Top 3 reasons to Outsource the employment of your workers.

I just finished reading The 2012 Contingent Workforce Report from the IHR (Institute for Human Resources). Many employers are augmenting their workforce with contingent workers (i.e. independent contractors, temporary workers) due to economic uncertainties. Employers are being asked to do more…with less. However, this means potentially greater administrative efforts to manage this process – hiring, on-boarding, payroll, benefits, taxes, terminations, etc, etc. 

Raise your hand if you know what Outsourced Employment is?

Are you sure….?

Not a staffing agency - a staffing agency will provide their worker, not yours.
Not co-employment - co-employment models are “shared” management of the worker.

Outsourced employment is when a third party provider acts as the employer of record for the worker. The provider manages the employment process, payroll and benefits of individuals working for client companies who prefer not to employ these individuals directly. The provider handles all applicable payroll taxes, deductions and insurances as well as ensuring the management of employees is compliant. 
A service contract is signed between the provider and the client. This contract outlines what the company can and cannot do when it comes to areas like terminations.

In short – the worker is employed by the provider, but does the work for the client. The worker receives payroll, benefits and HR support from the firm, but takes operational and performance direction from the client.

Whether you call it Outsourced Employment, Third Party Employment or Payrolling…you’re talking about the same thing. It’s a solution for employers that know who they want to have as a worker, but do not wish to employ them.

Here are a few of the reasons that companies outsource the employment of their workers:

• Ensures full compliance with Provincial and Federal regulations
• Reduces liabilities including termination costs and avoiding Independent Contractor misclassifications
• Employ retirees, seasonal and temporary workers
• Outsource payroll processing and tax remittances
• Outsource human resource management and administration
• Cost control

Here are the top 3 scenarios when Outsourcing employment is a solution:

1. Cross Border Employment

Companies outside of Canada that wish to employ workers in Canada can utilize an Outsourced Employment provider to ensure workers are not mis-classified. Many times these companies are “testing the market” in Canada, but do not want to set up operations. Instead of setting up the workers as Independent Contractors (which is likely a mis-classification), the employer can ensure they are employed correctly. If the company decides to set-up in Canada, the workers can be transitioned back to the company.

2. Augmenting your workforce

When considering augmenting your workforce during peak periods or landing a large account, this can be a great solution. You don’t have to worry about all the administrative work of hiring, on-boarding, payroll, benefits and terminations…especially when it’s for a short period of time. The Outsourced provider will look after all the administrative work while the client focuses on their business.

3. Start-up Businesses 

You are self-employed and you've just landed a huge piece of business. You need to grow. You need workers. But you’re not ready to take them on yourself yet – you don’t have the processes or procedures in place to employ workers. An Outsourced provider can have your workers up and going within hours, especially if you already know who you want to hire. If you need assistance in recruiting, the provider can also do that.

Outsourced employment can be a great solution in many situations. It enables the company to have workers, without having to worry about the employment process. For further information about Outsourced Employment solutions, contact us.


Tim Baker, CHRP
Business Development & HR Representative
HR Options, Inc