Employee leasing is an arrangement in which a client company transfers the legal employment of it's employees to a PEO (Also known as an Staff Leasing company) which specializes in human resource management, payroll accounting, and risk administration. The client company leases its employees back as employees of the leasing firm. This way the payroll and associated expenses and taxes of the leased employees become the leasing firm's liabilities.
Conceptually, the employee leasing company specializes in the employer related responsibilities, and are able to perform these functions better than the client company, at a lesser price.
Employee Leasing | AMS