Do you need to hire a permanent employee or contractor?

You may have just won a new contract, had an employee resign or are in the midst of an expansion period. As a hiring manager, you know that you need to bring a resource on board, but the question is whether you need to hire a permanent employee or a contractor? The upsides and downsides of an additional head count versus a contractor need to be weighed up carefully. Director of IT, Human Resources, Secretarial and Support, Professional Services RWC at Robert Walters, Erica Lindberg, highlights some important questions to determine what kind of hire will benefit your situation most.

What is your budget?

Although contractors are less of a commitment, they are paid a higher rate due to the flexible nature of the work. There are obligations that an employer must consider when weighing up the costs of each type of worker, such as overtime rates and duration of contract. If you don’t have head count approval, are concerned about fluctuations in the market and require greater flexibility, then a contractor is the better option.

If you have head count approval and you cannot see the workload diminishing, it may be a better option to hire a permanent employee instead of a band-aid approach to a long-term need. Hiring a permanent employee will give you more security and give you the opportunity to look at passive candidates in the market who are currently in roles and not available immediately for a contract role.

When do you need the resource?

Time may be a key factor in determining which option you choose. If you need someone urgently, you will have access to a larger pool of immediately available contractors. As a standard, candidates looking for permanent work are often already in a role and have a notice period of four or more weeks. Of course, there will be candidates looking for permanent work who are available immediately, but this is a much smaller pool.

What skills are you seeking?

Contractors are an ideal solution when you are looking to fill a particular skills gap for a specific project, or where you are unsure of how long you will need the resource. Permanent employees have the time to develop their skill sets within your business, and as you invest in them with training and career development opportunities, they will likely become more invested in your organisation in return.

Does the role fit the legal requirements?

According to the Australian Tax Office, a worker isn’t automatically a contractor just because they have an ABN, specialist skills or you only need them to work during busy periods. You need to consider the whole working arrangement to determine whether a contractor is really an incorrectly-classified employee.

While SEEK partners with trusted contributors to bring you the latest insight and advice, the views and opinions expressed in this article are those of the author.
  • About the author

About the author

Erica Lindberg

Robert Walters

Director of IT, Human Resources, Secretarial and Support, Professional Services RWC

Erica Lindberg has more than 13 years of experience in recruitment across the areas of technology, human resources and secretarial support, in the banking and commerce sectors. In her current role, Erica is responsible for the management of more...