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What Is An Employee Leasing Agreement

Employee leasing is a contractual agreement in which the leasing company, also known as the professional employer organization (PEO), is the official employer. Employment responsibility is generally shared between the leasing company and the contractor (in this case you). You retain the essential control of the management of the work of employees. Meanwhile, the leasing company assumes responsibility for work, such as the wage and labour tax reporting. Their main responsibility is to write a cheque to the leasing company to cover the payslip, taxes, benefits and administrative costs. The PEO does the rest. If you have opted for employee leasing and are considering working with an EOP, how can you decide if this PEO is the right one for your business? The National Association of Professional Employer Organizations (NAPEO) makes the following recommendations: One entity, the leasing company, leases its employees to another entity, the client company. The client company has dismissed its employees so that they can be hired by the leasing company and re-lease them to the client company. Staff members will perform the same tasks they did prior to this agreement.

Looking for more on the difference between co-employment and employee leasing? Check out our eBook, Co-Employement vs. Employee Leasing: The Differences Brokers (and customers) should know to learn more about their real difference! It is possible to find company performance plans that cover tenants who claim to be employees of the company, based on a common employer theory. If the use of a leasing company is considered a forgery to avoid tax obligations, the company may be liable for withholding tax (and penalties) that are not paid by the leasing agency. The use of temporary workers has such advantages as. B: (1) Leasing agencies often offer work benefits that cannot be pooled by small businesses. (2) Leasing agencies retain all reasonable taxes and pay for FICA, work allowance and unemployment insurance; (3) there is no obligation to continue to use individuals, i.e. an unsatisfactory worker can be replaced immediately; (4) leasing agencies are responsible for the compensation claims of their staff; and (5) temporary workers may face spikes in the company`s workload without the administrative costs associated with hiring temporary workers. Written contracts between the leasing company and the client company are necessary to establish the relationship between the two parties and determine which company is responsible for certain obligations and responsibilities with respect to tenant employees. Legal issues often arise among temporary workers when the leasing agency does not pay its employees properly or when temporary workers claim unemployment or benefits from the company`s workers. The contractual relationship between the leasing company and the client company has advantages: there will be co-employment work.