Contingent workers, part-timers, consultants, freelancers, temps, contractors – everyone’s talking about them, but what are they, how do you manage them, and are they right for your business?
Regardless of the ratio of contingent staff to permanent in your business, it’s never too late to take advantage of this seismic shift in workplace dynamics. Many organisations are now considering whether this type of worker holds a greater place in their long-term business planning.
To help you make these informed decisions, we’ve put together a list of frequently asked questions to help you decide whether contingent workers are right for your business.
What are the benefits of hiring contingent workers?
Engaging contingent workers in your business offers numerous financial and non-financial benefits. Some of these include:
- Lower costs – Employers typically don’t provide holiday and sick leave, equipment, desk space or benefit programs to contractors. Although contractors are often paid more per hour than employees, employers are likely to pay less overall due to these soft costs.
- Flexibility and scalability – If your business has peaks and troughs when it comes to workloads, contractors might be the answer. Contractors can be hired on an as-needed basis to support large projects, gaps in the team or busy periods.
- Niche skills – Many companies hire contractors because they’re looking for very specific skillsets and expertise that they don’t have within the business.
What are the downsides of hiring contingent workers?
Despite the significant benefits of contractor workforces, employers should also be aware of the challenges, drawbacks and disadvantages. Some of these include:
- Less loyalty – Because contractors may work multiple roles, and are only in the business for a short period of time, contractors are often at arms-length to a business and its employees. This also means that contractors have a higher rate of turnover than their permanent counterparts.
- Lack of control – Contractors often choose their own hours and how they accomplish tasks. Although you set the end product you want a contractor to deliver, you may find it difficult to communicate with the worker or have a firmer grasp over how the work is conducted.
- Data security – Usually, there isn’t the same kinds of safeguards for contractors as there is for permanent workers. We’ve seen contractors still have access to client systems or keep their building passes leading to breaches and IP loss. We’ve gone into further detail in this area with a recent blog post.
Finally, the world of contracting is constantly evolving – especially from a legislative standpoint. Misclassification, co-employment, health and safety, labour hire licensing, visas and sham contracting are just some of the areas that employers need to be across when engaging contractors, as we’ve outlined in the past.
Which leads us to…
Can contingent workers be considered employees?
The Australian Government has recently passed a significant amendment to the Fair Work Act, for the first time defining what casuals are and stopping the ability to access permanent entitlements.
The main criteria when determining whether a worker is contingent is whether they receive no ‘firm advance commitment’ or an ‘agreed pattern of work’ from their employer. The legislation goes further to define ‘firm advance commitment’:
- Whether the worker has the flexibility to accept or reject an offer of work.
- The person will work only as required.
- If the engagement is described in the contract as casual employment.
- Whether the person will be entitled to a casual loading or a specific rate of pay for casual employees under the terms of the offer or an enterprise bargaining agreement.
Interested in learning more about this law? Check out our recent webinar, or download a copy of our latest workforce risk report. We’ve also recently released a contractor risk diagnostic tool for you to assess whether your worker is a contractor or employee.
How do you manage contingent workers?
Many organisations hire contractors through recruitment suppliers, who then manage and pay the worker.
Recruitment suppliers tend to invest heavily in the front office and not the back office – by engaging and managing your workers through various recruitment suppliers, it’s almost impossible to manage downstream risk. As multiple suppliers engage your contingent workers, they’ll likely have different interpretations of associated legislation and an inconsistent experience for your workforce.
Under our model, CXC manages, engages and payrolls all contingent workers regardless as to how they are sourced. This allows us to align our processes to your HR strategy and apply a consistent risk framework across your contingent workers and suppliers.
As one of the world’s top suppliers of contingent worker management solutions, CXC is perfectly positioned to optimise all elements of your contingent workforce strategy. With operations in more than 50 countries across 5 continents, and with decades of experience, we can assist with every aspect of your program.
If you would like to find out more about how we can help with your contingent workforce solutions please contact us.