What Is Employee Leasing?
Temporary work or employee leasing means that an employee is leased by an employer to a third party in return for remuneration and for a limited period of time. Here we show you what this means and how it works.
What Is Employee Leasing?
In the so-called employee leasing, there is a triangular relationship between an employer, an employee and another company, which borrows workers from the first company for a limited period of time.
There is an employment contract between the employer, the lender, and the employee, the temporary worker. The borrower company, which borrows a worker, pays money to the lender for the provision of the worker. In order to act as a lender within the framework of an economic activity, the permission of the Federal Employment Agency is required.
Since the hiring out of employees is always for a limited period of time, it is also referred to as temporary employment. Within the agreed time frame, the lender continues to be the employer of the temporary worker. This means that there is no employment relationship between the hirer and the temporary worker.
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When Do You Use Employee Leasing?
– Coping with a short-term increase in the order situation
– Temporary substitution for absent workers
– Avoidance of short-time work
From the point of view of the entrepreneur
Economic structures fluctuate, so the order situation can be good or limited. If the order book is full, there may be a shortage of personnel to process the orders on time. In this case, you need more workers and this can lead to problems.
- it takes time to place ads and wait for applicants.
- new hires need a selection process.
- if the order situation sinks, too many employees cause high costs.
If you hire temporary workers, you are always flexible. A temporary employment agency provides you with employees when you need them. Once the situation in your company has normalized, you don’t have to terminate the temporary worker, because you don’t have an employment contract with him. You can simply “give him back”, whereby this very formulation ensures that the principle of temporary employment still has a tarnished reputation.
Wrongly so, because this form of work is also subject to strict guidelines that define working hours, salary, rights and obligations. It is inevitable that there are black sheep who circumvent the regulations. However, this problem also exists in the case of employment relationships with “normal” employment contracts.
On the one hand, temporary employment is used when vacancies in a company need to be filled temporarily. If the order situation requires a temporary increase in the number of employees without the need to permanently employ additional workers in the company, the principle of temporary employment also comes into play.
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Advantages of Employee Leasing
For the entrepreneur (hirer)
- Flexibility: As an entrepreneur, you can quickly and unbureaucratically increase the number of employees if the situation requires it.
- Cost savings: You do not have to conclude employment contracts with the borrowed employees, because these exist between the temporary worker and the temporary employment agency.
- Non-bureaucratic solution: There is no need to interview applicants, because the temporary employment agency can provide you with workers who have the appropriate qualifications.
For the employee (temporary worker)
- Changing fields of activity: As an employee, you may get to know new areas of your work within the framework of temporary employment, in which you can try your hand. This prevents monotony and ensures that your work is varied and that you regularly learn new things.
- Crisis-proof employment: If you are employed by a company whose order situation is collapsing, you may be threatened with short-time work and the corresponding financial losses. If you work as a temporary employee, you will be paid by the temporary employment agency. Regardless of whether you have just been loaned out by another company or not.
- Easy career entry: Although there is talk of a shortage of skilled workers in all industries, career starters often have a hard time. Many companies require several years of work experience for their vacancies, which is not yet given after vocational training or graduation. In this case, temporary employment is a good way to gain initial experience and recommend yourself for a permanent position.
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Disadvantages of Employee Leasing
For the employer (hirer)
- Unknown personality: When selecting workers, you as the hirer must rely on the statements of the temporary employment agency regarding their skills.
- Integration into the employee team: Temporary workers are new to the team and must first find their place in it. This means that your employees have to adjust to other people and have to reorganize the way they work together. As an entrepreneur, you are required to ensure harmonious structures so that there is no competition between temporary workers and employees.
For the employee (temporary worker)
- Lack of planning security: As a temporary worker you work at least several weeks in one company, but it can happen that you have to change companies at regular intervals. This is varied, but you will always have to adjust to new colleagues and work processes. For this you have to be very flexible, which is not possible for everyone.
- Missing projects: Once your temporary period at the user company is over, there may not be any subsequent projects for you to work on. Waiting for a new temporary assignment can affect your self-esteem, so you should ask yourself in advance whether you would be able to cope with such a situation. During this waiting period, you will continue to be paid by the temporary employment agency. However, if it becomes clear that there will be no further requests in the foreseeable future, you will also be dismissed there and you will have to look for new work on your own.
When Is it An Illegal Supply of Temporary Workers?
- Anyone who hires out foreign employees as temporary workers without the approval of the Federal Labor Office, even though they are not permitted to perform the relevant activity, is liable to prosecution under Section 15 AÜG.
- Normally, a temporary worker may work for a hirer for a maximum of 18 months, provided that the work has not been interrupted for more than three months during this period. (Collective bargaining agreements may stipulate 24 months as the maximum assignment period). Since April 1, 2017, it has been the case that temporary workers must be taken on by the company if they have worked for more than 18 months in one and the same company. If the hirer does not agree to this, the temporary worker must be removed by the lender.
Are There Alternatives to Hiring Out Employees?
Especially in the IT industry, there are many people who have specialized in freelance work. Working in their own homes and accepting assignments as needed creates a living situation for many freelancers that they feel comfortable with.
Unlike a contract worker, freelancers are independent and responsible for their own assignments. At the same time, this form of work gives them a great deal of freedom.
When freelancers and staffing agencies like ElevateX come together, all parties benefit from this togetherness. The staffing service provider is informed about every qualification of a freelancer and is therefore able to provide suitable workers to entrepreneurs who want to be supported by freelance specialists. This assistance can be of a short-term nature or last for years in the interest of both parties.
ElevateX, for example, sees itself as a point of contact for entrepreneurs looking for IT specialists. Through a large community that works exclusively in this industry, every searching entrepreneur meets freelancers who know their job and can come up with expertise. This centering saves time in the selection process, because the best freelancer can be found and hired for every job.
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FAQs
What Is Meant by Employee Leasing?
Job seekers enter into an employment contract with a temporary employment agency and are placed by the agency with a company that is temporarily looking for additional employees.
What Is Employee Leasing Used for?
Employee leasing is used in times of employee absence due to illness or as a temporary replacement for pregnant employees and subsequent parental leave. In addition, temporary workers are hired when the volume of orders increases drastically for a short period of time and the implementation of the order requires more workers.
What Are the Alternatives to Employee Leasing?
Personnel service providers bring freelancers and companies in contact with vacancies in other ways, for example. It is particularly advantageous if a staffing service provider specializes in a particular industry, so that companies can search for suitable employees in a targeted manner.
Job seekers enter into an employment contract with a temporary employment agency and are placed by the agency with a company that is temporarily looking for additional employees.
Employee leasing is used in times of employee absence due to illness or as a temporary replacement for pregnant employees and subsequent parental leave. In addition, temporary workers are hired when the volume of orders increases drastically for a short period of time and the implementation of the order requires more workers.
Personnel service providers bring freelancers and companies in contact with vacancies in other ways, for example. It is particularly advantageous if a staffing service provider specializes in a particular industry, so that companies can search for suitable employees in a targeted manner.
