What is outstaffing - description of the service with examples

A semantic and morphological analysis of the concept of “outstaffing” shows that it is a foreign (English) term, which in turn consists of two words: “out” - “outside” and “stuff” - “staff” (company employees).

It turns out that outstaffing is a certain economic state of an organization in which the staff of its employees is moved outside the scope of the organization itself. Despite the initial non-obviousness, such an unusual solution can nevertheless provide certain advantages to a company using this work scheme. So, outstaffing – what is it in simple words and what opportunities does it provide? Let's look at it in detail below.

Outstaffing - definition in simple words

Outstaffing is a form of cooperation in which one company (outstaffer) leases workers to another company (customer).

There are situations when a company needs one or more employees, but there is no point in hiring additional staff. This need arises, for example, during the pre-New Year sales surge or to perform heavy work 1-3 times a month.

To solve important but temporary problems, it is not advisable to hire a special person and enter into an employment contract with him. Firstly, no one will take such a position, since the pay for such a schedule will be low. Secondly, there may be problems with dismissal. Thirdly, this is additional paperwork.

A company providing outstaffing services will help you get out of the situation. An entrepreneur can “rent” a specialist for a while. The customer needs to indicate the requirements for the employee, and the provider will take care of selecting the right person. The agency ensures that staff are ready to report for duty when the client needs it.

The contractor works under an employment contract concluded with the outstaffing company. The customer does not enter into a legal relationship with the leased employee, but the contractor undertakes to fulfill all the requirements of the manager specified in the contract on an equal basis with the main personnel.

There are several types of outstaffing services in Russia:

1. Personnel services include selection, as well as documentary support of employees.
2. Accounting and outstaffing services - audit and accounting.
3. Consulting and outstaffing services - training and consultations.
4. Legal outstaffing services - legal support for an enterprise.
5. Direct outstaffing services.

Outstaffing should only be used to attract employees for a short period of time. If you plan to hire a person to perform duties on a permanent basis, it is better to draw up an employment contract with him.

Adviсe

1. Great attention should be paid to the contract being signed; it is important to spell out all the risks and reflect as fully as possible the nuances of introducing workers into the staff of a third-party organization;
2. The direction is new for domestic business, so you should analyze all available examples of outstaffing relationships, consult with those businessmen who have had similar experience;
3. If you decide to use the services of an outstaffing company, carefully analyze the activities of the company’s employees, familiarize yourself with their personal affairs, track record, and work experience;
4. For the first time, it is enough to conclude an agreement to hire employees for a short period. This way you can see how effectively the employees cope with the task; if successful, you can always extend the contract.

Examples

To better understand what outstaffing is, here are some examples:

1. Once a month, large deliveries of products arrive at the enterprise and labor is needed to unload the truck. For the sake of a few days, there is no point in hiring movers to perform such rare but important work. This will be expensive and will involve paperwork. This is where outstaffing comes in handy. The head of an enterprise can contact a recruitment agency and rent the required number of loaders for a short period of time.
2. Outstaffing can also be useful for performing periodic or one-time work. For example, a new product requires a large number of sales agents and promoters to enter the market. But it is not practical to hire and then fire so many people. It will be much more convenient to contact an outstaffing company, which will provide the required number of workers at the right time.
3. Outstaffing can solve the problems of staff limitations. A large company opened a representative office in another city. The organization is developing, and the number of orders is increasing so much that the regional office no longer has time to process all incoming applications. But the company's personnel policy does not imply staff expansion. However, after the failure of several large orders, management decides to hire outstaffers. 6 additional employees were hired, and the problem resolved itself.

Pros and cons of outstaffing

Outstaffing, if used correctly, will be useful for many organizations. But it has advantages and disadvantages that cannot be ignored.

Pros:

1. you can launch a new project without recruiting and training staff;
2. fill an “unpopular” vacancy in a short time;
3. reduce the company's costs for personnel records;
4. save on finding highly qualified specialists;
5. resolve the issue of staff turnover;
6. optimize staffing;
7. reduce legal and legal liability for employees.

Minuses:

1. leased employees may have a negative attitude towards the company;
2. it is impossible to guarantee completion of work on time;
3. it is difficult to improve the qualifications of an outstaffer;
4. it is impossible to fully monitor the performance of the performer.

Outstaffing is convenient when hiring migrants. The legislation of the Russian Federation strictly regulates employment contracts of local enterprises with citizens of other countries. And since the customer does not have a legal relationship with the employee, there is no need to worry about this. In addition, this relieves the company from checks by the migration service.

Conclusion

Outstaffing has become an excellent form of management that helps to cope with difficulties during a crisis. Outstaffing helps reduce company costs and optimize its income, and also influences the favorable formation of corporate relationships.

“How do you feel about outstaffing? Sometimes, concluding an outstaffing agreement is the only right decision that can save you from many costs. Perhaps it’s time to think about introducing advanced technologies into the business process?”

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Author of the article Angela Karpacheva Freelancer

Who does outstaffing?

Services for the provision of personnel for rent are provided either by recruitment agencies that have been accredited, or by legal companies or individual entrepreneurs who have entered into agreements with customers and have secured the consent of the contractor himself.

Outstaffing companies must:

• use exclusively the basic taxation system;
• have no arrears in contributions to the budget;
• The authorized capital of the company must be at least 1 million rubles;
• The agency manager must have work experience in his specialty and a specialized higher education.

Sample contract

Any operation within the framework of outstaffing cooperation is carried out on the basis of a concluded bilateral agreement.

Such an agreement indicates the name and surname of the specialist, as well as the time allocated for the execution of the project, the amount of the salary and the list of necessary work.

The outstaffing company provides a package of information about the specialty and qualifications of the provided worker.

In the process of implementing work under the concluded agreement, the parties may draw up reports on the progress and results of the work performed. They indicate the time period worked by the specialist and the amount of work performed. It is worth noting that the hired worker, as well as the customer company, are not documented and do not draw up any documents that have legal force. The current Labor Code of the Russian Federation does not carry out any regulations regarding the relationship between the customer company and the outstaffer.

If you are the head of a company, then the main documentation goes through you. But sometimes it happens that the director is on a business trip, and it is necessary to sign documents in his absence. In such cases, a power of attorney is drawn up for the right to sign documents. Read carefully how to draw it up, to whom and why this document is issued.

Read about what VAT is and how this tax is calculated here.

Is an individual entrepreneur a legal entity or an individual? Confusion in these concepts arises constantly. In this material https://businessmonster.ru/terminyi/ip-eto-fizicheskoe-ili-yuridicheskoe-litso.html you will find a detailed answer to this question, and also find out what is the difference between an individual entrepreneur and an LLC.

Work model

The model of working with an outstaffing company is simple. The provider concludes employment contracts with employees in accordance with the law. Next, the customer contacts the agency, and the parties sign an agreement for the provision of services, which specifies personal data, compensation, responsibilities and duties of the performers.

Then the provider sends employees to the customer’s enterprise to perform the work specified in the contract. All documentation is maintained by the outstaffing company. Every month the provider pays employees a salary, and also accrues bonuses and additional payments at the request of the customer.

The outstaffing company regularly pays contributions to the Pension Fund for employees, as well as deducts taxes and makes other payments required by law. Every month (week, quarter) the provider issues an invoice to the customer based on reports on the work done.

The cost of outstaffing services includes:

1. remuneration of the performer;
2. contributions to the Compulsory Medical Insurance Fund, the Social Insurance Fund and the Pension Fund;
3. personal income tax;
4. payment upon dismissal and vacation pay;
5. commission of the outstaffing company;
6. additional services (medical examination, training, provision of workwear or uniforms).

The agency commission is about 1000-5000 rubles for each employee. But, if there are a lot of employees for rent, the outstaffer can reduce the price. The provider's commission includes reporting costs for each contractor, accounting and tax support.

Legal side

The relationship between the outstaffer and the customer company that needs employees is formalized through a personnel supply agreement.
All conditions under which an employee is hired come from the customer. He sets their wages, assigns the amounts of possible bonuses and compensations. The outstaffer’s task is to find good personnel who could be constantly available to him to solve the various needs of clients.

Personnel and accounting records are maintained for employees, strictly within the framework of Russian legislation. An employment contract is concluded between the outstaffing company and each employee. It can be fixed-term (only for the duration of the contract for the provision of personnel to the customer) or indefinite - if the specialist is very valuable, and it is assumed that he will always be provided with work.

The difference between outstaffing and outsourcing

The concepts of outsourcing and outstaffing are often confused. But these words have completely different meanings. Main differences:

1. When outsourcing, the employee is required to be at the workplace and obey the rules common to all personnel. When outsourcing, the customer only needs the finished result (for example, an accounting report).
2. With outstaffing, the customer pays for the time of provision of personnel, and with outsourcing, for the final product of labor.
3. The outstaffer receives a permanent salary, while the outsourcer is paid only upon completion of the work.

Outstaffing and agency labor

There is an assumption that outstaffing has been banned. However, it is not. From 2021, the state prohibits only agency work. Previously, these words were indeed synonymous, but after the adoption of the law the terms were separated. And now agency work is prohibited, and outstaffing continues to exist.

Agency labor involves leasing an employee for any position, any place to perform any work. In this case, the opinion of the employee himself does not matter; only an order from management is sufficient. In outstaffing, the performer is a full-fledged party who agrees to work in the customer’s company.

What positions can you hire an outstaffer for?

Until 2021, company owners and managers could save on outstaffers:

1. Accident insurance premiums were lower. Companies that engage in dangerous or hazardous activities must pay decent insurance for each employee. But if the employee’s employer was an outstaffing agency, the contributions were much lower. The workers themselves suffered from this, but the companies only benefited.
2. Contributions to the Pension Fund were less. Even if the position requires early retirement (for example, a miner), the company does not need to pay more.
3. Savings on additional vacations in companies engaged in hazardous or harmful production.
4. Undesirable or obstinate employees who went on strike were quickly replaced with workers from the outstaffing agency.

But this state of affairs violated the rights of performers. Therefore, since 2016, some types of professions require only the conclusion of an employment contract with all benefits and insurance.

Now the following restrictions and prohibitions apply to outstaffing:

• Additional staff cannot be hired during strikes by key employees.
• The hired worker cannot engage in hazardous or harmful activities.
• Specialists who must obtain permits and accreditations must enter into a full-fledged employment contract and be on a permanent staff. These professions include healthcare workers, teachers, chief mechanics and engineers.

Additional questions

What is not covered by the 2021 outstaffing ban?

Federal Law 116 on the prohibition of outsourcing 2021 regulates the use of borrowed funds within the following framework:

• it is allowed to use the services of agency workers for a period of no more than three reporting periods (9 months);
• the amount of remuneration for work for outstaffing personnel cannot be less than the salary of the main employee;
• an enterprise cannot use more than 10% of agency labor without the consent of the trade union. It is allowed to use agency labor on a contractual basis if the employee helps in the household. The ban on outstaffing does not apply to categories of employees who, according to the labor code, cannot count on full-time or permanent employment. These are workers who include:
• single mothers with young children;
• persons recently released from prison;
• students;
• parents with many children.

This is also important to know:
How sick leave is paid in 2021

The requirements for companies that can provide workers on loan have become more stringent.

How to choose an outstaffer

It is necessary to collect information about all agencies operating in your region. The list of accredited companies can be found on the Rostrud website.

Now you need to compare the payment criteria and the terms of the outstaffing agreement and choose the most suitable option.

In what cases would outstaffing be appropriate?

Typically, outstaffing is appropriate if an employee cannot be hired by the customer company.

The reasons are as follows:

1. Since the contractor is responsible for the personnel, the customer is not vulnerable to inspections.
2. Working with migrants allows you to get not only cheap labor, but also to simplify all legal issues.
3. You can hire an employee for a long trial period to ensure his qualities.
4. A small staff will reduce costs for accountants and personnel officers.

When is outstaffing prohibited?

Outstaffing is prohibited in the following cases:

1. The customer declared himself bankrupt.
2. The workers went on strike.
3. Working conditions are dangerous.
4. This type of employment is not acceptable in the case of ship crews.
5. Delays in cash payments exceed 15 days.
6. Due to the risk of dismissal, the company is trying to retain the team by reducing working hours.
7. An employee needs a license or certificate to be allowed to work.

Who is responsible for the personnel

Amendments to the labor code help protect the interests of workers.

If the contractor fails to pay the due amount, the customer will be liable.

If an accident occurs at work, all responsibility falls not on the legal employer, but on the actual one. A special commission will investigate all the circumstances of the case.

Outstaffing on the Russian market

In Russia, outstaffing is mainly used by foreign companies, so not many organizations provide such services. The legislation of our country does not yet spell out many aspects regulating the activities of outstaffing companies. In particular, their responsibility for employees.

Another obstacle to the development of outstaffing is the fact that many ordinary citizens of the Russian Federation do not understand the meaning of this phenomenon. After all, you have to get a job in one company and work in another. Most employees prefer to work in the same place for many years.

But with the development of the market and business in Russia, outstaffing is becoming increasingly widespread. Intellectual services are especially popular - personnel, accounting, consulting.