What Is an Employee Leasing Agreement

If co-employment seems identical to hiring employees, it is because it is; The two terms are often used interchangeably. There`s one exception: co-employment can also be used to refer to short-term or contractual arrangements – but that`s not what PEOs do. Employee leasing is sometimes used to describe the agreement between a company and a type of human resources outsourcing organization known as PEO (Professional Employer Organization). The PEO becomes the employer or employee file of its clients and is responsible for paycheques, payroll taxes, benefits management and related administrative requirements. At the end of the year, each employee of the customer also receives his W2 from the peO – and the EIN of the PEO is associated with it. Outsourcing of human resources, co-employment, hiring of employees – they are in fact all synonymous. Would you like a truly technical description of the co-job? Read this NAPEO article. The PEO takes care of the administrative tasks and all related responsibilities. Your company handles every part of your employees` day-to-day tasks. The specific functions of your partner are determined when you conclude an employment contract with the PEO. You can determine how involved the PEO is in running your business when you negotiate the terms of your agreement. If you`re looking for a bit of help with specific key accounting or HR features, or if you`re looking for a full-service solution, there`s a PEO option for your business.

In the meantime, the customer retains control over the hiring and firing of their employees, and executives continue to make the day-to-day operational decisions for their business. What is leasing? This is not the case – which is why the term has usually been replaced with something better (see “Co-use” below). You may want to consider hiring employees if you need to increase your workforce, but don`t have time to perform administrative tasks such as payroll and benefits management. Despite the growth of the PEO industry and the increasing use by small businesses, there are still misconceptions about PEOs. One myth in particular seems to appear more often than others – a PEO relationship and employee leasing are the same thing. One entity, the leasing company, leases its employees to another entity, the client company. The client company dismissed its employees so that they could be hired by the leasing company and leased to the client company. Employees will perform the same tasks as before this Agreement. Hiring employees is a popular option for contractors who need new workers for a certain period of time and don`t want to worry about the administrative and regulatory HR tasks associated with hiring contracts or temporary workers. To clear up the misunderstanding, let`s take a closer look at employee leasing and co-employment, how they differ from each other, and why PEOs aren`t the same as an employee leasing company. The establishment of this contractual relationship between the leasing company and the client company has advantages: employee leasing is an agreement between a company and a personnel service provider that provides employees on a project-specific or temporary basis.

These employees work for the client company, but the leasing agency pays their salaries and takes care of all the personnel management associated with their job. Employee leasing, although it has already been used to describe employers` professional organizations (RFOs), should not be confused with co-employment relationships. In fact, temporary employment and co-employment differ considerably. The biggest difference is that the PEO does not provide staff to its client as part of a co-employment relationship through a PEO. This responsibility rests with the customer, as well as with all other personnel-related decisions. This includes hiring new talent as a result of the creation of the PEO partnership. Yes, temporary workers or temporary workers are sometimes considered temporary workers. Companies can get their services from rental or employee recruitment agencies if they have to work on a contractual basis.

When a company works with a recruitment company that uses employee leasing, the recruitment company provides its client with employees who perform their work at the client`s establishment. Once the project, schedule or contract is complete, employees return to the staffing service provider who is their actual employer. .

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