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Whether you’re looking for a job or looking to hire, it’s important to understand the differences between the most common types of employment, including temporary, contract to hire, and direct hire. Each type is designed to suit varying needs. Learn more and discover which is best for you:
Temporary employment, whereby workers are engaged only for a specific period of time, includes fixed-term, project- or task-based contracts, as well as seasonal or casual work, including day labour. Fixed-term contracts Fixed-term, project- or task-based contracts are contractual employment arrangements between one employer and one employee characterised by a limited duration or a pre-specified event to end the contract.
Fixed-term contracts (FTCs) have always existed in labour markets and serve specific purposes. They provide flexibility to enterprises to respond to changes in demand, such as due to seasonal fluctuations, to replace temporarily absent workers, or to evaluate newly hired employees before offering them an open-ended contract.
But beyond these traditional reasons, some enterprises have come to rely heavily on FTCs, hiring workers recurrently on these contracts for permanent tasks of the company. For these enterprises, temporary employment may bring challenge for the firm, including on how to manage workers in different type of arrangements but performing similar tasks; it also risks leading to underinvestment in training and innovation and hence lower productivity.
Some workers choose to be employed in temporary jobs as they are combining work with education or have other responsibilities that keep them from committing to work of an indefinite duration. For most workers on FTCs, however, it is not an explicit choice.
When fixed-term employment is involuntary, the arrangement is often of inferior quality as compared to indefinite-term contracts, especially if transitions to open-ended employment are compromised. It is thus important to prevent abuses in the use of FTCs through limitations on their renewals or overall duration or the prohibition of fixed-term work for permanent tasks. It is also essential to provide equal conditions of work to workers in temporary employment as compared to workers in standard employment.
Direct Hire When a client has a long-term need, direct hire is ideal. Direct hire positions are permanent, usually full-time positions with benefits. A staffing agency is involved during the recruitment and hiring process, but after an offer is accepted, the candidate goes directly on the client’s payroll.
The process for direct hire can be a little slower because clients want to take their time when making a long-term decision. It is ideal for candidates who are not as comfortable taking the risk of working contract. Direct hire employees are eligible for company benefits such as health, retirement, and PTO, and have the security of a long-term, permanent position.
Contract to Hire A hybrid of a temporary and direct hire, contract to hire is a way for clients and talent to test the waters. It allows potential employees to prove themselves to the company and see if the culture is a good fit. Likewise, it allows the client to test the candidate for a predetermined period of time. During the contract period, the talent is employed by the staffing firm.
The contract to hire process typically moves fairly quickly. Before entering into a contract to hire situation, clients should outline the terms – how talent will be evaluated and when the contract period ends. Clients should also maintain open lines of communication and provide consistent feedback to put the talent at ease. Once a permanent position is offered and accepted, talent transition from the staffing agency’s payroll to the client’s payroll.
Contract to hire offers many benefits for talent and employers when both have sincere intentions. Talent can rest assured that Pro Staff only partners with employers who are serious about hiring and have a long term need.
