What is the difference between contract staffing and permanent staffing?
Posted: Aug 10, 2018
As an HR manager you can use different types of employees to meet your labor needs at a reasonable cost. There are three types of employment to choose from: Permanent staffing, temporary staffing and contract staffing. In this article, we will discuss about contract staffing and permanent staffing.
A contract staffing requires an individual to abide by the contract signed between the organization and the individual by being in the organization for a specific time duration to complete a key project or initiative. While a permanent staff remains in the organization for a long time and are eligible for organizational benefits like health, retirement, PTO (Paid Time Off) and long term permanent position. Most recruiting team manage both types of jobs using a competent applicant tracking system.
Let us now look at some of the difference between contract staffing and permanent staffing.
1. Expected duration of the relationship between the employee and the employer
Contract workers need to work in an organization on the basis of the signed contract which is only for a specific time duration normally till the completion of a project or assignment. While permanent employees are not hired for a single project or assignment. It is an open-ended employment which does not have any end date. The best way to utilize both sets of staffing is by taking advantage of the permanent staffing to form the core of the organization and use contract workers to fill the gap or to get assistance in completing special projects whenever required.
2. Hiring process
Contract workers are obligated to sign a contract of employment that covers the major terms related to a particular assignment, including duration of the job and the remuneration agreed upon. While permanent employees have to sign an employment contract which includes contracts with set periods. But, they do this with the expectation that strong performance will result in pay hike and continuation of the employment without any contract.
3. Benefits for organizations
You can use contract workers to reduce the number of idle employees when there is little work to do. Bring in these so called experts to complete specific tasks without the need for keeping them in your workplace for a long time. For example; a construction business may contract an electrician only when they have a job involving electrical work or to complete a portion of the construction project that involves electrical wiring. The major benefit of hiring contract workers is that you do not pay any employee benefits that you need to pay a permanent employee.
4. Effects on workers
Contract workers do not get any health insurance coverage, retirement savings plans, savings for time offs or periods of unemployment by the organization. One thing in their favor is they get more time than permanent employees, which gives them an opportunity to serve multiple organizations at the same time earning more money. The advantage for permanent employees is that they enjoy great stability, but cost their organization more in terms of training, benefits and recruitment.
Once you understand the difference between contract staffing and permanent staffing, you can make smarter decisions to get the maximum returns on the labor costs. In a nutshell, contract workers are more effective when there is a high skill requirement to complete a major project quickly. While permanent employees make more sense when you want an individual to do core tasks for the long term.
Vivek Asrani is a content specialist at Talentnow RecruitX, a world class Applicant Tracking System built for staffing agencies. Vivek writes about the various aspects of recruitment technology.
Viral Vora is the Ceo of Talentnow Solutions, a leading Recruitment Software company. Viral is an industry veteran and writes about the various aspects of recruitment technology.