Understanding contingent workers and the difference between a self-employed contractor vs a fully employed contractor
Today’s global workforces are comprised of traditional internal employees and contingent workers. As more companies are embracing remote workers, many are also increasing their utilization of contingent workers. These contingent workers are referred to as “non-employee” “extended workforce” or simply “contractors”. Emerging talent sourcing technologies are allowing more options for identifying, screening and engaging talent for contingent workers. There are specific laws and regulations that govern how the engagement and supervision of each type of contingent worker should be managed.
As companies decide between IC’s, and contract employees, understanding the differences between each worker type and how to manage all aspects, including compliance, should be considered.
- The company sets and controls the work performed, determines working hours and location where work can be performed
- Based on the laws of the country, the worker will be considered a legal employee and subject to taxes, benefits and paid time off
- Submit worked hours daily, weekly, monthly into a portal
- Companies can employee these workers directly or outsource the management to a third party Employer of Record “EOR” company. Sometimes these EOR’s can be also considered as a Global “PEO”. Utilization of such companies adds an important layer of risk mitigation and indemnification.
- Workers in some countries can have assignments and project ended quickly while other countries require formal notice periods
- Can operate as an Independent or Corp to Corp contractor
- Both categories of self employed allow for work to be performed for multiple clients
- actively solicit and market their services for additional work
- Provide their own computers and technologies
- Set when and where they work office or remote
- Responsible for taxation
- Submit an invoice for services with a hourly back up for cost center coding
- Do not accrue paid time off
- Can have work project ended if properly called out in initial contract
What Category of Worker Should You Utilize?
When considering when and why to engage contingent worker, self employed contractor or an employed contractor, consider the following questions:
- Is the work an ongoing business need likely to reoccur?
- Do you have internal full time workers doing a similar role?
- Is the project or work a core component of your company functionality or services?
- Is there flexibility in when, where and how the work or project can be performed?
- Will you require the work performed during certain hours with detailed reporting
- Does the worker require unique niche skills?
- Can the work or project be expressed in a defined scope of services?
- How much control or supervision will you company exsert over the work or project?
- Are self employed contractors utilized for this type of position in your or other companies?
Organizations with an existing global footprint or who are looking to expand globally, are increasingly adopting a global contingent worker approach. In today’s world, global borders are less of a barrier to business expansion, causing an increase in global mobility.