There is a difference between Labour Management, Human Resource Outsourcing, Employer of Records and Professional Employer
Labour management as the word labour suggests is the outsourcing of the management of day labourers or casuals. The main objective for the employer is to release the cumbersome record management, routine administrative work and pay processing associated with these daily casuals to someone else who has the time and opportunity. It is mainly used in activity management example a power utility company needs day hire staff for routine line maintenance works on different sites in different parts of the city and the casuals are best hired at site to cut transport costs. While many manufacturing companies use day casuals to provide none skilled labour, there are much better options where these labourers are required at the same site every day for the same type of work. Labour management can be done by any third party not necessarily a HR firm. For example a Class One Construction Company can hire a class four construction company managed by a civil engineering technician to do labour management in a construction site.
Employer of records (EOR) is best illustrated by a multinational company operating in many regions of the world but has only small teams of local and expatriate staff in each country. It does not make economic sense to open branches in each country and employ a lot of administrative work like payroll management for such few staff. So it looks for a third party firm in the local market to hire the staff under the firm’s name and handle all contractual and administrative matters and gets one cheque per month to meet all costs. The main objective of EOR is risk management. EOR can be done by a law firm or HR consulting firm. Under EOR , the actual employer (multinational company has one key manager normally an expatriate who does the day to day supervision of staff and can even do the recruitment but hands over the recruited staff to the EOR to contract. The EOR will be informed of staff with disciplinary and performance issues to handle. The two parties will ideal have a jointly approved HR Policy and Procedure and while the key decisions like promotions, salary increase etc are made by the client, the implementer is the EOR.
Professional employee service is the hiring of professional staff by a consultancy firm and deployment of the staff to work at a client office or site. PEM involves full cycle including training and development and often it’s for full team is staff including management staff. PES is always done by a HR firm. A client looking for PEM often needs highly professional and specialized staff who needs high level on boarding, training, continuous Training and Development etc.
PEM is the highest level of Human Resource Outsourcing.
Human Resource Outsourcing is simply the contracting of one or more HR function to a third party. It can be single function outsourcing like recruitment only or payroll only outsourcing.
Recruitment only outsourcing is that undertaking by a third party to have readily available competent staff to fiill arising vacancies within a very short time in order to cut lead time in filling vacancies to lowest possible normally the client gives the recruitment firm an exclusive contract to recruit within an agreed time of a vacancy arising normally within 24 to 48 hours