Stepping into adulthood makes it a point to have employment because that’s how you pay the bills, right? With this being said, some businesses are joining the staffing agencies or the professional employer organization for hiring the staff. Consequently, you will become the co-employees with them and, in some cases, known as employee leasing.
These standards can impact daily operations, but people aren’t aware of what co-employment actually means. In this article, we are sharing a complete guide on co-employment, the definition, and more!
Co-Employment – What Does It Mean?
Co-employment works when two or more employers share legal responsibility towards the employees. The co-employment is also known as employee leasing and works by the development of the contractual agreement. The agreement focuses on the details regarding the responsibility of the employer. When it comes down to co-employment, two companies work up this phenomenon, such as;
The staffing agencies come into play when the businesses are in dire and constant need of help. For instance, if there is a doctor’s office, the staff will be required for on-call front desk help and medical billing.
Professional Employer Organization
This type of organization is utilized by the companies that want to outsource the payroll. Also, they must need to outsource the benefits while gaining control of the employee work.
As far as the workability is concerned, the businesses must sign the agreement with the parties, and the responsibilities will be shared among the businesses and staffing agency or PEO. To be honest, the specifics will vary with the firm, and we have shared the information below;
Sharing The Responsibilities – Professional Employer Organization
In case you are adjoining with the professional employer organization, your business will be responsible for the day-to-day tasks, performance management, and recruitment. On the other hand, the PEO will be responsible for taxes, payroll, unemployment claims by employees, employee compensation, paperwork, and onboarding.
Sharing The Responsibilities – The Staffing Firms
For everyone joining up with the staffing firm, your business will be responsible for relaying the performance management information to the agency and the day-to-day tasks. On the other hand, the staffing firm will be responsible for taxes, tax forms, payroll, compensation, unemployment claims, paperwork, onboarding, recruitment, decruitment, and relaying the performance assessment.
If we differentiate between these two forms, the businesses will have higher control when adjoining with the PEO. When it concerns the small business, they usually want to outsource the payroll and benefits to the PEO without handing over the performance management, operational control, and recruitment.
In contrast, if you have a busy business, such as the law office, opting for a staffing agency is a good choice because they offer better help with the functions. With this being said, you need to line out what issues and responsibilities that you want help with and choose the co-employment accordingly.
Is Co-Employment The Right Choice For Your Business?
The co-employers tend to solve the issues with small-scale and medium-sized businesses. First, PEO helps with the HR aspects, such as benefits, compliance, payroll, and onboarding and recruiting. On the other hand, the staffing agency will take care of employees’ sources, such as hotels, call centers, medical offices, banquet halls, and more.
Benefits of Co-Employment
Before you sign off the co-employment agreement with the staffing agency or PEO, it’s loaded with benefits. However, the benefits will differ from the agreement, so do read carefully!
Access To Improved Services
The prime reason for the development of co-employment is that businesses will have better access to top-notch services if they couldn’t find them independently. For instance, the staffing agency will be able to hire a front desk helper with a decade of experience in a short time period compared to the time you will take to find such personnel. When it concerns the PEO, they tend to work with the high-end benefit providers, so your employees will get the insurance and easy payroll processing.
Freedom To Run The Business
Designing compensation, employee recruitment, and HR tasks take extensive resource and time. This can also meddle with business processing. So, the co-employers will help with these tasks, so you can focus on developing and running the business.
Rather than hiring the full-time HR manager and paying the insurance broker can be pretty expensive. However, when you work with the co-employers, the costs will be reduced because they pool your business with others. With this being said, you can get such tasks done and gain benefits at lesser costs.
What are the Downsides of Co-Employment?
When it comes down to co-employment, it has multiple benefits, but it comes with a fair share of downsides and risks. However, these aren’t very exhaustive and tend to differ with businesses and vendors. So, have a look at what you need to be more careful about!
Potential Increment In Costs
Yes, we have already mentioned that cost-effectiveness is the benefit of co-employment. Still, in some cases, the businesses end up paying way more because growth becomes explosive. In the PEO case, the businesses need to pay on a per-employee basis; so, if the business grows, the fee will increase.
PEO is a fine choice for businesses that have less than eighty employees. On the other hand, the staffing agency will charge extra if the employee count or hours increase compared to the fee written in the contract.
Obviously, when you opt for staffing agencies and PEO, they tend to control the HR, taxing, and compensation, which means you won’t be in much control. The staffing agencies are usually more controlling because they can hire and fire.
The co-employment is only suitable for the small business if you’ve positive financial standing or no issues like poor business conduct or lawsuits.