On the spectrum of employment types, contract-to-hire jobs sit between temporary work and permanent positions. The contracted agreement spans a set length of time before an employer decides whether to officially hire the employee. Though it offers benefits like flexibility and experience, it also has downsides like job insecurity.
Technically a short-term job, a contract-to-hire position allows both the employee and employer a trial run before committing to permanent employment. Think of it almost as a hybrid of a direct hire and temporary employee.
Here, we explore the meaning of contract-to-hire, examples and whether this type of employment is worth it.
What Does Contract-to-Hire Mean?
Otherwise referred to as “temp-to-hire” positions, contract-to-hire job agreements outline a predetermined length of time employees agree to work for a company. Once the contract period ends, employers make the official decision of whether to hire the contractors full time — which often comes with better perks such as a salary and full benefits. Generally, the duration of contract-to-hire positions ranges anywhere from three months to one year.
How Contract-to-Hire Works
The hiring process for contract-to-hire employees tends to progress quickly. It is common for the employer, client or company to lay out specific evaluation terms that they will then use to assess the employee at the end of the contract. If and when an employee accepts a permanent, full-time position, their payroll may need to be officially transferred from the staffing agency over to the employer.
It is worth noting that contract-to-hire jobs are not the same as independent contractor jobs, temporary positions or freelance work. Rather, they are more similar to regular full-time or part-time jobs in terms of payroll and tax deductions from each paycheck, for instance.
Contract-to-Hire vs. Temporary Jobs
Contract-to-hire jobs are a great way for potential employees to gain hands-on experience in a role before being bound to it.
Throughout the contracted timeline, workers have the opportunity to prove themselves an asset to the employer while getting a feel for the company culture and environment. If the candidate is deemed a good fit, the position is theirs for the long term. With good intentions from both parties, contract-to-hire work can be mutually beneficial for employees and employers alike.
On the other hand, temporary jobs are more common in the event of seasonal needs, leaves of absence and unpredictable projects or workloads. Like contract-to-hire jobs, temporary positions are often staffed by a third-party firm and have a set timeframe.
However, temp work may or may not hold the promise of employment in the future. Instead, a temp employee might need to apply through the company once they open a job posting for a permanent role. Some benefits of temporary jobs include industry experience for the employee, cost savings for companies and flexibility for both parties.
Contract-to-Hire Pros
Make Professional Connections
Looking to build a stronger professional network? Contract-to-hire jobs are great for just that. The connections made in this “trial run” period not only help the employee make a good impression in the role but also could lead to opportunities through mutual connections or a better job offer at the same company. Even if a permanent position isn’t in the cards, having professional mentors, references and recommendations within your industry are invaluable.
Fill Gaps in Employment
For those struggling to return to the job market after an extended gap, contract-to-hire jobs can act as the perfect buffer for landing a permanent role.
Evidence of good performance offers merit for a raise and higher pay, too. After receiving a formal job offer, contract-to-hire employees may consider negotiating a salary increase based on their valuable contributions to the business.
Determine if Company Is a Good Fit
Contract-to-hire jobs allow employees time to prove their worth and make a positive impact on a company. These concrete, quantifiable contributions under their belts serve as ammo for securing permanent employment and demonstrating why they are the right fit in the long term.
Through hands-on “research,” contract-to-hire work is a great way to test the waters by not being bound to one role or employer. Not jiving with the company’s goals, values, coworkers, career pathing or overall work environment? No need to stick it out for the long haul, then. Contract-to-hire arrangements can build an employee’s confidence in their direction and future within their field.
Contract-to-Hire Cons
Lower Job Security
Despite an employee’s best efforts in a role, it is still possible that the company might not hire them for permanent work at the contract’s conclusion. Contract-to-hire work comes with no guarantees, meaning that some employers may just need temporary help during a busy season or another employee’s absence. Thus, less job and financial security can be a drawback of contract-to-hire jobs.
Little Benefits Offered
Until hired permanently, contracted employees are not usually able to reap the benefits of health insurance coverage, retirement savings or similar offerings through the employer. Some contract-to-hire jobs may offer benefits and insurance through a recruiting or staffing agency, but those obtained through the business directly are less likely to do so during the contract period.
Restarting the Job Search
If there is no promise of future employment, employers hold ultimate authority to sever ties with contractors for any reason. In this case, the contract-to-hire worker would have to begin their job search all over again to secure a new position. This doesn’t necessarily need to be a difficult process for those who have the time and resources, but it is still inconvenient when it happens.
Common Industries for Contract-to-Hire
In today’s job landscape, there are many contract-to-hire positions available across various specialties and industries.
Accounting
Careers in accounting involve handling taxes as well as financial data, records and accounts. Financial and accounting professionals are generally responsible for assisting customers with paying bills and managing records. From entry-level positions to remote jobs with flexible schedules, there is a range of contract-to-hire accounting work available for those with analytical and mathematical skills.
Marketing and Communications
Especially within the digital realm, marketing jobs aren’t going anywhere soon, and there are plenty of growing companies looking to develop their future leaders through diverse types of work.
Contract-to-hire roles under the umbrella of marketing or communications may exist in almost any major industry. To serve the business needs of clients or an organization, marketing professionals may specialize in areas of sales, advertising, digital media, PR or communications.
Information Technology
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Information Technology (IT) jobs offer a wealth of options among industries and employers. Performing tasks related to website maintenance, computer repair and internet security, those in the IT field might work for companies offering solutions in healthcare, education, media, digital marketing, information security, business consulting and more.
Administration
All kinds of administrative positions are in demand and regularly seek contract workers. Admin assistants may work in person or virtually. Otherwise, administrative professionals typically manage multiple responsibilities to support a company’s daily project needs. Computer and interpersonal skills are usually essential for administrative roles.
Graphic Design
Graphic designers are digital artists who create visual elements for clients and organizations to meet branding or marketing objectives. Most assets are then used on websites or in ads and marketing materials. Not only is contract-to-hire work common in graphic design, but it is also likely to offer flexibility for at least some remote work compared to other types of jobs.
Is a Contract-to-Hire Job Worth It?
Weigh the various pros and cons of contract-to-hire work before deciding if it is right for your current situation. It is also crucial to carefully review and understand the contract, as the terms will vary from client to client. A job that doesn’t truly guarantee permanent, full-time employment after the contract period might not provide the job security and peace of mind you are seeking.
Here are some factors to consider when deciding whether a contract-to-hire job is worth it:
Final Thoughts on Contract-to-Hire Jobs
Although contract-to-hire jobs may not be for everyone, they serve as solid stepping stones that sit one jump away from secure, long-term employment.
Career coach and LinkedIn Top Voice Diana YK Chan emphasizes that “you only need one yes to get hired” and shares some of her client’s recent career wins, including two contractors landing prominent full-time roles as soon as six months after they were contract-to-hire employees.
With plenty of clarity on the contract terms and transparency between employees and employers, contract-to-hire work holds high potential to lead to promising career growth and opportunities.
Top Takeaways
What is contact-to-hire?
(Reporting by NPD)
