Outsourcing is the hiring labor for a company through another company. The employer who needs employees for a service hires a company that provides workers to do the activity.
Employees have a work relationship with the intermediary company hired, even though they provide the service in other locations.
Example: An accounting firm needs employees to maintain cleanliness in its headquarters. To streamline the solution, it hires an outsourced service company that provides its staff to do the work. During the contract period, employees work at the accounting firm and their salaries are paid by the outsourced service company.
What is outsourcing of work and services?
The outsourcing of work or services happens when a company hires another company to provide services.
The contracting party is called service taker and the company that hires employees is called intermediary or outsourced, as it is she who makes the contact between the service provider and the workers.
Mandatory items in an outsourcing work contract
The two companies must sign an contract for services which must contain the main information and work rules.
Mandatory contract information:
- identification of companies (contractor and contractor);
- description of the functions that will be performed by employees;
- justification for hiring outsourced workers;
- determined period for the provision of services;
- amount paid for hiring;
- items relating to the health and safety of workers.
Outsourcing of work in Brazil
In Brazil, it is estimated that 30% of the workforce of companies is outsourced.
These workers must be guaranteed the same rights and working conditions as contracted employees. They are as follows:
- signed work permit;
- payment of minimum wage;
- right to 13th salary;
- paid vacations;
- payment of overtime worked;
- rest breaks;
- INSS and FGTS payments.
Outsourced workers must also have access to the same equipment, uniform and training for the activity performed.
Outsourcing has grown in the country in recent years and that is why, in 2017, a law was published that defines details on this form of hiring workers: the Outsourcing Law.
The Law of Outsourcing in Brazil
In Brazil, outsourcing was not part of the rules provided for in the CLT (Consolidation of Labor Laws). But, in 2017, Law No. 13,429/2017 was approved, which created some rules for these contracts.
The main rules of the Outsourcing Law are:
1. Any company can outsource employees
After the publication of the law, companies operating in any area can hire outsourced employees. Before the law was published, hiring was only allowed for certain positions or specific areas.
2. The execution of activities must be defined in the contract.
Outsourced employees can only work in the functions that were described in the contract signed between the service receiving company and the intermediary.
The law prohibits workers from being assigned to activities that are not agreed upon in the contract.
3. Equal working conditions for all employees
Contracting companies must give outsourced employees the same working conditions as contracted employees. Outsourced workers must have the same working conditions, such as rest breaks, food, transport and medical care.
4. Type of employment relationship between employee and company
The outsourced employee's employment relationship is with the company that outsources the services. The payment of salaries is also the responsibility of this company.
In case of problems concerning their rights, the employee should seek to resolve the issues with the company that hired him.
The service receiving company only has subsidiary liability, that is, if the outsourced company does not comply with its labor obligations, it is possible that it will be required to assume these responsibilities.
5. Prohibition of hiring fired employees
To protect the rights of workers who are already hired by a company, the law does not allow employees may be hired by the same company - as a third party - within the first 18 months after the dismissal.
Outsourcing Examples
In general, the areas that most hire outsourced services are civil construction, commerce, industry and the provision of services in general.
Examples of this type of contracting are:
- construction and electrical installation service providers to carry out a building renovation;
- general service employees for cleaning and maintenance of businesses;
- security and janitorial workers for residential condominiums;
- cooks and kitchen assistants providing food in a factory cafeteria;
- employees specializing in filing and accounting services.
Advantages and Disadvantages of Outsourcing
The main advantages and disadvantages pointed out are as follows:
Advantages for companies
- Company focus only on managing the activities of its area of expertise;
- Decrease in human resources expenses and bureaucratic processes;
- Hiring employees who have technical and specialty training.
Advantages for employees
- Increase in the number of job vacancies offered by companies;
- Possibility of hiring people who provide services as a legal entity.
Disadvantages for companies
- Less intimacy between employees and the company they work for;
- Employee turnover growth.
Disadvantages for employees
- Weakness of labor relations due to lack of employment relationship;
- Increased layoffs of hired employees with replacement by outsourced employees;
- Growth in the number of temporary contracts and without stability.
Also read the meaning of CLT.