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HOW TO MITIGATE CO-EMPLOYMENT RISK WHEN ENGAGING CONTINGENT WORKERS

Many companies ask “Can I contract out co-employment risk?
 
This is a common question when any company begins to develop their contingent workforce programme. Unfortunately, it’s near impossible to escape co-employment risk entirely. However, there are ways to mitigate and minimise the risk to your business.
 
Please note before you read on: The information and opinions contained on this website has been prepared by Hays for general information purposes only. The information does not constitute legal advice and should not be relied on or treated as legal advice. It is important to obtain your own independent legal advice. 
 
 

What is co-employment risk?

Co-employment risk is inherently part of any working relationship where a non-employee worker is engaged and performing work for a manager or organisation.
 
It can be challenging to establish and enable best practices with in-house contingent worker management solutions. The legislative landscape continues to shift and evolve, the composition of our workforce changes at pace, and we are faced with an increasingly unpredictable economic environment.
 
Engaging a capable and experienced workforce solutions provider can support co-employment risk mitigation. An external partner can also provide organisations with access to highly skilled, top talent.
 

Common risks associated with co-employment

We often see organisations hit a pain point – they need access to the right talent at the right time for a fair price – including the growing contingent worker population.
 
However, a lack of processes for engaging contingent workers can leave HR and Procurement teams completely overwhelmed. In an attempt to resolve this issue, it’s common to see teams completely prohibit the use of independent contractors. But banning subcontractor-like relationships often leads to the loss of highly valuable talent.
 
Ironically, we’ve seen many examples of co-employment when independent contracts are banned. Misclassified workers might be paid through various loopholes in an organisation.
 
For example, they might:
 
  • Pay off an invoice.
  • Produce a Statement of Work.
  • Outline time and materials needed in the SOW.
 
Other co-employment risks include independent contractor misclassification, exemption status and other regulations.
 

Mitigate co-employment risk by choosing the right provider

The first step to mitigating risk is to choose a progressive Managed Service Programme (MSP) service provider. Partners such as Enterprise Solutions at Hays play the role of ‘middleware’ between an organisation and all of its non-employee workers.
 
Experienced MSP partners help to:
 
  • Share broad industry experience and best practices.
  • Reduce rogue spend.
  • Provide compliance.
  • Access top talent at the right time and place, regardless of worker classification.
 
Some MSP providers also offer oversight of workers who they sourced from online staffing solutions, marketplaces, and direct sourcing channels.
 

Invest in Contractor Management Office services

A Contractor Management Office (or CMO) service is an important component of a contingent workforce programme, and often integrated into an MSP contract. This additional support includes the ability to classify and engage non-agency sourced workers, as well as payroll support.
 
For second and third generation programmes, CMO can also include vendor qualification and sub-vendor engagement services. Learn more about Contractor Management Outsourcing services.
 
 

Reduce co-employment risk by categorising employees

 
To mitigate risk in a contingent management programme, you need to define a clear separation between your full-time employees, and the non-employee workers who are completing projects for the organisation.
 
Partnering with a contingent workforce management provider can mitigate risk. They’ll ensure that:
 
  • Policies are in place, tracked and mandated.
  • All non-employee workers are engaged compliantly. This may be as qualified independent contractors or a payrolled worker through a supplier.
  • All suppliers and companies can focus on their day-to-day operations.
 
Make no mistake, contracting a supplier to offer payroll services does not eliminate worker classification or co-employment risk. Risk still applies to anything the supplier may be doing incorrectly. This is why there is such importance placed on having a capable and experienced partner.
 

Eliminate co-employment risk

An effective partner will help to minimise co-employment risk, creating an effective and enabling environment in which you measure supplier partners for being compliant and delivering the best talent.
 
Get in touch with Enterprise Solutions at Hays today, to find out more. You may also be interested to read our guidance on offboarding contractors.
 
 

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