Staff rental (outstaffing): Advantages and benefits

In the modern world, belonging to one or another profession is increasingly becoming the determining criterion of well-being for people. Often employers hire “headhunters” in order to attract the best specialists to their ranks, and on the other side, there is an even more fierce struggle – for a better place “under the sun” in the form of a promising company with a good social package, the opportunity career growth and other bonuses for employees. It’s no secret that the labor market is becoming more and more innovative every year, and along with the arrival of various applications, social networks for finding employees (for example, LinkedIn), a new way of interaction at the company and employee level has appeared, which is called outstaffing.

What is an “outstaffing”?

Outstaffing is a peculiar way of removing personnel from the organization’s staff. In outstaffing, an employee enters into an employment contract not with a company that is actually an employer, but with an intermediary organization, the so-called out staffer. In this case, the process of renting a specialist working in a contractor company to perform a specific task with a customer is carried out. The specialist is part of the client’s team along with other team members; his work is regulated by the management. In this case, the client pays the company to the contractor for outstaffing services under the contract, and the contractor, in turn, pays the salary to the specialist.

Difference between «outstaffing» and «outsourcing»

Outsourcing is the transfer of entrepreneurial functions, responsibilities and business processes to another company working in this area on the basis of an agreement. This service improves the efficiency of the enterprise and allows you to use the released resources to develop new directions. Outstaffing implies the provision of personnel with the necessary qualifications on a temporary or permanent basis. When outsourcing, any work or services are performed completely with a guaranteed required result and process control.

Types of outstaffing services

The variety of types of outsourcing services is determined by the number of areas of activity in which customers need to use the services of hired personnel. Most often, customers involve specialists in working specialties: builders, drivers, loaders, salesmen, cashiers, plumbers, electricians and storekeepers. Less often, customers need narrowly focused specialists with deep knowledge, such as the chief project engineer, the chief project architect – if it is necessary to build one object, after the commissioning of which there is no need for the services of professionals of this level. The outstaffing service is used when they perform complex intellectual tasks (IT services, analytics, software development and implementation, block chain technologies, Big Data analytics), in the legal or accounting sphere.

Advantages of outfitting

It is no coincidence that such a service appeared on the labor market, since it has a huge number of advantages. Namely, if a company uses outstaffing, then it gets rid of problems with labor disputes. When an employee enters into an employment contract with an out staffer company, and not with a customer, this excludes the customer’s participation in labor disputes that concern this employee, and liability for violation of the law to him. Further, personnel management processes and personnel production are greatly simplified. Holidays and sick leave are issued by the out staffer company. As a result, this reduces the burden on the client’s accounting department and eliminates the need to provide separate social guarantees. The out staffer also maintains personnel records, administers business trips, prepares advance reports, and provides the necessary certificates to employees. This is a definite plus especially in startups. Simplification of financial issues. Out staffer carries out the calculation, calculation and payment of salaries and all compensation. Handles taxes and various levies, such as pension fund and social security contributions; optimizes taxation, forms the customer’s tax credit.

Disadvantages of outstaffing

The advantages of outstaffing for the company are obvious, but this service also has a number of disadvantages. Financial losses due to cooperation with an unscrupulous agency. You should never forget about the presence of scammers or simply unscrupulous performers. This can be avoided if the customer selects a reliable contractor who is legally entitled to provide such services. Outstaffing can reduce the rate at which vacancies are filled. Not all new hires are ready to work out staff. This can slow down the employment of new employees in the company. Candidates with potential may go to competitors, and the rate of filling a vacancy may decrease.

Outstaffing service cost

The cost of the service is calculated on the basis of several factors: the term of the service, the number of personnel and the level of salary provided by the employees, as well as the type of outstaffing. In case the provision of outstaffing services involves work without recruiting personnel by the company, the cost of services will vary from 10 to 20% … If it is necessary to withdraw a large number of people from the staff, then the intermediary firm provides significant discounts.

Outstaffing service regulations

The legislation of the Republic of Belarus lacks the concept of «outstaffing», and therefore there is no legal regulation of it either. However, there is an opinion that, despite the fact that the outstaffing agreement is not regulated in the legislation, its application is possible in accordance with cl. 1 part of the second paragraph 1 of Art. 7 Civil Code. According to this provision, civil rights and obligations arise from contracts and other transactions provided for by law, as well as from contracts and other transactions, although not provided for by law, but not contradicting it. By its nature, outstaffing involves the transfer not of functions, but of specific employees. At the same time, such workers are registered for work in a third-party organization, but in fact they work in the same place and perform the same functions. From the point of view of civil law, an outstaffing agreement is a service agreement. In this regard, it should be regulated by the provisions of Ch. 39 Civil Code. According to paragraph 1 of Art. 733 of the Civil Code under a contract for the provision of services for a fee, one party (the executor) undertakes, on the instructions of the other party (the customer), to provide services (perform certain actions or carry out certain activities), and the customer undertakes to pay for these services. The content of the outstaffing agreement specifies the services that the contractor must provide by the efforts of his employee. It is also permissible to indicate the surname, name, patronymic of the employee, by whose forces the services will be provided. This requirement is confirmed by the provisions of Art. 734 of the Civil Code, according to which, unless otherwise provided by the contract for the provision of services for a fee, the contractor is obliged to provide services personally. Taking into account the foregoing, the possibility and necessity of concluding a contract for the provision of services for a fee should be assessed directly by the parties to the contract – the customer and the employee.

Documentation of the outstaffing

If you need to move staff out of the state, you should take into account the many nuances that contribute to the correct execution of documents. Namely, it is important to draw up primary documentation related to the performance of services by an employee. We should focus on drawing up contracts between the customer and the out staffer (intermediary) company. Always make sure that the contracts reflect the real services and work performed by the employee. Do not forget to correctly draw up the internal documents of the counterparty. If necessary, explain to the permanent staff the specifics of the outstaffing process. Do not forget that the human factor very often affects the productivity and quality of work, so it is important to take this nuance into account when communicating with staff.

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