One can answer this question without any further philosophizing – those businesses that take advantage of outstaffing.
If you are at a loss to even venture a guess as to what that might mean, you will find the information below quite useful.
Outstaffing is a hybrid of necessity and economical crisis. This term implies optimization of the staff number by having them on board in a company-provider (staffing company). This universal solution is applicable and cost-efficient for any business intent on reducing its expenses. It lends itself to accurately regulating the staff number without altering the actual headcount. In most cases the company-provider employs staff of the client company. In other words, the personnel keep on fulfilling the same duties while working with the previous employer, whereas their nominal employer is the agency that assumes legal and financial liability for an employee by drawing up labour contracts, making entries in the employment record book, making contributions to the funds established by the legislation, calculating the social tax, providing all necessary fact sheets, making arrangements for an employee to take a leave, etc.
Are there any other bonuses that the practice of outstaffing can offer, apart from the significant reduction of direct costs and tax burden, as well as providing a unique opportunity to place greater focus on key aspects of the enterprise, without getting sidetracked engaging in some other petty matters and not taking good care of all the issues that might occur in regard with Ukrainian legislation on labour (in particular, the Labour Code of Ukraine)?
Outstaffing allows to:
- enhance financial firmness;
- increase profit ratio per employee, boosting investment appeal of a business;
- exclude any risk of being fined for flouting labour legislation as well as minimize the number of grievances on the part of labour, fiscal and migration service or other legal authorities;
- shorten the volume of information being checked by state control authorities (as well as the duration of this process);
- simplify employment relationship with personnel, decreasing the risk of occurrence of any labour disputes – the agency will be responsible of settling such issues;
- alleviate the burden on the accounting department, since all the matters connected to payroll and HR records maintenance (including business trips) are managed by the outstaffing agency;
- cut corners on severance package;
- cut down on pay packages.
Apart from this:
- if need be, the outstaffing agency will occupy itself with taxation management and rendering of accounts on behalf of self-employed persons;
- the outstaffing fee can be placed into the expenses category, which makes it possible to decrease the corporate income tax;
- the customer will get credit against tax from VAT covering all the sum payable to the agency.
To put it bluntly, all problems in regard to dealing with control authorities or any other fines (a company might be fined 111 690 UAH for any “off the books” employment; in case of an inspector’s non-admission the fine will amount to 372 300 UAH) will never have anything to do with your business! The crucial thing is to be in time for cutting a deal with the outstaffing agency. Who is going to be afraid of Virginia Woolf and her likes then? Or of upcoming “Groysman’s raiding parties”?