What is employee leasing?
In personnel leasing, also known as employee leasing or labour leasing, companies use external service providers to temporarily access qualified specialists. In practice, this means a triangular relationship under labour law between the service provider, your company and the employee. Personnel leasing offers access to expert knowledge, particularly in the engineering sector, where specific specialist expertise is required. A study by Statistics Austria shows a significant increase in labour leasing in Austria in the period from July 2021 to June 2022, with the number of temporary workers increasing by an impressive 12.4% compared to the previous year. These figures show that more and more companies are incorporating this form into their HR strategy. Especially in the fight against the shortage of skilled labour, companies are happy to rely on expert service providers.
How does labour leasing work?
Personnel leasing is carried out by specialised service providers who act as a connector between your company and the temporary workers. These service providers supply companies with qualified specialists for a predetermined period of time. All administrative tasks, such as payroll accounting and personnel management, are handled by the service provider. The labour can often be taken on to a fixed employment by the company at the end of the leasing period (usually 18 months in the engineering sector). This is particularly the case in the engineering services sector. Our experience to date in personnel leasing shows that 95% of our customers decide in favour of permanent employment after the leasing period.
Advantages and disadvantages of temporary skilled labour
Deciding whether to integrate labour leasing as part of your HR strategy is not an easy decision. To support you in this process, we have compiled a list of pros and cons for you.
Advantages:
- Flexibility & transparency: In the context of labour leasing, only the actual hours worked are invoiced. All recruiting and administration costs as well as cancellation risks are borne by the provider. As an employer, you therefore have flexible cancellation periods. In addition, the personnel leasing company supports you with the enrolment and any further training of the leased employee.
- Access to specialised skilled workers: 82% of Austrian companies are suffering noticeably from the prevailing shortage of skilled labour (source: WKO, 2023). Personnel leasing gives you temporary access to highly qualified specialists without making long-term commitments. This is particularly advantageous in technology-driven sectors such as engineering services.
- Extended probationary period: The "extended probationary period" of the temporary assignment gives you security with regard to the employee's qualifications and motivation before a fixed employment takes place.
- Long-term hiring option: Once you have got to know the employee during the temporary employment period, you have the option of hiring them on a permanent basis. You can base your decision on practical experience. In this way, you can minimise the risk of recruiting the wrong person and ensure the quality of your team in the long term.
Challenges:
- Cost packages: The costs for employee leasing are made up of the agreed hourly rate and the service fees of the personnel leasing company. In the long term, the leasing costs can exceed the costs of direct employment. However, these can be calculated very well in advance. You should discuss the exact amount of the costs with the personnel leasing company in advance to ensure financial transparency.
- Less control: You are dependent to a certain extent on the services of the personnel leasing company. Restrictions mainly relate to control over certain aspects of staffing.
- Integration challenges: Integrating leased personnel into existing teams can present various challenges. Team members may have to get used to different working methods and corporate cultures. Clear communication and integration into existing processes are crucial to ensure smooth collaboration.
- Uncertain takeover conditions: The legal requirements for taking on leased labour are often confusing and can be challenging. It is therefore important that you understand the legal framework and plan strategically. This will minimise uncertainty. The leasing service provider can help clarify these uncertainties.
