It’s tough for candidates to decide whether leaving a full-time job for a contract position is right for them. And, candidates might think contract work is only for low-paying, entry-level positions. Most employers who hire full-time workers are responsible for staff training. From the initial training to refresher courses, companies invest heavily in their full-time employees to motivate them and sharpen their skills. The good news is that they can choose the training that will enhance their marketability and earning power.
It all depends on an individual’s preferences and what they value more. While contract-to-hire positions are available today, they aren’t as common as they might be. But if companies start embracing this model, there’s a good chance they’ll see the benefits quickly. There’s one option we haven’t yet discussed that could combine the advantages of contract and full-time employees without the disadvantages of either. As pointed out in the Wharton article linked above, companies are trying to reduce their overhead costs (whether that actually works or not). Do you need someone who can solve similar problems for you on a long-term basis?
The IRS test for classifying employees
Your new contract job may pay more money and give you more challenging and exciting work, but you’ll need to be comfortable with not knowing what will happen at the end of your contract. It could end up being a stressful time when you’re out of work and the bills start piling up. Of course, contract vs full time salary you have a position to fill now and you certainly want to choose carefully to find a good fit. However, you also have to consider how this person will fit into the business model in the future. Our partners cannot pay us to guarantee favorable reviews of their products or services.
This type of employment and job stability is something many people strive towards, as it enables them to plan and supports specific lifestyles. Thanks to this commodity, contractors can easily plan and organize time off or vacations and holidays by accepting more work prior to ensure that they’ll be able to handle them financially. In order to understand this better, let’s look at a practical example. For instance, software development companies from NY may get hired only to create a specific software solution for their client. Or they may also be hired to maintain the software solution and provide constant updates. Previously we’ve only briefly mentioned some factors that emphasize the difference between contract work and full-time employment.
The unexpected extra costs
And that can be a huge detriment to companies, say multiple professors of management at Wharton. The contract-to-hire model gives you a massive hiring advantage over your competition. However, they may want the stability of a full-time (or even part-time) position with your company.
They will be with you regardless of how busy or quiet company activities are. During slower times your team will be able to complete organisational or strategic tasks. If you have a short-term project that you need assistance with, a contract worker could give you the help you need only when required and without the commitment of a full time schedule. However, if your business is taking on longer-term projects, the costs of a contract worker will quickly add up.
What is the difference between a contract worker and a freelancer?
There are hard questions that need to be answered about contract workers and the gig economy. If it’s a W-2 contract position, then you can basically compare the full-time and contractor positions directly because the employer is paying the same costs as they would if you worked for them full-time. Your full-time job is probably paying you a lot more than just your salary. Depending on where you work, your employer could also be paying you through benefits, a pension, a bonus, paid sick and vacation days and opportunities for free training and education.
- Both contract work and full-time employment offer this possibility – each in its unique way.
- Not only do full-time employees show a greater level of dedication to one employer than contractors, they also tend to stick around.
- With all of this being said, it’s now time to look at some of the most noteworthy advantages of both of these types of employment.
- When you hire a permanent employee, you do so for the low and high periods for your business – which could be somewhat of a financial risk.
Please consult an employment lawyer for advice on your specific situation. Selecting the right employee is a serious choice, but deciding what type of employee to hire is another thing entirely. Being a full-time employee has many benefits both for the employee and the employer. Of course, one of the less-obvious (but very important) benefits of long-term employees is a sense of family and community. To determine which employment structure best suits your business, you need to understand the nuances of these employment structures. Keep this handy for the next time you move from contractor to full-time or vice versa—it could make a tough decision much easier.