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Contractor vs employee: pros and cons

Contractor vs employee: pros and cons

If your business is growing and you feel it’s time to add extra staff, how do you choose between hiring new employees and using temporary contractors? There are pros and cons to both options and businesses should choose the best option to suit their unique circumstances.

Contractors

Most often hired for project work through a reputable recruitment agency, skilled contractors are ready to hit the ground running, can help up-skill your existing staff and may provide an insight into other industry projects and contacts. Whilst a temporary professional contractor will usually cost more on a per hour basis than an employee, there are many benefits that contractors can provide to businesses that are often overlooked.  

The Pros

  • Flexibility
    Contractors provide employers with the flexibility to easily increase their workforce during busy periods and decrease during quieter times, without the stress of having to lay off staff.  
  • Reduced HR costs
    The more employees a business has, the more resources are required to manage HR tasks such as payroll, superannuation and leave management etc. That’s why contractors prove especially beneficial to small businesses with minimal HR resources, as these employee benefits are managed by the recruitment agency.   
  • Minimal training
    Contractors generally only require minimal training and are ready to hit the ground running, saving businesses time and money.   
  • Temp to perm
    Occasionally an employer finds a temporary contractor so beneficial for their business, that they make an offer of permanent employment. The beauty of a temporary contractor is that their placement effectively acts as a trial period, allowing employers to review their potential, free of obligation.   

Employees

Job security, long-term prospects and the opportunity to build solid relationships with other staff members help employees to do their job more effectively. Whilst contractors may provide employers with flexibility during times of economic cautiousness, employees often possess a greater sense of commitment and loyalty to their employer.   

The Pros

  • Professional development
    Employers are more likely to invest in the professional development of employees, having the security of a permanent employment arrangement in place.  In return, employees value the job security afforded to them and commonly look for opportunities to build on their role and grow in their careers.
  • Team building
    Contractors don’t enjoy the benefits of engaging with their co-workers in the same way that employees do, simply because they are usually hired for shorter, project specific work. Employees provide a more suitable solution for employers who wish to create a culture of commitment, team support and comradery in their workplace.  
  • Company values
    Employees have more time to absorb and subscribe to a business’s goals and values, delivering positive messages about the business to their networks and peers.  
  • Continuity
    Employees are able to offer more continuity and momentum of role development.

Whether opting for employees or contractors, employers must select the option that will best fit the requirements of the role, the company culture and the longer term plans of their business.