There are a lot of pros and cons of contracting versus permanent employment that employers should think when hiring for a new or old position. A business might use a mix of various employment types to meet its labor needs. These employee types might take in full-time, part-time, and independent contractors. When looking at the pros and cons of contract employment versus permanent employment, it's key to understand the difference between these employment types.
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What Is an Employee? An employee is a person who works for another person or company on a permanent basis. An employee can be a person who works either part-time or full-time for the business. This employee is occurred to work based on an employment agreement and receives payment on a continued basis.
What Is a Contractor? A contractor, also known as an independent contractor, provides his or her services to an outside organization. Contractors are usually hired for a predetermined amount of time and at an established hourly or daily rate. Typically, a contractor is hired for a short-term project and is assigned a specific task to complete.
Pros and Cons for Employees Every of these employment types has both pros and cons for the business and for the employee. Many of the differences between contract and permanent employees look at around how the employee is expected to work, the type of work they are expected to produce, and the benefits they receive from the company they work for.
Pros of Being a Permanent Employee
- Maintain set work hours and/or work schedule.
- Less financial risk because of receiving a regular paycheck.
- Maintain a continued expectation of work.
- An employer typically provides paid time off, vacation time, and/or holiday pay.
- Income taxes are deducted from a paycheck.
- Might receive extra employer incentives or benefits, like as bonuses.
Cons of Being a Permanent Employee
- Typically have a daily commute to an office.
- Only have a limited number of days off per year.
- Provided with a limited scope of work.
- Might not have the ability to branch out and try various types of work.
- Less freedom to decide one's own schedule.
- Less opportunity to negotiate pay rates.
Pros of Being a Contract Employee
- Higher wage than permanent employees.
- Might have the opportunity to work remotely.
- Flexible schedule and work hours.
- Have the ability to test out a company and try many various companies.
- Have access to learning additional skills quickly.
Cons of Being a Contract Employee
- Might have a long commute or have to travel to the work location.
- Work is not guaranteed and might change on short notice.
- Holidays and time off are not paid for by the company and must be planned carefully.