater to a large number of clients and are able to negotiate good compensation and benefit packages for their clients. Further, PEOs are able to relieve businesses of tedious and mundane HR chores that need a great deal of attention such as payroll management and ensuring that all legal regulations are complied. Most importantly, PEOs help businesses save tons of money! The good news is the smaller the business, the bigger the savings. One study showed that businesses with about 25 employees saved 40% on compensation thanks to their PEOs. In the same study, businesses with 100 employees saved between 25 and 35%.

Talking of savings, employee leasing also saves businesses money. While employees bring professionalism and skill to the business, they don’t come with the big bill that independent contractors can sometime bring along! Leased employees are cheaper than independent contractors and slightly costlier than full-time employees. However, with all the other savings that PEOs offer businesses, it may well be worth the money!

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