Contract vs Permanent. What’s the difference and which would work better for your company.
While we see more and more companies offering contract employment in recent years, what actually is the difference and how does each work for your specific requirement?
In today’s employment market, we often see 2 different types of jobs available, permanent or contract-based positions. More often than not, it is the preference of individual job seekers on which job type they are more comfortable with. While many prefer a permanent position due to the security it brings, there is also a need to highlight that contract based jobs do offer certain incentives as well. Most importantly, all should be aware that should there be a stagnation in the private sectors, both types of employments can be laid off in the aim of cutting cost for the company.
Advantages of Contract-based Positions
(1) Higher salaries
As companies are not required to pay certain benefits to contract-based employees, they are able to offer a higher salary to them, in view that they cost much lesser than permanent employees. This reduction in cost provides companies a viable alternative when facing a stagnation.
(2) Flexibility
As contract-based employees are usually bonded by lesser commitments, it offers them the flexibility to travel or make other sudden arrangements with minimal interruption to their work.
Advantages of Permanent Positions
(1) Security and stability
With permanent position comes a stronger sense of security. This source of stability is often seen as a driving factor that boosts the performance of a permanent employee, hence a popular strategy when companies recognise the need to improve its performance. Due to the obligation to provide promotions, benefits and bonuses, permanent positions are often perceived as having a higher earning potential than contract based positions.
(2) Learning opportunities
Despite recent trends of job hopping, permanent position employees are generally expected to stay in a company for longer periods. Companies are thus more receptive to the idea of enhancing their skillset sending permanent employees for trainings and learning opportunities. The additional skills obtained can be useful to the individual in his/her career prospects or even useful for developing new skillsets.
(3) Specialisation
Some job specialisations are too complex for companies to hire external contractors. A good example would be the pharmaceutical industry, where contract jobs are hardly available due to the need for a dedicated workforce coupled with thorough researches. Such specialised workforce are not easily replaceable by vendors and often sees only permanent positions available. This sees a more permanent offering by companies.
