What is a contingent worker?

The benefits of hiring contingent workers tend to heavily be financial. A company doesn’t have to collect and pay taxes for the worker, they don’t have to provide sick days or PTO, they don’t have to offer health benefits, and there is no need for overtime pay. This saves costs on employing a worker and administrative costs with payroll and HR.

A contingent worker can also provide increased flexibility. If there is an influx of work that is too much for the employees of an organization, a contingent worker can step in to perform the extra work and temporarily fill shoes as needed. Once business slows down or the temporary need is satisfied, the business and the contingent worker simply part ways. This helps prevent the extra costs of bringing on permanent employees and then having to either lay them off, or continue to pay ongoing salaries for unneeded workers. The ability to scale easily without the risk of having to carry a bloated workforce after demand has dropped off is a major advantage of working with contingent workers.

Finally, contingent workers bring with them abilities and expertise that you may not be able to find within your own organization, especially if there is a unique project that needs to be completed. Contingent workers can be hired based on these special skills—skills that may be essential for a current or upcoming project, but not essential to your ongoing business.

Although there are several benefits to hiring contingent workers, there are also challenges to be aware of. One such disadvantage is that managers often have less direct control over contingent workers. Contingent workers often set their own hours, and are responsible for managing their own projects. Any specific demand for availability or adherence to processes must be clearly outlined at hiring, otherwise the contingent worker will have the freedom to fulfill their obligations in the way that they see fit. For some managers, this lack of direct control can be a problem.

Contingent workers may also create issues relating to loyalty, commitment, and ownership. Generally speaking, contingent workers are dedicated to their projects, not to the company itself. And because they may be working for more than one company at a time, they likely will not push themselves to go above and beyond what their contract specifies to ensure the success of your business.

There are also tax risks in hiring contingent workers. Tax documentation can be complex and confusing, and if an employer accidentally hires an employee as a contractor, they may end up facing steep fines and penalties—in addition to paying missed employee taxes. When working with contingent workers, be aware that if your professional relationship changes and the worker becomes a true employee, you’ll need to update your tax information accordingly.

ServiceNow Enterprise Onboarding and Transitions solutions are built on the Now Platform, and are designed to increase employee productivity, improve workforce flexibility, support employee journeys, and enhance the overall employee experience. Working with a contingent workforce, businesses can automate the onboarding and offboarding processes at scale, providing effective guidance and getting contingent workers up to speed quickly, no matter how many contractors are involved.

With mobile capabilities, end-to-end visibility, step-by-step guidance, workflow automation, and in-depth analytics, you’ll have all of the resources you need to ensure that your contingent workers are happy, productive, and effective, for as long as your professional relationship lasts.