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Global Work Glossary

Lost in a maze of global employment jargon? Find your way out with our handy collection of work and HR terminology

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# A B C D E F G H I J L M N O P R S T U V W X Y Z

Contract employee

Who is a contract employee?

A contract employee, also known as a freelancer, contributor, or independent contractor, is an individual who is hired by an organization for a specific period or project typically under the terms of a written contract. Their employment is temporary and project-based and allows organizations to access a diverse range of skills without the costs of hiring a full-time member of staff.

Different countries define what makes a contract employee in different ways, but in the United States, if someone dictates when and where they work for a temporary period, they’re considered a contract employee. Organizations need to keep a record of all payments to contractors and create comprehensive contracts which make clear the nature of the working relationship. They also need to make sure to be clear about classification. For example, if an individual is given benefits, they are employees and not contract employees. And this has an impact on taxation.

Hiring contract employees comes with its own set of regulations. These individuals work independently and are therefore responsible for paying their own taxes. They also have fewer legal protections compared to regular employees.

To stay on top of compliance when hiring contract employees, it’s important for organizations to use a global payroll solution such as Multiplier. This will ensure that all important documents are centralized and all local requirements are met.

Ready to take the leap? Choose Multiplier as your EOR partner

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