Employee leasing is similar to employing temporary personnel, but involves permanent employees. An employer transfers employees to the payroll of a leasing firm that, in turn, leases them back to the employer. The leasing firm becomes the legal employer and is responsible for payroll and leave; record-keeping; benefits and services; and participation in hiring, evaluation, and firing.
- Savings of time and money
- Improved employee benefits
- Help with personnel policies and employee handbooks
- Records uniform and easily audited
- Leasing company exercises certain controls over employment policies
- Employer retains responsibility for productivity and conduct
- Termination may be more difficult
- Labor union contracts or state law might keep certain employers from leasing certain employees
- Most leasing firms require the value of one full payroll in an escrow or trust account in addition to regular payroll costs
Because of the infrequency of the need or the specialized nature of the work, many business needs are better met by contracting for the service rather than hiring permanent employees.
In these situations you enter a contract with a business to perform specific services, during a specific period or at a specific time, for a specific price. The terms of the contract cite responsibility for providing any materials or equipment necessary to perform the service and other requirements for successful completion. It is the contracting firm’s responsibility to provide staff, pay them, and supervise them.
When contracting for services, it is wise to require:
- References from other companies that have used the contractor and will comment on the quality of contract performance.
- Certificates of insurance demonstrating that the contractor has adequate liability and other coverage for its employees.
- Copies of required licenses for performance of certain services.
- Appropriate warranty or guarantee on the quality of the work.
- Clear payment schedule including possible retainage (holding back of a portion of payments) pending satisfactory completion of a project.
- Proposals for services usually are presented and detailed on standard forms designed by the contractor. It is wise to have your legal counsel review the terms of the documents before you sign them, to avoid any misunderstanding of your obligations. Such a review also may suggest amendments benefiting you that are also acceptable to the contractor.