Contract vs. Permanent Hiring: Which Is Right For Your Business?

Permanent hire or contract  — which is better? With the pandemic highlighting the ease of remote work, it’s likely that some companies will decide to hire freelancers who can log on from anywhere. However, more traditional companies may be hesitant to go this route and will stick to hiring permanent employees who will work in-office.

Both options have their benefits. So how do you decide who to hire? First, let’s explore the differences between contractors and permanent employees.

Contracting

What is a contractor?

Contractual employees, also called “independent contractors,” “contract workers,” or “freelancers,” are hired for a specific project or timeframe. Often, contract employees are hired for their expertise in a particular area, like writing or graphic design. These types of employees are usually hired for a short-term project for an agreed-upon pay.

When should you hire a contractor?

A contractor is usually hired during a busy period of work or if there is a project taking place that needs extra attention or a specialist’s input. Employers may also decide to hire a contractor if one of their staff is off on maternity or paternity leave, or in the case of an illness or medical emergency that removes an employee from work for a few months.

Permanent Employment

What is permanent employment?

A permanent employee works for an employer and is salaried or receives an hourly wage. They work until they are laid off, terminated, retire or resign. A permanent employee may work on a part-time or full-time basis. The Bureau of Labor Statistics classifies part-time as one to 34 hours a week and full-time as 30 hours or more.

Permanent employees receive their payment in weekly, bi-weekly, or monthly paychecks. They may also receive benefits packages through their employers, though those benefits may differ based on their status as full-time or part-time employees.

When should you hire a permanent employee?

A permanent employee is often needed if you are expanding your business and need more members of staff to handle the work that you are doing each month. If you’re wondering whether you should hire a full-time employee on a permanent contract, it’s usually because a new role is created in your team, an employee has put in their two-week notice, or your business’s workload is piling on and you need more hands. 

Here is a quick graphic breakdown of employees versus independent contractors from the Department of Labor. 

Questions to ask yourself when deciding between a contractor and a permanent employee:

• How much time do you have to spend on the onboarding process?

• How much communication will this role require?

• What is your budget for hiring for this new role?

• Can you provide a benefits package for this role?

• What are the responsibilities of this role? 

Are contractors the future of work?

Remote working as a result of the COVID-19 pandemic caused a lot of workers to look into freelancing so they could continue to take advantage of the flexibility of working from anywhere. In fact, a recent study by global freelance platform Fiverr reported that 68% of remote workers are interested in freelancing as a result of the crisis.

Employers who witnessed their employees work from home during the pandemic without issue realized that remote work is doable. Additionally, tools like Slack and Zoom provided a more flexible work environment, proving that almost any job could be done by anyone that has access to these virtual communication tools. 

Quick Facts (Source: Zippia):

• The number of freelancers in the United States has increased by almost 12% between 2014 and 2021.

• Freelancing is expected to grow by approximately 14% over the next six years.

• 36% of the U.S. workforce did freelance work in the past 12 months.

• There were 59 million people doing freelance work in the United States, as of 2020.

According to Forbes, over half the workforce is going to be either independent consultants or freelancers by 2027. So, whether or not you’re ready to hire contractors for your company, you might not have a choice if you want to get the best talent. 

Conclusion

When it comes down to answering the question ‘contract or permanent – which is best?’, you must consider your own business goals, budget, and the scope of the work and then decide which option is going to reap the most benefits in the long run.

Here at WHO Staffing, we can help you find permanent or contract employees that fit your role requirements. Contact us today to get the conversation started.