Employee Leasing:
What Is It And Who Uses It?

You might have heard of the term employee leasing in your travels and you might wondered exactly what it means.

It refers to when a company takes over the human resources duties of another firm. The leasing firm hires the company's staff and then leases staff back to the company.

The client company retains the same staff and they can continue to hire and fire as required but the leasing firm takes care of the administrative work ie. paperwork and things of that nature.

Why would a client company hire an employee leasing firm and what is the benefit?

A small business is one example of a type of company that could achieve savings and efficiencies by utilizing an employee leasing firm.

The employee leasing firm looks after staffing and HR-related issues such as payroll, benefits and things of that nature on behalf of the client company which saves the client company from having to do it themselves.

A personal example of using an employee leasing firm occurred in the condo I lived in.

The cleaning and maintenance staff all worked for the condominium corporation and were thus employees of the condo.

Being a condominium corporation, they would be classified as a small business and wouldn't have the negotiating power that a larger firm would have in terms of negotiating insurance, healthcare and other benefits for their employees.

The condo decided to utilize a leasing firm so they entered into an agreement with this firm to hire all the cleaning and maintenance staff who were then "leased" back to the condo.

They continued to do their jobs as usual but the condo no longer paid the staff, no longer paid them benefits, no longer handled employee disputes, no longer did any paperwork or related work.

The leasing firm took care of this and the condo paid them to handle it for them.

For a small business like the condo board, there could be numerous benefits to use a leasing firm since the firm should help to ensure the company offers solid compensation and benefits for staff, retains good staff, reduces costs and paperwork, and is compliant with all local employment laws.

For a small business, the benefits could be well worth the fee paid to an employee leasing firm.

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