Defining Contingent Workers

How is an agreement between an Independent Contractor different to a Statement of Work? Do you know what being a Direct Contractor actually means? Or how an Agency Contractor is engaged?

Here are some clear definitions to help you understand the differences across the various types of contingent workers out there.

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Direct Contractor

  • Sourced directly by the end client i.e. via an internal careers team or HR department
  • Engaged directly with the end client, typically for a fixed term e.g. 6 months
  • Paid directly by the client
  • Engaged to perform an identified role and paid by the day or hour

Agency Contractor

  • Sourced by a third party recruitment agency
  • Engaged and paid by the agency but works onsite under a Hiring Manager’s direction
  • Typically engaged for a longer assignment (than a temporary worker) of 3-6 months
  • Engaged to perform an identified role and paid by the day or hour

Temporary Worker

  • Typically sourced by a third party supplier such as a temp agency
  • Engaged and paid by the agency but works onsite under the Hiring Manager’s direction on a casual day-to-day basis to cover shortages
  • Typically engaged for a few days, up to 2 weeks
  • Engaged to perform an identified role and paid by the hour

Independent Contractor

  • Work for themselves
  • Work is quoted in time and materials
  • Paid by the end client
  • Engaged to perform a set task
  • Can work for more than one client and can subcontract their work to others

Statement of Work

  • Sourced from a consulting firm whose employees are provided to perform work for a client onsite i.e legal firms, IT outsourcing
  • The work is quoted on a project basis
  • Client pays the invoice and the consulting firm pays their employees
  • SOW’s are retained for specified projects or fixed periods of time

Outsourcing Agreement Employee

  • An employee of a services outsourcing company i.e catering staff, security guards
  • The outsourcing services company invoice the end client on a regular basis, and pay their employees
  • Typically sourced for a need requiring regular independent services with a high level of expertise

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