Contract to hire does not necessarily fit the needs of everyone, but since the onset of the COVID-19, it has become an increasingly popular method for employers to recruit personnel and for job-seekers to find employment, particularly with remote and freelance work and professional, nontraditional positions. Let’s explore the topic of contract to hire work to help you decide if such an employment arrangement will fulfill your wants and needs.
What Is Contract-to-Hire Employment?
Our employment and staffing agency meets with an employer to determine a fixed amount of time and pay scale for an offered position, and the contractor (employee) agrees to work for that specified time and to fulfill the assigned duties of the position. For the duration of the arrangement, it is not uncommon for the contractor to be legally employed by a third-party “employer of record (EOR),” and not by the company that has provided the position.
Benefits of Contract-to-Hire Employment for Employers
A major benefit for the company and the contractor is the ability for both to make more thorough employment assessments that go beyond the limitations of a single, half-hour interview. A contract-to-hire arrangement is like a trial run—a working interview, so to speak—in which the employer has time to assess the skills of the contractor and to determine if the candidate is a cultural fit for the company.
With a contracted employee, a company can choose to use a third-party EOR to put off the responsibilities associated with having the worker on staff, such as running background checks, completing and maintaining employment forms (I-9, W-2, and W-4), tax reporting, processing daily sheets, payroll, etc. Because contract-to-hire arrangements extend beyond the limitations of a traditional interview, the ability to make a thorough assessment before selecting a permanent employee helps with workforce retention, because you’ll know whether you’ve selected the right person for the job.
On the other hand, if you’d rather not maintain a large staff for your business, contract-to-hire arrangements allow companies and organizations to remain light on their feet and to bring on staff only when needed.
Benefits of Contract-to-Hire Employment for Employees
Like the company, the employee (contractor) has the opportunity to assess whether the job is a good fit to help determine whether to accept a permanent staff position if it is offered by the company. In most cases, the company has posted the position with the intent of making it permanent for the right candidate. Essentially, you get to try out the job before accepting it.
During the course of the arrangement, contractors have the opportunity to demonstrate their skills and personality. Workers who would rather not be locked into permanent employment will find obvious benefit from positions that have a specific termination date, or who may benefit from a temporary position to avoid gaps in employment on their resumé while searching for the perfect permanent job.
Drawbacks of Contract-to-Hire Employment for Employees
Depending on whether the arrangement involves a contract, you may or may not be able to terminate a contract-to-hire agreement unless you are doing business or working in a state with at-will employment. Every state has some aspect of at-will employment laws, but many have restrictions and stipulations.
You might decide that you love the job, but there are no guarantees that the employer will
offer you a permanent position at the end of the specified time. Additionally, only in rare
instances do employers offer health insurance or paid leave benefits for contract-to-hire
Assessing Contract to Hire
No situation in life ever falls into a one-size-fits-all category, and when it comes to hiring a
workforce or signing on to become part of a company team, the advantages and disadvantages of contract-to-hire arrangements need to be examined from individual perspectives. Employers would benefit greatly from talking to an employment and staffing agency like Valeo Resources.
Contact us today. We’re a leader in talent acquisition, and we have plenty of ideas and recommendations to help you make the right decision about contract-to-hire