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Understanding the Difference Between Contract, Contract-to-Hire, and Direct Hire Employment

You may have heard of contract, contract-to-hire, and direct hire but not necessarily know the difference between these different types of employment options. Each offers its own advantages and companies choose different types of employment arrangements based upon their needs. In today’s blog, we’ll provide an overview of the three employment types.

 

Contract

Contract work is typically for a fixed duration, which can range from days to weeks to years, with a clearly defined start and end date. Companies utilize contract work during periods of workload surges, during an employee’s absence, and for assistance during seasonal work demands. This allows companies to have temporary assistance and can be beneficial to employees looking for short-term employment. In an article on Indeed, they discuss some of the benefits of contract work writing, “Due to the increased mobility of contract work, temporary employees have more chances to learn new skill sets. Every project may require a unique approach or ability, such as managing different technology. The client may also invite you to partake in different training programs, which can help you build innovative strategies for your career. You can experiment with new approaches and identify ones that best fit your interests.” Additionally, another benefit is less competition for this type of work. In the same article they go on to say, “Fewer professionals may pursue contract work than permanent positions, which makes the former employment type less competitive. You can gain experience in your industry and participate in interesting projects without undergoing extensive interview and onboarding processes. There may be less pressure to structure your resume to pass pre-screening and compete against other qualified candidates. The smaller the number of candidates vying for the same role, the higher the chance you can fulfill the job and earn a living from your services.”

 

Contract-to-Hire

Contract-to-hire employment is for roles that begin with a contract period during which time the employer will assess the employee’s skill set and ability to see if they would like to hire the employee for a permanent position. Think of this as a trial run with potential. This can be a win-win for both contractors and employees. It gives contractors a chance to see if they like the company and role before signing on to it permanently, and it gives companies a thorough evaluation period to see if the candidate is a good fit.

 

Direct Hire

Direct hire employment is where companies hire employees directly in permanent roles with no pre-defined end date. For these types of roles, the hiring process may take a bit longer for the employer to assess whether or not the candidate has the skill set needed and would be a good company fit. In an article on Forbes, they write, “Permanent contracts, also known as open-ended contracts, represent the most traditional form of employment agreement. They establish a continuous arrangement between the employer and the employee, devoid of a fixed end date. This type signifies long-term commitment, typically offering stability, job security, consistent income and access to company perks and benefits.”

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