What Is Employee Leasing? Definition and Key Benefits

Although employee leasing is particularly attractive to small and medium-sized businesses due to the cost savings and expertise it offers, companies of all sizes can benefit from this arrangement. Larger organizations may opt for employee leasing to streamline their HR processes and free up internal resources, allowing them to focus on strategic initiatives. The scalability and flexibility of employee leasing make it a viable solution for businesses of varying sizes and industries.

Industry-leading Engagement & Recognition Platform

Leverage our experience to differentiate your business from your competition with ADP TotalSource. If you’re considering establishing a PEO relationship, here some questions to think over.

Managing Employee Benefits: Understanding ASOs & PEOs

By partnering with a PEO, companies can reduce the likelihood of costly litigation and alleviate the burden of managing risk-related functions within their organization. In practical terms, a PEO will handle tasks such as payroll processing, benefits administration, workers’ compensation insurance, and regulatory compliance on behalf of their clients. Doing so, PEOs can help medium-sized and small businesses save time and money while reducing administrative burdens. PEO companies handle essential HR tasks such as payroll, managing employee benefits and workers’ compensation, ensuring tax compliance, and risk management. By outsourcing these tasks, businesses can focus on their core activities and strategic goals.

What Is a Form 1120? Tax Form Filing Tips

Depending on the state your business operates in, you may or may not need to purchase workers’ compensation coverage. As mentioned earlier, PEOs take care of administering HR benefits and other types of benefits. Most companies assume that they have to take on the task of managing all aspects of their business in order to scale successfully, but that is far from the truth.

Selecting the right PEO company for foreign businesses in Beijing involves assessing several key factors. Consider the firm’s experience, reputation, and the range of services offered. To ensure your business thrives in Beijing, visit HROne’s PEO services page for comprehensive solutions tailored to your needs.

Administers Benefits

Attracting and retaining top talent today requires more than a standard benefits package. Fast forward to present day and the word “employee leasing” is not really used in the market place. The PEO industry has been around for over 25 years and has dramatically evolved in that time period. When the industry first started it was often times referred to as employee leasing.

Aloha International Employment

A PEO partnership also provides small businesses with access to improved health insurance and employee benefit offerings, which can assist with recruiting and employee retention. PEOs allow business owners to maintain control of their company and hire new employees as they see fit. The biggest distinction is that in a co-employment relationship through a PEO, the PEO does not provide staff for their client. This responsibility falls on the client, as do any other staff-related decisions. This includes hiring new talent after the PEO partnership is established. However, if needed, some PEOs offer comprehensive recruiting services, including job advertisement creation, interview assistance, offer letter creation, and more.

To clear up the confusion, let’s take a closer look at both employee leasing and co-employment, how they differ, and why a PEO isn’t the same as an employee leasing company. Under joint employment, both employers share control over their employees. This means, for example, either of the joint employers can hire or terminate an employee, set starting salaries and grant wage increases. Contrast this with co-employment, where only one employer—the PEO’s client—has control over the employees. According to the National Association of Professional Employer Organizations (NAPEO), the confusion exists because, historically, it was common to use employee leasing terms to describe the services provided by early PEOs.

• An employee leasing company offers businesses short-term or per-project staffing solutions by providing their clients with workers who can work on-site at the client’s office or place of business.
• PEOs, on the other hand, are in the business of offering HR administration services.
• While this model provides risk mitigation for business owners, it has fallen out of favor due to the competitive advantages of its successor, professional employer organization (PEO) – also referred to as co-employment.
• In fact, by partnering with a PEO, companies can often free up internal resources, allowing employees to focus on more strategic initiatives rather than day-to-day administration.
• PEO acts as a co-employer, sharing HR responsibilities with the client company.

The ideal PEO provider in Beijing will offer personalized solutions that align with your business objectives. Seek companies with a profound understanding of local labor laws and a proven history of aiding foreign businesses. HROne excels in these areas, delivering essential services that ensure compliance and operational efficiency. For more insights on how HROne can assist your business, explore our blog for expert advice and case studies. By outsourcing HR functions, businesses can lower overhead expenses linked to maintaining internal HR teams. With continuously changing regulations, having a partner that ensures compliance with local laws can mitigate risks and avoid costly penalties.

• This means, for example, either of the joint employers can hire or terminate an employee, set starting salaries and grant wage increases.
• Engaging with a PEO company in Beijing can be a strategic move for businesses aiming to efficiently manage HR operations and compliance in the complex Chinese market.
• A Professional Employer Organization (PEO) offers a wide range of benefits for the companies they partner with.
• Business owners often pay less for their PEO services than they would pay for simple, HR activities… and receive much more in return.
• Since the PEO handles a large portion of your administrative tasks, you will have more time to focus on running your business.
• Employee leasing typically does not result in layoffs or job loss for existing employees.
• ADP’s PEO also has the experience to help you understand your benefits plan and other options so you can make an informed decision.

This allows the PEO to negotiate more what is peo employee leasing company expansive and less expensive benefits, workers’ comp, and unemployment insurance rates while offering state-of-the-art administrative services. The average client of a PEO, according to the National Association of Professional Employer Organizations (NAPEO), is a small business with 19 employees. Furthermore, the perfect PEO company for foreign businesses in Beijing should provide robust HR support, payroll management, and employee benefits administration.

Global PEOs specialize in complying with international laws which is beneficial for companies that are wanting to expand and do not have knowledge of a certain jurisdiction. The employment duties met by the PEO and the company are shared between both, so that the PEO has responsibility for reporting wages and employment taxes, whereas the company has responsibility for the employee’s day-to-day work. The PEO is able to take control of the taxes, employee benefits, and contributions that are required when dealing with payroll which means that the company does not have to handle this.

While this model provides risk mitigation for business owners, it has fallen out of favor due to the competitive advantages of its successor, professional employer organization (PEO) – also referred to as co-employment. An employee leasing company offers businesses short-term or per-project staffing solutions by providing their clients with workers who can work on-site at the client’s office or place of business. As a small business, you’ve probably had to deal with situations where you’re short-staffed and could really use an extra hand (or three) for the short term.