Personnel Leasing in Eastern Europe

Personnel leasing in Eastern Europe describes the practice of providing employees from Eastern Europe to companies in Western Europe through a recruitment agency for a limited period of time.

The advantages include:

• Flexibility
• Cost saving
• Rapid recruitment of labour
• Possibility of reacting to seasonal fluctuations in personnel requirements

Personnel leasing can be useful in various situations:

• When a company temporarily has an increased need for personnel, for example, during a seasonal peak phase or when carrying out a major project, personnel leasing allows companies to react flexibly to these peaks without having to enter into long-term employment contracts. They have the option of hiring qualified employees for the desired period and then releasing them as soon as the demand is met.
• If a company needs specific expertise - be it in the IT sector or in another specialist area - but does not have the appropriate resources or has been unable to find a suitable candidate, personnel leasing is a good option. Personnel leasing also relieves the burden on a company's internal HR departments. The search for suitable applicants and administrative tasks such as drawing up contracts and payroll accounting are taken over by the external service provider.

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The basic steps and aspects of personnel leasing in Eastern Europe are:

1. Legal framework: Each country in Eastern Europe may have different legal requirements for labour leasing. It is important to understand local labour laws and regulations to ensure that staff leasing complies with all legal obligations.

2. Personnel service provider: Companies that need temporary labour can turn to personnel service providers (also known as temporary employment agencies). These providers often have a database of qualified candidates.

3. Agreements and contracts: Agreements are made between the personnel service provider and the client company. These contracts regulate aspects such as the duration of the assignment, qualifications of the temporary workers, transfer fees in the event of permanent employment, and financial terms.

4. Recruitment and selection: The personnel service provider recruits and selects qualified employees based on the client company’s requirements. This may include interviews, as well as reviewing CVs and references.

5. Deployment of temporary workers: The selected temporary workers are assigned to the client company for a fixed period to bridge staffing gaps, handle seasonal peaks, or complete specific projects.

6. Payroll accounting: Payroll for the temporary workers is handled by the personnel service provider. The client company pays the provider an agreed fee for the services rendered.

Poland, Hungary, the Czech Republic and Slovakia are particularly well known for their well-trained labour force in personnel leasing.

Industries such as the logistics, production, construction sector, industry sectors and catering often use personnel leasing from Eastern Europe.

The legal regulations vary from country to country, but as a rule, employment contracts, wage and labour protection laws must be observed.

The maximum working hours are limited by law and vary from country to country.

The costs are made up of the employee's salary, the recruitment agency's placement fee and any additional benefits.

The employees often have good training, practical experience and language skills in the national language of the host company.

Risks can arise from unexpected redundancies, legal disputes or insufficient employee qualifications.

EU freedom of movement enables workers from Eastern Europe to work in other EU countries, which facilitates personnel leasing.

The costs for temporary workers can vary depending on the country, industry, experience, and qualifications. As a rule, these costs include not only the wages but also expenses for social benefits, job security, insurance, and, if applicable, commissions for the temporary employment agency. It is difficult to provide a specific amount, as this depends on various factors. However, it is important to note that companies may incur higher costs for temporary workers than for permanent employees, as they are also paying for the services of the temporary employment agency.

Temporary work and agency work are often used interchangeably, but refer to different aspects of employee leasing.

• Labour leasing: can refer to different types of temporary employment relationships, including project work, seasonal work and others. Temporary workers can be employed directly by the company or by a personnel service provider. Temporary work can be governed by various labour law regulations and contracts.
• Temporary employment: focuses specifically on the leasing of employees to companies for a limited period of time. Employees are employed by a personnel service provider and are loaned out to companies. In many countries, there are specific laws and regulations governing temporary work.

The transfer fee for temporary work refers to the costs a company must pay to hire a temporary worker on a permanent basis. This fee is also known as a conversion fee or buyout cost. It's important to note that the exact amount depends on various factors, including regional laws, company policies, and the individual contractual agreements between the staffing agency, the temporary worker, and the hiring company.

In many cases, the transfer fee is a predefined amount outlined in the contract between the staffing agency and the client company. It may be calculated as a percentage of the temporary worker's annual salary or based on another agreed formula. The duration of the temporary assignment can also influence the amount.

It is advisable to review the contract between the staffing agency and the client company to clarify the specific terms and fees. These agreements can vary significantly depending on the country, industry, and internal company guidelines.

At first glance, a temporary worker may appear more expensive than a permanent employee due to additional costs such as placement fees and agency margins.

However, when analysing the overall cost, it’s important to consider that companies typically have no long-term obligations toward temporary workers. This means there are no fixed costs for social benefits such as health insurance, pension contributions, or paid leave. Additionally, businesses can respond more flexibly to demand and order fluctuations by adjusting the number of temporary workers accordingly.

Another factor is productivity. Temporary workers often adapt quickly to new tasks and can help scale operations during peak periods, which may boost overall productivity.

Therefore, it’s not possible to make a blanket statement about whether temporary workers are more expensive than permanent employees. Costs and benefits depend on several variables, such as the length of assignment, job function, required expertise, and desired flexibility. Each company must assess individually which employment model is the most cost-effective.