#HRmust-know: A Brief Understanding Of Contingent Workers

#HRmust-know: A Brief Understanding Of Contingent Workers

December 17, 2021

For enterprises that require extra staff during busy times of the year, hiring contingent workers is the perfect solution. However, contingent workers are different from permanent staff in terms of HR management. Therefore, you need to grasp a thorough understanding of contingent workers and be aware of certain notes if you are going to hire a contingent worker.

#HRmust-know: A Brief Understanding Of Contingent Workers

#HRmust-know: A Brief Understanding Of Contingent Workers

What is a contingent worker? 

A contingent worker is a person who works for an organization but is not hired as an employee. Contingent workers may, temporarily or as-needed, be hired to involve in a particular project or deliver their services under a contract rather than taking on a long-term duty. Generally, any contingent worker that works for your organization, employed through a staffing agency or a third party, could be:

  • Independent contractors
  • Freelancers 
  • Consultants

Contingent worker’s employment status

Contingent workers are frequently hired under the “service contract’ or ‘consultation agreement’ to clarify the task and the amount of time the worker will be required to complete the contract. After that, the worker leaves the company. The contingent worker is usually defined as “self-employed” rather than “employed” because they run their own business and are held responsible for their success or failure. So, the workers are considered contingent, as explained by the law firm Davison Morris, if:

  • Contingent workers have a service order in which they agree on a fixed cost with their clients.
  • According to a negotiated contractual timetable and other fixed criteria, contingent workers can select what work they do and when, how or where it is done.
  • They may often employ another person to complete the job.
  • They operate independently, with the emphasis on outcomes rather than process.
  • In their own time, they must rectify any substandard work.
  • Usually, contingent workers acquire business assets with their own money, cover operational costs, and supply their tools and equipment.
  • The company’s redundancy, disciplinary and complaint processes do not apply to contingent workers.

#HRmust-know: A Brief Understanding Of Contingent Workers

Things to note while hiring contingent workers

As contingent workers are self-employed, they are accountable for their tax duties and are only in charge of the services they provide. The organization pays the contingent workers instead of an employee as a separate company under this structure. This indicates that the company can only manage the result of contingent employees’ works, not the process of achieving this outcome. Thus, while recruiting contingent workers, iCIMS, a talent acquisition firm, advises there are two specific things you must keep in mind: 

  • Throughout the recruitment process, you need to be able to set reasonable expectations. If you employ contingent workers, they need to understand and be aware that you are going to handle them as a separate legal entity from the rest of the organization.
  • When an “employer-employee connection” exists, it is prohibited to pay someone as a contingent worker regardless of what this relationship is labelled. Such errors might lead to legal proceedings and penalties.

#HRmust-know: A Brief Understanding Of Contingent Workers

Handling contingent workers properly might be a difficult task for companies since they’re already overwhelmed with internal jobs. In that case, allow us to assist you. With more than 14 years of experience and in-depth knowledge about the local market, Talentnet can handle comprehensively contingent workers to fulfil business recruiting demand in various industries, thanks to huge talents pool and our experienced HR experts. Contact us to know more.

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