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5 min read

Contingent Workforce: Definition, Types, & Staffing Strategies

Contingent Workforce

What is a contingent workforce?

A contingent workforce is a group of workers who are not full-time or permanent employees of an organization. These workers are typically engaged on a temporary, project-by-project, or as-needed basis. Contingent workers can include temporary staff, contract workers, freelancers, independent contractors, and gig workers.

Contingent workers are typically engaged to fill specific roles or to provide specialized skills that are not available within the organization. They offer flexibility and cost savings to the employer as they are not entitled to the same benefits as regular employees, and the employer is not responsible for providing them with long-term employment.

Contingent workforce can also include remote workers, who may not be physically located in the same office as the employer and may have different working arrangements or schedules.

Overall, the use of a contingent workforce is becoming increasingly popular among organizations as it allows them to scale up or down their workforce as business conditions change, and to access specialized skills and expertise on an as-needed basis.

What are the different types of contingent employee?

There are several different types of contingent employees, including:

  • Temporary Staff: These are employees who are hired on a short-term basis to fill in for absent employees, to cover for increased workloads, or to provide specialized skills. They are typically engaged through a staffing agency.
  • Contract Workers: These are employees who are hired on a contract basis, typically for a specific project or for a fixed period of time. They are typically engaged through a contract agency.
  • Freelancers: These are independent contractors who are hired on a project-by-project basis. They are typically engaged directly by the employer and are responsible for their own taxes and benefits.
  • Independent Contractors: These are self-employed individuals who are engaged to provide specialized services or skills. They are typically responsible for their own taxes and benefits and are not considered employees by the employer.
  • Gig Workers: These are independent contractors who are engaged through online platforms, such as Uber or TaskRabbit, to provide services on a project-by-project basis. They are typically responsible for their own taxes and benefits and are not considered employees by the employer.
  • Remote workers: These are employees who work from a location that is not the company’s office, they can be full-time or part-time, permanent or temporary and work in different ways, such as working from home, working from a co-working space, or working from a different city or country.

Each type of contingent employee has its own set of characteristics, responsibilities, and benefits. Employers must be aware of the different types of contingent employees and the rights and responsibilities that come with each one in order to comply with the laws and regulations.

Contigent Workforce

What are the benefits of hiring contingent employees?

There are several benefits of hiring contingent employees, including:

  • Flexibility: Contingent employees allow organizations to scale up or down their workforce as business conditions change, and to fill specific roles or to provide specialized skills that are not available within the organization.
  • Cost savings: Contingent employees typically do not receive the same benefits as full-time employees, which can result in cost savings for the employer.
  • Access to specialized skills and expertise: Contingent employees can provide specialized skills and expertise that may not be available within the organization, allowing employers to access new capabilities and stay competitive.
  • Reduced risk: Hiring contingent employees can help organizations to reduce the risk of overstaffing, as they can scale up or down their workforce as needed.
  • Increased productivity: Contingent employees are typically highly skilled and motivated, which can lead to increased productivity and improved performance.
  • Improved work-life balance: Contingent employees can provide a better work-life balance, as they can work flexible hours or on specific projects.
  • Compliance with labor laws: Hiring contingent employees can help organizations to comply with labor laws and regulations, as they are not considered employees and are not entitled to the same benefits and protections as regular employees.
  • Increased diversity: Contingent employees can bring a diverse set of experiences and perspectives to the organization which can lead to creative thinking and problem solving.

It’s important to keep in mind that contingent workers may not have the same rights and benefits as full-time employees, such as minimum wage, overtime pay, unemployment insurance, and workers’ compensation. Employers should comply with the laws and regulations regarding the hiring and management of contingent workers.

Video: How to create a competitive advantage with contingent workers

Are there any downsides to hiring contingent workers?

Yes, there are several downsides to hiring contingent workers, including:

  • Lack of commitment: Contingent workers may not have the same level of commitment to the organization as full-time employees, which can lead to lower productivity and engagement.
  • Lack of continuity: Contingent workers may not be available for long-term projects, which can lead to a lack of continuity and make it more difficult to maintain momentum on important initiatives.
  • Lack of training and development: Contingent workers may not receive the same level of training and development as full-time employees, which can limit their ability to grow and improve their skills.
  • Lack of benefits: Contingent workers may not be entitled to the same benefits as full-time employees, such as health insurance, retirement plans, and paid time off.
  • Legal and compliance risks: Employers may face legal and compliance risks if they misclassify employees as independent contractors or fail to comply with labor laws and regulations regarding the hiring and management of contingent workers.
  • Lack of employee representation: Contingent workers may not have the same representation as full-time employees, which can lead to a lack of representation and make it more difficult for them to advocate for their rights and interests.
  • Quality of work: Contingent workers may not have the same level of expertise as full-time employees, which can lead to a lower quality of work and make it more difficult to maintain standards.
  • Lack of loyalty: Contingent workers may not have the same level of loyalty as full-time employees, which can lead to a lack of engagement and a higher turnover rate.

It’s important to keep in mind that while hiring contingent workers can provide flexibility and cost savings, employers should also consider the potential downsides and take steps to mitigate any negative impacts. This can be done by clear communication, setting clear expectations and goals, providing regular feedback and recognition, and creating opportunities for virtual team-building and social interaction.

What are the best ways of hiring contingent workers?

Here are some best ways for hiring contingent workers:

  1. Define the role clearly: Clearly define the role, responsibilities, and expectations for the contingent worker. This will help to attract the right candidate and ensure that they have the necessary skills and experience to succeed in the role.
  2. Use a reliable staffing agency: Staffing agencies can help to find and screen potential candidates, and handle the hiring process on behalf of the employer. They can also help to ensure compliance with labor laws and regulations.
  3. Use online platforms: Online platforms such as LinkedIn, Upwork, and Freelancer can help to find and connect with potential candidates.
  4. Use social media: Use social media to advertise the role and reach a wider pool of potential candidates.
  5. Vet candidates thoroughly: Vet candidates thoroughly to ensure that they have the necessary skills, experience, and qualifications for the role. This can include conducting background checks, references check, and skills assessments.
  6. Clearly communicate the terms of the engagement: Clearly communicate the terms of the engagement, such as the duration of the contract, the compensation, and the expectations for performance and communication.
  7. Provide orientation and training: Provide orientation and training to help the contingent worker to understand the company culture, goals, and work processes.
  8. Provide support and supervision: Provide support and supervision to help the contingent worker to succeed in the role. This can include regular check-ins, feedback, and coaching.
  9. Be fair and respectful: Be fair and respectful in the way you treat your contingent workers, and ensure that they receive the same level of respect and support as full-time employees.
  10. Review and evaluate: Review and evaluate the performance of the contingent worker, and provide feedback and recognition for a job well done.
Reece is RemotePad’s finance and accounting specialist. Reece is the go-to contributor when RemotePad advises on the financial implications of remote work and hiring employees, locally and internationally. Based in the southern New Zealand city of Dunedin, Reece has a Bachelor of Commerce degree, majoring in Accounting, from the University of Otago.

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