8 signs that show its time to turn a contractor to an employee

Teamwork relationships are often a tense thing. Especially if it is an employer-independent contractor relationship. These relationships are not clearly regulated by law. They vary on a case-by-case basis. So the answer to the question: "Who's better to hire: independent contractors or permanent employees?" depends on several factors and varies by situation.

Indeed, it is impossible to give a universal answer to this question. What’s more, it’s often extremely difficult to determine whether a person is actually a permanent employee or an occasional independent contractor. To understand, you have to look at the legal nuances, but there is confusion in every other case, as well.
There are some criteria that can be determined through simple questions. To find a solution, and understand, whether is this person a full-time employee or a contractor, you need to answer the following questions:
  • Does he/she work in the organization’s space, on the organization’s premises?
  • Does he/she use his/her own equipment/tools?
  • Does he/she control the timing of his/her work?
  • How does he/she get paid for his/her work?
As we have already found out, there is no clear and unambiguous answer to it. You need to consider each situation individually, analyze the pros and cons and think about beneficial cooperation in particular cases.

But it even happens that a clear line between these two concepts is erased. Even if you began working with a person as an independent contractor, over time you may have a desire to hire him as a permanent employee.

The following list contains 8 factors that signal that it’s time to hire an employee on a permanent team:

  1. You haven’t entered into a contract. This is a rather dangerous position to be in. It is in the interests of both parties to initially conclude a contract, which will clearly and in detail spell out all the important conditions: the scope of work, the deadline for delivery, and other details of cooperation. Without a separate contract for a particular job, the relationship between employer and contractor becomes the same as between an employer and a permanent employee.
  2. You want to have such a great specialist on your team. Most likely, you have dealt with this contractor many times before and have been satisfied with the result of cooperation every time. In this case, the contractor is a highly skilled professional whose work is in demand. If you want to continue working with this person, feel free to offer him/her a permanent place on your team. If he/she is indeed a highly sought-after professional, you may have to offer him/her personal benefits or other favorable terms so that he/she will willingly accept your invitation.
  3. You partner with this person time after time. The work of an independent contractor is supposed to be temporary, defined by a specific work task and a deadline. If you invite a particular contractor again and again, and he/she literally works for you all the time, you can offer him/her a position on your staff. Thus, you will change the legal status of your cooperation, although the basic conditions may well remain unchanged.
  4. You want this person to work only for you. If you have found a unique nugget or a person who creates authentic and exclusive products, you may want to monopolize his/her work. That is, to make him/her work exclusively for you and not cooperate with other companies. In this case, you practically have to offer him/her a permanent job, having agreed on the main condition — to work only for you.
  5. You initially made a mistake in your definition. You may have dealt with a permanent employee from the beginning, but mistakenly thought of him/her as a contractor. In that case, you need to clarify the situation as quickly as possible, discuss all the details and settle the legal issues, execute the contract.
  6. The independent contractor is doing the main work for your company. An independent contractor should not do the bulk of the firm’s work or play a key role in it. If it does happen that a contractor is the main element of your production, try to formalize a business relationship with him/her on an ongoing basis. This will be much more reliable and beneficial to your company.
  7. You have not established a payment with a contractor. If the price for contractors is the same as your employees' wages, it is more profitable to make them such employees.
  8. You regulate the working hours of your contractors. Independent contractors set their own hours. If their shifts resemble your employees' workday, however, it’s worth considering taking contractors on staff.

An employee’s status reflects strongly on how they feel about their work and how enthusiastically they perform it. If you have doubts about a person’s status, or you are uncomfortable working with them as a contractor, it’s worth considering taking them on as part of a team for the long term. Being part of a permanent team is always comfortable for the person, it creates stable ground under their feet. It is also beneficial to the employer because it gives legitimacy and confidence in the collaboration.
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Ranking of outsourcing service providers in Russia 2021
Ranking of the largest consulting companies in Russia 2021
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