employee leasing definition

employee leasing

Arrangement in which a firm (called subscribing firm) transfers its employees to another firm (called leasing firm) which specializes in human resource management, payroll accounting, and risk administration. The subscribing firm leases its employees back as employees of the leasing firm and usually pays more for their services than their salaries at the time of transfer. This way the payroll and associated expenses and taxes of the leased employees become the leasing firm's liabilities.

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