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What is HR Outsourcing? And How Can Employers Benefit From It?

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Kiljon Shukullari

Kiljon Shukullari, HR Advisory Manager

(Last updated )

Having a dedicated HR department ensures your business is compliant with employment law, that you hire the right employees, and that they thrive in your workplace.

It is a crucial component of any successful business. After all, no resource is more important to your company than your employees. Despite the necessity of employee management, many small businesses don’t have the resources to handle this in-house. For this reason, many business owners have started to outsource HR.

In this guide, we’ll explain what HR outsourcing is, how it can help your business, and the types of HR outsourcing that third-party HR companies can offer.

What is HR outsourcing?

In a nutshell, HR outsourcing is the process of hiring an external party to execute some or all of your HR tasks. You can outsource payroll processing, employee benefits administration, talent acquisition, and more.

HR outsourcing is the practice of securing human resources services and expertise from sources outside your company. Most often, these outside sources are HR outsourcing companies that can connect you with experts who can help you with anything from advanced policy development to administrative tasks, often within a short moment’s notice.

Who is HR outsourcing for?

Your company will likely benefit from HR outsourcing if time, staff, business size, or budget constraints prevent you from hiring an in-house HR department. Here are some common reasons that small businesses turn to the help of HR outsourcing.

  • Time spent on HR duties detracts from time that needs to be spent on other priorities
  • A history of legal issues, or a likelihood of future liability issues
  • A budget which doesn’t allow for hiring dedicated in-house HR staff
  • Not having enough resources to stay on top of hiring and employee management

What are some of the benefits of HR outsourcing?

It’s economical

One of the main reasons people turn to HR outsourcing is its value for money. Instead of having to hire a full-time HR professional, small business owners can simply subscribe to a plan and access a slew of services designed to take away the heavy lifting of HR.

According to Glassdoor, the average HR manager salary in Canada is $87, 800. Your annual HR outsourcing bill will come nowhere close to that. And if the yearly cost of outsourcing your HR is less than hiring one HR employee, consider how expensive it would be to hire a full team, including their employee payroll taxes and benefit administration costs.

It can lower your premiums

As HR firms tend to have strong relationships with benefits providers, HR outsourcing can often lower your benefit premiums. For example, if your HR firm is attempting to secure a benefits package for a large group of people, it may have more power to negotiate lower plan rates than your company.

Depth of expertise

Since HR outsourcing companies provide advice to thousands of different clients, they can draw on a deep level of experience across many different industries, jurisdictions, and areas of concern.

It saves time

When you can’t afford in-house HR staff, that workload will ultimately be delegated to someone on your team. If you hire a third party, the employees who previously handled those responsibilities will have more time for their main tasks. As a result, your company’s productivity and efficiency will likely see a boost.

Reduces risks

Because HR outsourcing services have such a depth of knowledge in their field, by seeking their expertise, you can minimize your chances of risk and errors.

Helps you stay compliant

‍Staying up-to-date with constantly changing legislation can be overwhelming and time-consuming, especially for new business owners. Hiring an outsourcing firm can help assure law and regulatory compliance across multiple HR processes.

Provides data security

‍Data security is crucial when working with sensitive employee information. To keep this information secure, many HR outsourcing companies use advanced security systems and software encryption.

What types of HR services are typically outsourced?

‍Some common HR outsourcing functions include contract creation, payroll processing, benefits administration, employee relations, hiring, and employee counselling.

What kind of HR outsourcing does Peninsula offer?

24/7 Advice

Whether you spot a hazard at work or need help with a contract, Peninsula’s advisory hotline gives you access to support to overcome any HR or health and safety challenges, no matter the time of day. This allows you to spend less time on HR and workplace safety and more time ensuring your business is thriving.

Instead of outsourcing your calls or making you wait hours for a response, you’ll be connected to an employment expert who knows your business and will help you solve any issue you run into.

Legal assistance

With new legislation constantly coming into place, employers have a harder time staying compliant, ensuring employees’ rights to safe work, and legally dismissing staff. Few small businesses can afford this, let alone have the money on hand to fight the case.

Peninsula’s HR outsourcing services can protect your business from legal action in the first place and many can provide you with expert legal representation and support until case resolution.

Tailored contracts

Contracts are heavily scrutinized, and any ambiguity is interpreted in the worker’s favour. Well—drafted employment contracts ensure your employees are aware of their obligations and agree to work under the terms you set out, helping secure your business clientele and intellectual property. Peninsula’s services can help you write these tailored contracts to ensure you are always compliant.

Cutting-edge HR software

For small businesses, the expense of HR software can be costly, and having HR support to better handle employee management can be a game changer.

Peninsula’s in-house HR software gives employers access to a central hub where all your employee records can be filed, with unlimited document storage. It also lets you track and organize employee absences.

Is HR outsourcing a good idea?

HR outsourcing can help small businesses, especially those with limited financial and human capital, enjoy access to top-of-the-line legal assistance, advisory hotlines, HR software, and the latest OHS compliance information. HR outsourcing helps small businesses focus on growth, not on administration.

When employees and company owners who are not HR experts try to perform essential HR tasks, they can easily waste valuable time just trying to understand regulations and paperwork requirements. Using HR outsourcing can free up time for strategic planning.

When you dedicate resources to taking care of your staff, you can improve the daily experience of the people you count on to keep your business successful, increase staff retention, and improve your bottom line.

Looking for the right HR outsourcing service for your business?

Ultimately, outsourcing your HR and documentation keeps your business lean and efficient. It also helps you avoid the hassle and expense of a lawyer or having to hire an HR team. Peninsula’s experts can help you take care of any issues that arise, including vacations and absences, onboarding employees, temporary layoffs, work refusal policies, and dealing with accidents, incidents, and inspections.

As your HR outsourcing partner, we work to help your business succeed. Our experts make the messy work of HR simple, manageable, and affordable.  Get access to the same resources that are helping over 5100 businesses across Canada thrive. To find out how we can help you save time and costs, call an expert today at 1 (833) 247-3652

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