Which Is Better: Contract Employee vs. Permanent Employee

Contract Employee vs. Permanent Employee

Changing company staffing needs and candidate preferences have led to an increase in contract work, which has caused permanent work to see a slight drop in demand. But if you’re a company, which candidate services you better?

This article is here to answer that very question by making an information-backed comparison.  

What Are Contract Staff?

Anything contractual means a defined time. Contractual work means staff only work for a company for a limited time. This contract can be until completion of a project and their skills are no longer necessary.

If, by chance, the skills are still necessary after the contract ends, a renewal is possible. The core benefit of this short-term work association is:

• Temporary staff get to use their skills, contribute, and work for various clients while having flexibility.
• Companies get specialised skills, knowledge, and an outsider’s view.

Various top job portals now cater to this type of work, and it has become easier to close a short-term position.

What Are Permanent Staff?

The key word here is permanent, meaning persisting or long-term work agreements. These staff are carefully tested and added to a company’s workforce to add lasting value.

They remain with the company until either party decides to end their employment. Until then, the company can invest in employees and vice versa.

Differences Between Contract and Permanent Employees

Definitions aside, here is how you can distinguish between contract and permanent employees.

1. Employment Type

Distinguishing the employment type is vital as it affects tax and benefits.

Contract staff are hired for their skills, which means their employment is contractual or temporary. 

This employment type is by no means long-term and doesn’t offer candidates the complete package.  

Permanent staff are persisting members of a company’s workforce and benefit from a long-lasting employment type. This guarantees the company and employees a partnership until one party decides against it.

2. Salary & Benefits

Contract-based workers receive hourly or weekly pay that aligns with their skill level or experience.

Fixed pay is in place for permanent workers on the company’s payroll system. They get a yearly increment based on their performance throughout the year.

3. Work Security

Stability gives employees security and companies the ability to scale and improve operations.

Temporary staff enjoy work flexibility and multiple opportunities in a short time. Unfortunately, it comes at the cost of stability, as their contract can come to an unexpected end. 

When struggling to get contracts, they can face a time of uncertainty that affects them mentally and financially.

Persisting staff benefit from stability and can make plans based on this security. They are protected by labour laws and have defined job descriptions and work terms. Overall, they can be in a better mental state and are more motivated to work because they feel valued.

4. Role & Responsibilities

The roles and responsibilities of staff can vary based on their skills, employment type, and position.

Short-term staff fill a skill gap that stops companies from completing projects. These individuals operate in a specific industry and an even finer niche. They must deliver the requirements within a time frame and can.    

Long-term employees have desirable skills and knowledge and can improve throughout their tenure. They work with other co-workers in other departments to complete tasks.  

5. Growth & Career Advancement

Contract workers are brought on board for their skills and knowledge in a specialised field. So, it’s unlikely to get anything, including better career options from a job or working with a specific company.

It’s the opposite for permanent staff, as some companies go above and beyond to upskill and improve their workforce. It sees them get the best career growth moves and bright futures.

Pros & Cons of Hiring Contract Employees

Pros

• Contract staffing services help companies and candidates find each other.
• It’s a cost-efficient staffing option for companies.
• Companies can close skill gaps using these temporary staff.

Cons

• Contractors get less stability and career growth chances.
• Companies lose out on enriching skills when the contract ends, and these individuals leave.

Pros & Cons of Hiring Permanent Employees

Pros

• Companies can maintain workforce stability by partnering with an agency for permanent staffing services.
• There is security for candidates and companies, helping the workforce perform better, which benefits the organisation.
• They ensure the company always remains active and productive with a strong base of employees.
• It’s still easier to find permanent candidates using the best recruitment agencies.

Cons

• These staff present fixed and persisting overhead costs to the company.
• Hiring or retaining staff on a long-term basis could be difficult to do.

Conclusion

Choosing between contract or permanent staffing services is simple when you know which candidate you need.

If your requirements are short-term, involve a specialised skill, or are restricted to a project, and you want to keep costs low, choose contract staff.

If your needs are long-term and require stability and skill growth, and you have a larger budget, choose permanent staff.