Employee leasing – what is it and how does it work?

Employee leasing – what is it and how does it work?

Staffing gaps can undermine the operations of any company: halt production, delay shipments and drive up operating costs overnight. It is no coincidence that more and more companies, instead of running a lengthy recruitment process, reach for a ready-made solution – employee leasing. It is a model that provides quick access to workers without taking over the entire HR administration. We explain the purpose of employee leasing, what it actually means, which regulations it is based on and when it truly pays off.

Employee leasing – what is it?

Let's start with the basics. In Polish law there is no statute that explicitly defines the term "employee leasing." It is a market term, used colloquially by entrepreneurs and employment agencies. Its legal foundation is temporary work, regulated by the Act of 9 July 2003 on the employment of temporary workers.

In practice, for entrepreneurs employee leasing means hiring workers from a specialised agency. The company does not employ them directly but makes use of their work. In return, all HR formalities remain on the agency's side.

How does employee leasing work in practice?

The whole structure is based on three parties, each of which plays a different role.

• The temporary work agency – this is the formal employer. It recruits candidates, signs contracts with them, keeps HR records, calculates and pays out wages, and remits ZUS contributions and tax advances.

• The user employer – this is your company. It assigns tasks to the worker, organises their work, directs them on a day-to-day basis and monitors results, and is responsible for safe working conditions.

• The temporary worker – performs work for the user employer and under their direction, even though their contract is signed with the agency.

The settlement is simple: the agency issues a single invoice, most often monthly, based on a record of the hours actually worked.

Employee leasing versus temporary work – and how it differs from outsourcing

Since employee leasing is based on the Act on temporary workers, the question of their relationship arises: employee leasing versus temporary work. Contrary to appearances, are these two different things, or actually one and the same?

In our reality they are essentially synonyms – "leasing" is simply a more vivid, commercial name for the same service. The distinction that really matters lies elsewhere: between leasing (and thus temporary work) and outsourcing.

• With leasing, you "hire" workers, but it is you who directs them.

• With outsourcing, you hand over an entire task to an external party, together with responsibility for its completion.

Confusing these models is always costly in its consequences, because poorly structured outsourcing can be classified by the National Labour Inspectorate as disguised temporary work. And that means disputes and a fairly costly headache.

Employee leasing – benefits for the company

Why has this model gained such popularity in logistics, manufacturing and processing? For a prosaic but important reason: with employee leasing the benefits are greater than one might assume, and they are most visible precisely where demand for people fluctuates and the pace of operations matters.

• Speed – workers can be sourced within a few days. There is no need to run a weeks-long recruitment process on your own.

• Flexibility – you increase the scale of employment at the peak of the season and reduce it when there are fewer orders, without dismissal procedures.

• Predictable costs – you pay for the hours worked, on the basis of a single invoice, with no hidden surcharges.

• Fewer formalities – recruitment, contracts, ZUS, working-time records and payouts are on the agency's side.

• Limited legal risk – a reliable agency is responsible for the compliance of employment with the regulations, including the legality of foreigners' work.

In the case of employee leasing, the benefits also come with one drawback that is definitely worth keeping in mind: a temporary worker is, by nature, tied to the company more briefly and more loosely. On top of that, excessive turnover within the team makes it harder to build up experience and bonds with the remaining employees. That is why leasing is best treated as a tool solely for meeting specific needs – a season, a project, a replacement – rather than as the default way of building your entire permanent workforce.

When is it worth considering employee leasing?

Hiring workers is a very versatile solution that works well when a company faces seasonal peaks, is carrying out a short-term project, needs to quickly fill positions after sudden departures, or is testing the scale of operations before deciding on permanent posts. In each of these cases, hiring workers provides time and peace of mind – the team grows when it is needed and shrinks when demand slightly falls.

The final outcome depends on the quality of the agency: on the accuracy of selecting people, smooth HR administration and reliable accounting of hours. Well-run employee leasing relieves the company and stabilises production; poorly run, it generates turnover and risk. It is therefore worth choosing a partner that treats both the employer and the worker seriously.