Legal support of personnel outsourcing & outstaffing

This paper provides a comparative analysis of the authors' approaches and the current legal regulation of personnel outsourcing and outstaffing. The paper also sets and tackles tasks to specify the essence and the legal nature of personnel outsourcing and out-staffing. The specified management techniques imply application of world expertise and "the best practices" of business administration, instead of developing one's own competencies in those activities that are not strategically important or crucial for a company. Both personnel outsourcing and personnel outstaffing imply attraction of resources, which belong to external organisations, to create a value. The main reason for applying external resources is that no company possesses a complete set of knowledge, skills and abilities to sustain its competitiveness in all the spheres of its primary and secondary activities. At that, the legal vacuum in the field of attracting external labour resources resulted in the fact that dishonest employers tried to reduce the taxation base and violated constitutional rights of their staff. Statistic data confirm that an outsourcing contract would frequently conceal personnel outstaffing. Absence of a clear and distinct legal support resulted in numerous litigations to determine the legal nature of contracts. Legal support in this field was provided by Federal Law 116-FZ of May 05, 2014 "Concerning Introduction of Changes into Particular Legal Acts of the Russian Federation". For the first time in the Russian legal practice, the definition of the notion "borrowed labour", which is prohibited in Russia, was introduced in Article 56.1. Besides, if one considers Chapter 53.1 of the Russian Labour Code more profoundly, one could conclude that outsourcing cannot be regarded as borrowed labour that is prohibited in Russia. This is due to the simultaneous absence of the three basic features of borrowed labour: an employee works to meet the demands of their employer, under their employer's supervision and control. In case of outsourcing, an employee works beyond their employer's control. In contrast, the essence of personnel outstaffing makes it possible to identify it as borrowed labour. This is proved in the current practice when an employer intentionally presents their staff's permanent employment as temporary employment, thus actually using borrowed labour that is prohibited in the Russian Federation. Therefore, the current legal basis determines clearly whether or not one could apply personnel outsourcing and outstaffing. To avoid violation of the federal legislation, any company that provides services for another company must be accredited by a local employment agency. The official register of the employment agencies is presented on the website of the Federal Service for Labour and Employment (Rostrud), whereas customers ought to verify their contractors' licenses and bear subsidiary liability for the staff they attract.

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