The Similarities and Differences of Temporary, Contract and Permanent Work 

Whether you’re a business looking to use recruitment software to hire new workers or an aspiring employee looking for a job, it’s important to know the differences between the different types of workers. 

In this article, we’ll run through the basics on temporary employees, permanent employees and independent contractors, and explore how businesses can best manage the different types of workers. 

The Different Types of Workers 

In general, there are three different types of worker: 

  • Temporary employees
  • Permanent employees
  • Independent contractors 

While there are other ways to categorise the types of employee, these categories capture the important distinctions best. Full-time and part-time employees are different, for instance, but they will generally be employed as temporary or permanent workers or contractors. 

1) Temporary employees

Key features: 

  • Typically employed for a fixed term 
  • Generally provided through a staffing agency or human capital firm
  • Classed as employed by their agency, with hourly or daily rates paid by your organisation 

The main benefit of hiring temporary workers is the increased flexibility it provides, both to your organisation and to the workers themselves. 

This is especially useful if your business tends to go through seasonal cycles. If demand fluctuates over the course of the year, it might be inefficient to hire new permanent employees, as you might find yourself paying a fixed salary even when there’s no work to be done. 

Hiring temporary workers, by contrast, allows you to fill needs as they arise and easily streamline your operations if and when demand dries up. 

2) Permanent employees

Key features: 

  • Employed on a permanent contract
  • Paid directly through your organisation’s payroll 
  • Eligible for employee benefits 

If the key selling point for temporary workers is flexibility, for permanent workers it’s stability. 

Employees know they’ll make a set amount of money over the year and can budget and plan for the longer-term accordingly. Businesses, meanwhile, know that their workers will be with them over a longer period and can work towards longer-term goals. 

Both parties also get to build up strong working relations. When growing your business, it can be crucial to find people who will stay with your company for the long haul. Investing in and training your personnel can pay off, helping you create a truly great team. 

3) Independent contractors 

Key features: 

  • Self-employed
  • Generally paid a flat amount for the completion of a specific task or project
  • Can choose their hours and place of work 

While there are some similarities between temporary employees and independent contractors, the differences are crucial. The most notable distinction is in employment status: while temporary workers are usually employed directly by their agency, independent contractors tend to be self-employed. 

They also tend to have even more flexibility, including in how and where they work. While some jobs, like construction work, require contractors to be onsite, many others can be completed from home. 

The main reason employers would turn to contractors is to get a specific task completed to a high standard. While contract rates often work out higher than those paid to temporary or permanent employees, it can be well worth the business’s while to pay for the expertise contractors bring. 

Managing the Different Types of Workers

If your business is large or growing, there’s a high chance you’ll find yourself managing multiple different types of workers. This requires both good knowledge of the relevant rules and regulations and the ability to keep track of a variety of workers and projects.

Failure to properly manage a mixed workforce can result in problems such as: 

  • Inefficient practices
  • Work being completed late or going over budget
  • Disruptions in supply and increased costs 

While having the right management and human resources staff is crucial, you also need to make sure they have the proper tools to do their job. 

Recruitment and management software like Indeed Flex can make the difference between poor and good workforce management, allowing you to keep track of your business and provide a productive and flourishing working environment. 

Understanding the different types of workers is key to running any business. Knowing when to choose temporary or contract workers as opposed to hiring new full-time employees can help you be more efficient and successful than ever – while failure to stay on top of your responsibilities and obligations can be truly costly.  Make sure to understand the distinctions by avoiding misclassification of employees, and your business will thrive.