We all wish to have a growing business, and with that growth comes the task of increasing your workforce. However, the more critical aspect here is the assessment of the cost it will bring to the table. The conventional approach to hiring might burn holes in your pocket.
On the other hand, contingent employment, the unconventional model, is gaining momentum as it saves employers time and money. Contingent employment is also becoming more attractive for the younger generation.
Peoplescout’s survey reports that the number of contingent workers is twice as much as non-contingent workers under 25. Young workers, too, are ditching their 9 to 5 jobs to become a part of this gig economy.
The contingent employment model is soaring in popularity among both employers and workers. However, before you apply a contingent workforce solution for the gaps in your company, you must first understand what it is and how it can affect you.
We bring to you this comprehensive guide that unfolds the ins and outs of contingent employment.
What is Contingent Employment?
Contingent employment refers to the employment model offering non-permanent positions to workers. The job role in this type is temporary, with workers being filled on a need basis.
Having a few extra hands on deck is safe to fulfill your sudden and seasonal requirements without exceeding your expense limit.
So, what would be the position offered for contingent staffing?
The term contingent position means that a worker’s position in the company is non-permanent and is held by the individual until the completion of the project or until the employer (and the worker) find fit.
So, who is a contingent worker?
As a part of the non-traditional workforce, contingent workers, also called contingent employees, are non-permanent workers you can hire on a need basis.
They aren’t part of your employee radar and do not come under your payroll. They work on your projects in exchange for a fee rather than salaries.
The contingent worker category includes freelancers, gig workers, on-call workers, part-timers, etc. Independent contractors also come under this category as opposed to contracted employees but are almost the same as contingent employees with a few caveats.
Contingent Worker vs. Core Employee
Though temporary, you must define your contingent workers and classify them according to the legislation. Not all temporary workers come under contingent hiring. You must be aware of how you classify your contingent staffing to avoid legal issues in the future.
According to the US labor department, contract employees and seasonal workers, though temporary, come under the employee category during the contract period. Some employment laws admissible to direct hires apply to them as well. You will also have to offer them some benefits, including minimum wage.
On the other hand, contingent employees are considered self-employed. The usual employee-related laws apply however you don’t need to worry about offering employee benefits.
Why Opt for Contingent Employment?
So, what does contingent labor mean for your company?
- Efficient use of time for your money
- Quality produced work and outstanding employee recruits
- Flexibility for your employees and company
- Scalability at cost for the medium to long-term
- Simpler compliance activities
- Open to innovation and experimentation with different talents
These are the factors that yield positive results with contingent hiring. Let us now understand how each of these factors favors your business and the workers.
Benefits of Contingency Recruitment for Businesses
Remember the challenges traditional hiring brings? Well, they are all reversed in contingency employment. Below are the advantages of contingent hiring.
You are looking to fill skill gaps and fulfill your sudden or seasonal needs. Regular hiring isn’t suitable here, as it takes more than a month to fill the position.
Contingent employment fits perfectly with your conditions. The contingent employees already have the required skills which help you combat sudden demands. Also, you do not have to consider them for your long-term requirements. These factors simplify the hiring process and unlock rapid scalability.
Harness expert help
Today, the contingent method of employment gives a whole different meaning to employment in the past decade. Professionals recognize that contingent work puts their skills to better use than a single full-time job and hence prefer it. They bring in innovation and new perspectives to grow your business. Unlike outdated notions, contingent hiring compliments and empowers your business.
With the market in constant flux; businesses strive to be agile and fluid to adapt to these changes. Flexibility is essential to sustain your ground. Contingent employees working only for short terms resonate well with agility and are a perfect fit to help your business adapt quickly to the changing market.
Reduce overhead expenses
Apart from salary, you would have been spending a lot on fringe benefits- insurance plans, paid leaves, profit-sharing plans, pension contributions, and the like. Contingent hiring is your go-to if you’re looking to save costs. With the workers not coming under your employee cadre, you can avoid fringe benefits and other overhead expenses.
Avoid complexities during tax filings
As stated above, contingency employment is different from core employment. The contingent workers are deemed self-employed and do not come under your payroll. Legally, they are responsible for handling their taxes. Thus, you need not fret over taking care of their taxes. Curtail your responsibilities and avoid complexities.
Freedom to experiment
Innovation is another factor that lets you sustain and adapt to the changing market. However, it involves steep funds, time, and several risks that it is seen as an extravagance only a few can afford. Contingent hiring, a temporary arrangement, allows you to innovate and experiment with new approaches. The risks will also be tolerable owing to the short term.
Advantages of Being a Contingent Worker
Not only do the companies favor contingent employment. The workers, too, have started shifting in this direction.
Workers love the Work-Life Balance contingent working provides
In a traditional job role, we know our life takes a backseat in the concept of work-life balance. It was presumed to be a far-fetched dream.
The rise of contingency employment crushed this assumption. Elastic enough, it allows the workers to fit their work around their life instead of letting life revolve around work. As and how it should be. Thus, the most significant perk of being a contingent employee is embracing work-life balance.
Flexi schedules revolve around them, not the other way around
Who wouldn’t want to be their boss? Freedom is the deal-breaker here.
Self-employment offers the freedom to:
- Choose their job
- Decide their working hours
- Schedule meetings and calls at their convenience, etc.
Not only do you select your suitable contingent worker, but they also get to choose their employer, who they want to work. It’s a two-way road.
Upskilling and gaining new experiences is right under their alley
Each new job and each new company brings in new adventures and experiences. A contingent worker need not buckle down for several years to gain these experiences. Contingent employment lets workers gain a multitude of experiences within a short time. They work parallelly with different companies and in varied work environments, giving them increased exposure and the required experiences.
Also, the varied work environments and work nature bootstrap them to new skill sets enabling them to stay adept with the growing technology.
Freedom to be creative with one’s career
Being confused with choosing a suitable career and aligning it with our passion is a dilemma we’ve all been through. Contingent employment lets individuals experiment with various work roles making the career selection process more manageable. It helps eliminate options faster and eventually helps break the infamous career dilemma loop.
Challenges in Contingent Employment
Despite having unparalleled flexibility, contingent employment might not fit well with your business. Let us look at some of the challenges contingent employment brings along.
Difficult to keep employee controls in place
Though they work for you, contingent employees aren’t your employees. There are some restrictions this poses to you, the employer. You can demand work and set clear expectations. That’s about it. You cannot set their work hours.
Simply put, you can define what they must do but not how they do it. You can only focus on the result but not interfere with their process and work regime.
Communication with contingent employees is different from regular employees
Communication is key. Effective communication at all levels is the baseline for a successful business. Contingent employees work at their convenience. Their working hours might vary from yours, more so if they work from across the globe. These factors might disrupt your communication and make it difficult to set clear goals.
As such, with contingency employment, the transmission of information, if not transparent or streamlined, will eventually take a toll on your business.
Trust and reliability require time to build
Having a solid, trusting relationship between you and your workforce is necessary to speed through to fulfilling your missions and stay on the same page with your business vision. With contingency employment, it may be challenging to create this without the long process of building mutual trust.
As you know, trust isn’t established in a few days. It requires time and effort, both of which a contingent hire cannot render as they work for several employers simultaneously. Also, quick hiring can make you overlook the screening process. This might lead to hiring the wrong individual and, thus, creates a vulnerability.
Temporary workers leave your data at risk
Data is the new oil. It holds the secret to the most intricate details of your business. It might lead to data leaks and severe data breaches when tapped wrongly.
Contingent hiring brings onboard temporary workers working for a short time. Nonetheless, you will have to let them access your data and other essential company resources despite being brief. Again, this can pose several risks and vulnerabilities in data security, leaving you in a pickle.
Legal and compliance issues if you’re not careful
More often than not, you will find that many legislations have stringent definitions of what constitutes a contingent employee. The difference between a contingent worker and a core employee isn’t always apparent leading to misclassifications.
However, if you misclassify an employee as a contingent worker, you might be subjected to severe penalties and hefty fines. A prevalent example is the legal definition of contractors. Some qualify them as temporary employees, while some categorize them under contingent hires.
Further, the definition changes across countries. Thus, contingency employment can cause legal complexities and compliance issues for a global employer.
Creating a solid team culture is not possible
Insisting on good team culture and bonding helps you create a strong team that unitedly works towards your goals.
A contingent employee finds no need to build lasting relationships with the rest of your team. Even if they are willing to try, the difference in working hours might leave less or no time to connect with other colleagues. This might result in poor team culture and weaker bonds.
Besides, how you treat your contingent hires might also affect the culture. If they feel like they aren’t given importance within the team, they might feel demotivated and prefer staying aloof. They might also not be invested in your work.
Read more on the advantages and disadvantages of hiring contingent workers.
Managing Your Contingent Workforce with Multiplier
When managed well, contingency employment can be an asset. The only hurdle is practical contingent workforce management.
While you can manage some of the above challenges by making conscious decisions and following best practices, you might need additional hands on the deck to efficiently endure the rest.
Multiplier, a SaaS-based HR solutions provider, bolsters you through those challenges to let you enjoy the rewards of contingent hiring.
Always stay compliant with the legal laws with our instant contract generator. We comb through your agreement terms to generate comprehensive and region-specific contracts.
Contingent employment includes workers across countries working in different job roles. Employ our robust platform to make instant payments across borders in a single click.
No more multiple documents or numerous tabs. No more clutter.
It can be tedious to organize and maintain tabs on all contingent workers dispersed across the globe. Have a panoramic view of contractor information from a single pane in our platform.
Nothing more motivating than the unexpected perks of working with you. We let you offer certain essential benefits, including health insurance plans.
Relax while we share your responsibilities. Let it be teamwork. Get in touch to know more.
Frequently Asked Questions :
Q. How do companies ensure compliance with labor laws and regulations for contingent workers?
Companies can ensure contingent workers’ compliance with labor laws and regulations by classifying employees, providing clear contracts, training, and supervision, and providing benefits and protections along with frequent audits.
Q. Why do companies use contingent workers?
Companies use contingent workers for flexibility in adjusting their workforce and cost savings. Additionally, contingent workers can provide specialized skills, work flexibly, improve scalability, and reduce the need for training and development.
Q. What are the different types of contingent employment?
The different contingent employment types include temporary workers, contract workers, freelancers, independent contractors, and part-time employees. Temporary and contract workers are hired for a specific period or project, while freelancers and independent contractors work on a project or task basis. Part-time employees work fewer hours than full-time employees and may receive different benefits.