Staff leasing or personnel leasing is when one company (a specialized agency) which employs, pays wages, social security contributions and taxes with regard to a worker’s contract “leases” the worker(s) to another company against remuneration. There are different reasons why an organization might want to enter into such an arrangement, but generally these boil down to a lack of time, resources or both. That is why companies use the services of these specialized agencies for seasonal or highly qualified labor, or to fill out a temporary vacancy.
Under Bulgarian law staff leasing may be used for short-term purposes: until a specific work is done (i.e. seasonal work or a project) or to substitute a missing worker. The reason for this is that the contracts which workers sign with these agencies can be only temporary, which under Bulgarian law means no more than 3 years.
2. Distinction from similar arrangements
Staff leasing is not the same as paying a company to search for workers with whom you later enter into an employment contract. The leasing agency is the employer and your company only uses the labor.
Some jurisdictions such as the US recognize so-called Professional Employer Organizations which effectively become co-employers with the company where the labor is provided. Bulgarian law does not have such a legal figure.
Staff leasing should be seen as a form of outsourcing. This is because one of the functions of a company – that of hiring workers, payroll, taxes and administrative affairs – is being contracted out to an agency.
3. Risk factors
Before turning to a staff leasing agency, ask some important questions:
1) Has the agency been properly registered?
2) Does it provide the qualified labor your company needs?
3) What is the feedback from previous customers?
4) Does it give social benefits to its workers? If so, are these the precise social benefits you would like the people working at your company to have?
4. Legal regime
As a recipient of leased labor you do not have obligations regarding employee wages, social security contributions, taxes and other administrative issues. This does not mean, however, that you have no obligations towards the worker. The law requires that you specify his workplace, give him his professional tasks and safety instructions, keep record of his working hours, etc. You cannot change the position or nature of the work for which the worker was leased.
There are some categories of labor for which you cannot lease workers. Using such arrangements is also prohibited in case of an ongoing strike.
Leased employees must be treated equally with regard to other employees in the company which do the same or similar work. This includes things such as initial and future training.
There are certain questions on which the company and the agency must reach an agreement in their contract, as required by law. These include, for example, the way in which leave days can be used.
Bulgarian law declares clauses that forbid the worker from entering into an employment agreement with the company to be invalid. As such the law gives you the opportunity to hire a leased employee if you wish do to so.
If you’d like to take advantage of this flexible contemporary possibility for acquiring labor force, but you have questions or doubts regarding the legal arrangements, do no hesitate to ask us – your online legal consultant!
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