Everything You Need to Know About Contingent Employment

What is Contingent Employment?

Contingent employment entails hiring individuals for well-defined periods, typically on a project-to-project basis. It allows employers to take a more project-oriented and adaptable approach to employment.  

Consider a busy eCommerce company preparing for the holiday season. The owner anticipates a surge in customer service inquiries during this period but does not want to hire full-time employees. Instead, the company engages a group of customer service representatives temporarily. 

These reps work remotely to handle customer inquiries during the holiday rush and are compensated based on their work hours. The employment contract comes to a close once the holiday season concludes.

Here, the customer service representatives are contingent employees who offer their services for a specific, short-term need. They allow the company to manage seasonal demand efficiently without the commitment of permanent hires.

Contingent Employment Vs Traditional Employment

This approach differs from traditional full-time employment, providing more flexibility and adaptability to both employers and workers. Opting for contingent staffing allows you to swiftly respond to the changing demands of projects and market conditions. 

Related Read: Difference Between Contingent Workers, Contractors, and Core Employees

Why Do Companies Go for Contingent Employment?

Organizations increasingly turn to on-demand, flexible labor through contingent employment to tap into the top talent and quickly scale up, facilitating business growth. This approach helps them adapt to changing demands and access specialized skills.

Workers also find contingent jobs advantageous. For many, temporary or contractual work better aligns with their lifestyles. It gives them the freedom to select projects and work from convenient locations. Below are some notable reasons behind the rising contingent job offer.

1. Top talent access

Businesses are turning to contingent staffing to find suitable candidates with crucial skill sets and acquire top-tier talent. A contingent job offer allows you as an employer to source specialized skills on a contract basis and supplement your internal workforce.

2. Dynamic assessment of business needs

Businesses often encounter dynamic market conditions and growth opportunities. A contingent offer of employment allows you the flexibility to assess and meet your company needs without the commitment required for permanent hires, fostering adaptability and cost efficiency. 

3. Fresh perspectives and creativity

Contingent employment often brings a breath of fresh perspective to organizations. With their diverse backgrounds and experiences, these external workers can provide innovative ideas and different ways of approaching challenges. Their unique viewpoints can help you see opportunities and solutions they might have otherwise overlooked, ultimately contributing to a more dynamic and creative work environment

4. Trial run for new roles

A contingent workforce allows you to evaluate non-permanent candidates for potential full-time roles. It helps ensure that positions align with long-term plans and cultural fit. Contingent employment also serves as a trial period to gauge an individual's suitability for a company culturally and professionally.

Benefits of Contingent Employment for Organizations

The benefits of contingent employment are significant and as follows:

1. Scalable and flexible workforce

An external workforce can be invaluable for a company that requires swift adjustments in its employee numbers due to economic conditions or seasonal work demands. The adaptable nature of the contingent workforce allows you to safeguard the job security of regular employees and ensure optimal resource allocation and business agility.

2. Cost efficiency

The average cost to hire a new employee is about $4,000. The ability to hire talent for specific projects can result in significant cost savings. Contingent staffing also eliminates employee costs and allows you to avoid the year-round expense of maintaining a full-time workforce during business fluctuations.

3. Access to unique skill sets

Contingent employment introduces a valuable pool of unique skills and expertise to a company. These specialized individuals can quickly fill skill gaps and bring in-demand proficiencies to specific projects or tasks. Their ability to offer niche skills not always available in the internal workforce adds a dynamic dimension to a company's capabilities.

4. Streamlined administrative processes

It takes approximately 44 days to fill the average position. Sourcing and hiring permanent employees can be time-consuming, yet there are instances where the need for critical talent is immediate. Contingent staffing can help you quickly fill openings and bypass the extended timeline associated with traditional hiring processes.

Also Read: Difference Between Independent Contractors and Employees

Advantages of Being a Contingent Worker

Contingent work is steadily gaining traction as more people embrace its benefits. Further, the rise of virtual platforms and remote work opportunities has made it easier for people to access contingent work options.

The growing trend reflects a shift in how individuals approach work and balance their preferences and goals. Here are some perks of joining contingent employment.

1. Flexibility

Contingent work allows individuals to work according to a schedule that fits their lifestyles. They can choose when and where to work, accommodating personal commitments, such as educational pursuits or hobbies. It presents a better work-life balance and allows one to pursue their interests.

2. Transitioning careers

Contingent work can be a transitional phase for those exploring new career paths or industries. It provides an opportunity to gain experience, build a network, and assess the industry before committing to a full-time role in a new field.

3. Lifestyle preferences

Contingent employment can align with specific lifestyle choices. For example, digital nomads often choose contingent work because it allows them to work remotely from different locations. Similarly, artists or writers use it to support their creative endeavors while earning income.

4. Entrepreneurial pursuits

Contingent work can be a stepping stone to entrepreneurship. Freelancers and independent contractors can manage their work, set rates, and build their client base, essentially running a small business.

5. Diverse experience

Contingent workers often take on various projects or roles across different industries or organizations. The diversity of experience can enrich and help them acquire a broad skill set, making them more adaptable and marketable in their careers.

Challenges in Contingent Employment

Contingent employment presents numerous advantages, yet it also brings significant challenges you must effectively address. 

1. Compliance and legal issues

You must navigate the legal and regulatory requirements for contingent staffing. It includes correctly classifying contingent workers and ensuring compliance with employment laws, tax regulations, and worker classification standards. Failing to do so can cause legal disputes and penalties.

Seek expert guidance on worker classification and ensure adherence to employment laws and tax regulations. Clear documentation of contracts and hours worked is also essential, along with regular internal audits to identify and rectify any discrepancies.

2. Availability

While finding a contingent employee with specialized skills may be easy, their availability can be uncertain. They might be working with other companies, or their schedules may conflict with your timeline.

Open communication and planning can ensure you secure the right talent when needed. Consider building relationships with a pool of contingent workers to have options available.

3. Control

Managing contingent workers differs from managing core employees in terms of control. While you can assign tasks and set deadlines, you may not have the same control over how they perform their work. Contingent workers bring their expertise and methods to drive outcomes.

Provide necessary resources and guidelines while allowing contingent workers the autonomy to leverage their skills. Regular check-ins and feedback sessions help align their work with your goals.

4. Confidentiality

Contingent employees typically handle sensitive data and have access to confidential company information. It raises concerns about the data breach risk to other organizations they may work with in the future. Consequently, you must vet contingent workers carefully to mitigate such risk.

Ensure they have a trustworthy reputation and establish clear guidelines for handling sensitive information. You can also implement non-disclosure agreements (NDAs) to legally protect your data and information.

Manage Your Global Team Easily With Skuad

Contingent employment or staffing allows you to meet the changing business markets and adapt to the modern employment model. Despite having some challenges, it can benefit your business when managed right.  

Skuad can give you a hand in managing contingent workers. We can simplify onboarding, payroll, and local compliance to help you build globally distributed teams in over 160 countries. So, speak to our experts today to learn more!

FAQs

Q1. What is the opposite of a contingent employee?

Permanent or regular employees are fundamentally distinct from contingent employees. The former has an ongoing and long-term employment relationship with an organization. Conversely, contingent employees work non-permanent or temporarily for specific projects or durations.

Q2. What is the difference between a temporary employee and a contingent employee?

A temporary employee allows companies to see and evaluate how well they work before deciding to hire them permanently. Meanwhile, contingent employees bring specialized expertise and support to companies on a short-term basis. The latter is ideal for companies working on a specific project that needs to be done quickly and efficiently.

Q3. What is the difference between contingent workers and core employees?

Contingent workers are temporary. Companies hire them for specific, short-term projects or to replace employees who have taken absence leaves. On the other hand, core workers are hired for a permanent position in a company for years.