When businesses need extra help, they often consider two options: hiring someone on a fixed-term contract or hiring a contractor. While both options are temporary, they work in different ways. Explore the key differences to determine which option is best suited for your business.
What Is a Fixed-Term Contract?
A fixed-term contract is when a business hires an employee for a set period, filling a temporary gap in their workforce, such as an employee going on maternity leave. This could be for a few months or even a couple of years. The contract has a clear end date, and the employee usually works like a permanent staff member. They may be entitled to annual and sick leave and other benefits the company has on offer.
Businesses use a fixed-term contract when they need someone for a specific project, to manage a busy period, or for a particular skill set that is not required on an ongoing basis. At the end of the contract, the business can decide to extend it, offer a permanent position, or part ways with the employee.
What Is a Contractor?
A contractor is a self-employed worker who provides specialised skills to a business, often used for short-term projects or specific tasks. Instead of being an employee, they run their own business and work on a contract basis. They usually set their own hours, bring their own tools, and handle their own taxes and insurance.
Unlike fixed-term employees, contractors do not get company benefits like paid and sick leave. Instead, they charge for their time or work, and their agreement ends when the project is finished. Since they are not company employees, there’s no need to manage payroll, benefits, or long-term employment obligations. Once the project is completed, the contractor moves on to their next client.
The Difference Between a Fixed-Term Contract vs a Contractor:
Employment Status: Fixed-term employees are part of the company’s workforce, while contractors are independent.
Benefits: Fixed-term employees get benefits like sick leave and holiday pay, but contractors do not.
Control: Employers have more control over a fixed-term employee’s work schedule and tasks. Contractors have more freedom to work how and when they choose, within the terms of the contract.
Tax and Insurance: Businesses handle tax and insurance for fixed-term employees, while contractors manage their own.
Flexibility: Contractors offer more flexibility; they can be easier to let go when the work is done or their skills are no longer required, whereas fixed-term employees follow normal employment rules.
Which One Should You Choose?
A fixed-term contract is a great option if you need someone to fully integrate into your team for a set time. It provides stability and ensures the person is available when needed.
If you need a specialist for a short-term project or want to avoid the hassles of an employee, hiring a contractor might be the better choice. Contractors bring expertise and flexibility, making them ideal for businesses with changing needs.
Both options have their benefits. It is important to choose the one that best fits your business goals. Need help finding the right professionals for your team? Get in touch with us today.