Employee leasing in recent times has been an excellent alternative for employers for various reasons. With reduced hiring costs, control of assigned work, and access to expert knowledge, employers must ensure that they compliantly close the hiring process by offering employee leasing agreements.
Similar to the concept of an employment contract, an employee leasing agreement works best when executed in written form, making it legally binding, compliant with labor laws, and covers everything related to the job description.
Although employee leasing offers several merits, generating a compliant employment lease agreement is necessary. This article covers everything you must consider before generating a compliant employment leasing agreement.
What is an Employment Leasing Agreement?
An employee lease agreement is a legally binding document that allows a business to set terms and conditions around leasing out the services of a full-time employee. It is a contractual agreement between the leasing company (or PEOs) to the client requiring the services.
An employee lease agreement ensures that the interests of both parties are protected. Therefore, how you create an employee lease agreement decides your future relationship with another party.
What Should you Include in the Employee Leasing Agreement?
Just like an employment contract, a good employee lease agreement should contain the following details –
- Name and address of both parties
- Rights, responsibilities, and obligations of each party
- Performance expectations from each party
- Payment and payment terms
- Conflict resolutions
- Consequences of breaching contract
In addition to the basic expectations, certain standard sections must be covered.
Standard sections of an employee leasing agreement
In addition to the basic contractural terms specified above, an employee lease agreement must also contain the following sections –
- Provision of services: This section covers all the provisions that relate to the services provided by the leased employee.
- Term and termination clauses:
- The clauses on the termination of employment by the employee or the company leasing the employee are outlined in this section. This includes severance pay and a notice period.
- The employment term (fixed or indefinite term) and
- Obligations and representations and warranties of HASI: This section talks about the amounts payable by the Trust to HASI, such as withholding social security contributions, 401k plans, employee stock option plans, health benefits plans, transition plans, and state or local taxes.
- Obligations of the Trust Provision of Office Space and Administrative Support to CCO: This section outlines the obligations of the Trust as compensation reimbursement. Such reimbursements can be any expenses an employee incurs during the employment tenure.
- Entire agreement: The entire agreement section covers the agreement and understanding between both parties (the employer and the leasing company), which includes administrative support (payroll and/or secretarial services), supplies, equipment, and all matters relating to the agreement.
- Scope of Trust’s Obligations: This section must contain a copy of the ‘Certificate of Trust’ of the Trusts, and a copy of the Agreement and declaration is on file in the Trust’s principal office.
Other standard aspects of the employee leasing agreement include:
- Governing law
A good employee leasing agreement must describe all of the terms and conditions clearly to ensure both parties understand and agree upon the same.
What does an employee lease agreement look like?
Creating an employee lease agreement can be challenging, especially if you draft one for the first time. Below is a sample of how an employee lease agreement looks like with all the standard clauses discussed in the previous section:
|EMPLOYEE LEASE AGREEMENT (PPIC)
This Employee Lease Agreement (“Agreement”) is made and entered into as of the __ day of [__________], 2023, (“Effective Date”) by and between Quartz Health Solutions, Inc. (“Quartz”) and Physicians Plus Insurance Corporation, a Wisconsin stock insurance corporation (“PPIC”).
NOW, THEREFORE, for and in consideration of the premises and of the mutual covenants hereinafter set forth, it is hereby agreed as follows:
(1) All of the rights of PPIC under the Agreement extend to the receiver or Commissioner;
(2) All books and records of PPIC will immediately be made available to the receiver or the Commissioner, and shall be turned over to the receiver or Commissioner immediately upon the receiver or the Commissioner’s request; and
(3) Quartz will continue to maintain any systems, programs, or other infrastructure notwithstanding such proceeding or seizure, and will make them available to the receiver for so long as Quartz continues to receive timely payment for services.
If to [Name of the client company]:
[Name of the client company]
Attention: [Signing Authority]
[Address of the Company]
If to [Leasing company]:
Attention: [Signing Authority]
[Address of the Leasing Company]
IN WITNESS of which, the parties have executed this Agreement as of the Effective Date set forth above.
[Name of the client company}
[Name of the leasing company]
Just like how the given employee leasing agreement sample covers all aspects around the job description, roles, and responsibilities, and the governing laws, you must cover everything in an agreement to mitigate legal challenges.
How can Multiplier help in employee leasing agreements?
Employee leasing can be a great way to meet global expansion plans by helping reduce recruiting costs, administrative and recruiting expertise, and ensuring you work closely with the staffing provider.
To ensure you are compliant with the leasing process, it is important to generate an employee leasing agreement that covers every aspect of roles, responsibilities, and job description while complying with governing regulations.
Multiplier’s team of professionals helps you thrive across global markets by simplifying your HR and payroll teams’ efforts.
You can now partner with us for a reliable, robust, and secure solution that helps you onboard, manage, and pay global employees on a single platform. Additionally, you can get employment contracts that comply with local labor laws. Our intuitive platform has made accessing the global talent seamless and ensures offering employee benefits is made easy.
Get in touch with our experts and experience how we can help manage your global talent.