Everything you wanted to know about team leasing but didn’t know where to find it
The daily changing reality brings new forms of labor organization into our lives. Recently, such a form of hiring employees using ATS recruitment system as team leasing has appeared. This short article will consider the main nuances of such contracts.
What are the benefits of team leasing?
To help you decide whether this type of hiring is worth your attention, here is a short and, for sure, not an exhaustive list of the crucial advantages of team leasing:
- Team leasing labor agreements guarantee the customer the official reduction of taxes;
- Such a form of contracting decreases a company’s production costs;
- By attracting a group of employees to team leasing, you get extra financial and temporal resources for the development of your own staff;
- You can quickly (literally within one or two days) and without extra legal red tape attract temporary workers and just as easily part with them when the entire scope of work is completed;
- Any other employment agreements do not give you such freedom and cost savings.
Next, we will consider the mechanisms by which it becomes possible to achieve the above benefits.
Where does the magic come from?
Achieving results that are so attractive both for the employer and the employees he hires becomes possible thanks to the legislation within which all three parties operate: the employer, employees, and the agency that selects workers with the necessary qualifications and, so to speak, rents them out.
It is important to note that the agency bears the burden of bringing contracts with employees in line with the labor laws of various countries. This is especially relevant if we take into account that the leasing team can be international. For the employer, in case of choosing this form of cooperation, the following prospects open up:
- In leasing, you can order any number of employees.
- Under such an agreement, any number of foreign employees can be legalized. The employer is relieved of the associated bureaucratic procedures since this is the responsibility of the leasing agency.
- The salaries of employees hired under team leasing contracts are charged to the lessee’s expenses. This becomes possible because the remuneration of external personnel is included in the agency’s fee and, therefore, is assigned to the lessee’s expenses, reducing his tax base.
- Because of the described method of settlement with employees provided by the agency, the employer’s accounting department gets rid of the need for calculation and payroll. Therefore, among other things, the employing company does not need to pay for additional work for its finance department.
- The leasing agency is responsible for maintaining labor discipline. It also, if necessary, provides a replacement for any of these employees.
- The employer receives an unlimited trial period to test the competence and other qualities of employees and, if desired, invite them to the staff. At the same time, the duration of such a probationary period is not subject to the restrictions provided by the labor codes of various countries since employees are already at work in the agency.
Development companies and leasing agencies – is there a dissimilarity?
If we leave aside the differences between team leasing and outsourcing when answering this question, we can say that the main discrepancy may lie in the breadth of the services provided.
Development companies, as their name implies, are engaged in developing IT projects. Therefore, they have employees whose qualifications are determined by work in this area.
Agencies commissioned by the employer select workers from any field – even cooks, hairdressers, or architects.
Along with that, as the experience of implementing such a recruitment system in various countries shows, IT specialists are mainly involved in body leasing and team leasing contracts. This means that any development company, if it takes on the responsibility of complying with all the necessary formalities described in the previous section, may well expand its scope of activities and start providing leasing services as an agency. The indisputable advantage of this approach is that the developer company already has a staff of qualified specialists and is well aware of each of their abilities and professional level. In addition, such a company can accept outsourcing orders involving its own staff in implementing these projects. A license to conclude body leasing and team leasing contracts increases the safety cushion. This is ensured by the fact that in the absence of orders, the company can transfer part or even all of its employees to leasing, getting rid of the need to support them during forced downtime.
How profitable and sustainable is such a business?
The prospects for the work of such agencies and the attractiveness of team leasing labour agreements for employers are evidenced by the fact that today large chain retailers, construction firms, banks, IT companies, design bureaus, and agricultural enterprises are transferring their work to the team leasing contracts. The advantage of leasing is that, foremost, they need a different number of employees in different periods. In particular, a short-term increase in staff due to external workers may be necessary on holidays in stores and the service sector. In agriculture, such needs are regulated by production cycles tied to the seasons.
If you decide to expand the scope of your company by providing leasing services or creating a general leasing agency, you will definitely need at least two departments:
- Personnel service. The responsibilities of this department include the following:
- Accounting for the time that employees of the company have worked.
- Drafting employment contracts.
- Other functions that are typical of such services.
An important factor influencing the success of this department is fluency in at least two or three languages for each of the full-time employees involved here. Of course, this requirement is relevant if you plan to provide services on an international level and work outside Anglophone countries.
- Legal department. Again, suppose you are planning an international lease. In that case, your lawyers should have a good knowledge of the labour laws of the countries with which you are going to cooperate to avoid possible pitfalls. At the same time, leasing employment makes it possible to successfully pass through bottlenecks, which are insurmountable barriers for other workers and employers.
Body and team leasing is a progressive form of hiring specialists and a rapidly expanding business. Whether you’re looking at such labor agreements to hire employees with the right qualifications on favorable moments or considering diversifying your company’s services, this approach deserves your attention.