Co-employment

Meaning & Definition 

A co-employment arrangement lets several employers take on some of the responsibilities of being an employer toward a single employee. Examples of co-employment include using a third-party staffing company, using an outside payroll provider, or co-employment within a professional employer organization (PEO) structure. In these examples, one party is responsible for managing HR and ensuring compliance with relevant workplace legislation and regulations, and the other party provides direction and control over how to carry out their respective work.

Importance of Co-employment

• Facilitates on-site staffing options for flexible arrangements.
• Assists clients in outsourcing all human resources, payroll and compliance to an external provider.
• Delivers an easier way for the primary employer to fulfil their administrative obligations to the employee.
• Provides a clear framework for determining which aspects are the responsibility of the primary employer and the on-site staffing provider.
• Supports the use of scalable workforce models and optimised costs.

Applicable Regulations & Policies

• There is no one single law that defines co-employment; however, depending upon the arrangement, the worker may be considered under more than one act.
• The Act of 1970 on Contract Labour lays down the obligations of employers towards employees engaged on a co-employment basis through contractors. 
• The Industrial Disputes Act of 1947 governs all issues regarding both the classification of workers and the obligations of employers towards their employees. 
• Clear contracts and job descriptions are important in avoiding misclassification.