Question

Explain why and how a company must make the decision to either employ workers or contract out labour services. How would legislation to enforce mandatory minimum paid sick leave affect the choice?

Answer 1

Answer

A company needs to make this crucial decision of either employing or contracting out labor services. This is because it is expensive to get all the tasks done by the on-roll employees. However, at the same time certain tasks that require skills cannot be completely contracted out. Thus, a right mix on employees and contract workers is required.

A company can contract out work that is temporary in nature. In other words, the work that is not perennial should be contracted out. Other work should be given to the employees.

A legislation to enforce mandatory minimum paid sick leave would make it even more difficult to employ more number of people and it would make the company prefer contracting out more as the cost of contracting out would be much lower than the cost of keeping on-roll employees.