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What is Human Resources Provision

Although not usually conceived in such a manner, for all practical and legal purposes, the provision of human resources is virtually identical in nature, setup, functioning and finalities as temporary staffing.

Human resources provision is often believed to be nothing more than outsourcing, meaning in very broad terms, the exporting of some or all payroll administration to a specialist third-party organization.

However, this oversimplification limits the scope and conceptual understanding of human resources provision and conceals its enormous potential as a vehicle to balance the supply and demand of manpower between two or more work organisations located in different countries within the EU or EEE or even beyond.

Just like temporary staffing, it consists of a triangular relationship between three distinct parties and is usually applied when work organizations, for several reasons, prefer to contract a human resources provider to employ professionals on their behalf to respond to long-term or permanent manpower needs.

The human resources provider acts as the employer of record on matters relating to payroll, taxes, and other fiscal and human resource issues, while the Client/User firm is responsible for the direction and supervision of employees.

Three parties
A – Employment agency worker
B – Human resources provider (Employer of Record)
C – Client/User firm

The employment agency worker (A) is employed by the human resources provider (B) – the employer of record, who then posts the worker with his Client/User Firm (C).

The employer of record (B) is responsible for paying salaries and all other employment related costs to the employment agency worker (A). The Client/User firm (C) commands, controls, supervises and benefits from the labour provided by the worker (A). The Client/User firm (C) pays the human resources provider (employer of record) (B) for having provided the worker (A) to perform work from which they benefitted.

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Benefits / Advantages of Human Resources Provision

  • Work organizations can benefit from manpower located abroad without having to hire them or deal with any red tape
  • Work organizations can benefit from manpower located abroad that will only consider accepting a job in another country if the Social Security and other employment related benefits and contributions are directed to their home country accounts
  • Employers benefit from the possibility of assessing a worker´s performance before making the decision of hiring him/her directly
  • Significant reduction in costs and no hassles with payments and other human resource administrative procedures
  • A solution for situations where manpower needs are permanent or for when it is not legal or feasible to contract staff on a temporary basis.

Example A

A large German restaurant chain specializing in Sushi and Asian cuisine has a need for approximately 40 cooks at locations across Germany.

They find themselves in a difficult position. Although the salary paid to a cook is quite attractive when compared to competitors, experienced cooks are extremely scarce in Germany. The best cooks for this particular cuisine are Thai and Nepalese. However, these professionals are nearly impossible to find in Germany.

There are a reasonable number of experienced Thai and Nepalese cooks in Portugal with valid Residence Permits that would accept the jobs in Germany where wages are considerably higher. The representative of the German firm would prefer to sign a temporary staffing agreement with Work Supply Ltd, which would allow the Thai and Nepalese workers to be posted to Germany. However, this solution does not comply with labour law regulations because the cook positions are long-term or permanent.

Thus, the only alternative is to use the human resources provision track since it allows for the Thai and Nepalese cooks legally residing and working in Portugal to be placed in Germany for at least 2 years. The restaurant management teams direct and supervise the cooks, but the latter are employed by the Portuguese temporary staffing agency established solely in Portugal and with no presence in Germany.

Although the cooks are not EU or EEA citizens, EU directives clearly allow them to be posted, directives that have been supported by European Court of Justice rulings.

Example B

A large auto parts manufacturer established in France is unable to find CNC technicians for it´s production plant near Paris.

They have asked Work Supply – Temporary Staffing Agency Ltd to recruit Portuguese nationals with experience in CNC. The French manufacturer´s intention is to hire the Portuguese CNC technicians directly – to put them on their payroll.

During the recruitment process many the CNC technicians displayed discomfort or an unwillingness in working under the employment of the French auto parts manufacturer. They wanted to sign an employment contract with Work Supply – Temporary Staffing Ltd believing it would be easier to defend their rights in a Portuguese court of law in case the employer failed on its contractual commitments and obligations. The CNC technicians also didn’t want to sign a contract with a French employer about which they knew nothing or make deductions to the French Social Security system believing it would make it harder or impossible to obtain unemployment benefits and interfere with their retirement pension calculations.

The French auto parts manufacturer decided to acquiesce to Portuguese CNC technicians´ demands. Temporary staffing was out of the question because the Portuguese professionals were needed to respond to permanent manpower needs.

The French company and Work Supply Lda agreed that Human Resource provision was the best solution. Work Supply Ltd would deploy the workers to France, act as the employer of record and handle all payroll and human resources administrative issues, while the auto parts manufacturer would have full control over the workers, directing and supervising their performance.

In Summary

Temporary Staffing and Human Resources are two sides of the same coin.

The similarities are far greater than the differences. They are used for virtually the same purpose and are setup and function in much the same fashion.

Temporary Staffing – for specific temporary manpower needs

Human Resources provision – for long-term or potentially permanent manpower needs.

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