Difference Between Lease Hire & Contract Hire

Lease hire and contract hire each provide specific benefits the to parties involved.

Lease hire and contract hire agreements require the use of a third party staffing company to facilitate. In both arrangements, the staffing company has the legal responsibility of the employees.

Employee Leasing

A company that provides employee-leasing services is a professional employer organization, or PEO. PEOs hire the entire staff of a client company and manage employee benefits, payroll, insurance and other human resources duties. The PEO is effectively leasing employees back to the client company under contracted terms.

Contract Hiring

Contract hiring is most commonly available through a temporary staffing agency or recruiting firm. The agency recruits for the client company's open positions and hires employees to work on a contract basis. At the end of the predetermined length of contract, the client can hire the employee directly. This arrangement provides a risk free opportunity for the client and employee to work together on a trial basis to ensure a proper match.

Benefits

Both lease hire and contract hire arrangements have benefits to the employee. In a lease hire agreement, the employees often have access to better benefits, as the buying power of the agency allows for lower rates. Contract hire arrangements are beneficial to the employee, as they provide access to positions that are not typically advertised.

References

• The U.S. Bureau of Labor Statistics: Employment Services