Difference between Leased Employees and Contract Employees
Leased employees and Contract employees are two distinct types of employment arrangements, each with its own characteristics and implications for both the workers and the companies they work for. Some of the differences are as follows,
Basis |
Leased Employees |
Contract Employees |
---|---|---|
Employment Structure | They are employed by a Professional Employer Organization (PEO). The PEO handles all administrative tasks related to employment, such as payroll, benefits, and tax withholdings. Leased employees work at the client company, but they are not directly employed by it. | These individuals are typically hired directly by a company to work on a specific project or for a set period. They can also be self-employed or work through a staffing agency. Unlike leased employees, contract employees handle their own taxes and benefits. |
Duration and Scope of Work | They often work for the client company on a long-term basis. Their roles are usually similar to regular employees of the company. | Their work is usually project-specific or for a fixed term. Once the project is completed or the term ends, the contract employeeâs engagement with the company typically concludes. |
Benefits and Taxation | They receive benefits like health insurance, retirement plans, etc., from the PEO. The PEO also takes care of tax withholdings and compliance. | Generally, they do not receive benefits from the company they are working for. They are responsible for their own taxes, often paying self-employment tax, as they are considered independent contractors. |
Control and Supervision | While the PEO is the official employer, the client company has control over the leased employeesâ day-to-day activities and job duties. | They usually have more autonomy regarding how and when they work, especially if they are self-employed. The company hiring them typically focuses on the outcome or deliverables rather than supervising the day-to-day work. |
Legal and Financial Responsibilities | The PEO assumes most of the legal and financial responsibilities related to employment. | These individuals or their agencies bear the legal and financial responsibilities for their work, including taxes and insurance. |
Contact Us