Contractors vs. Employees: Which Does My Business Need?

Contractors vs. Employees: Which Does My Business Need?
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Contractors vs. Employees: Which Does My Business Need?

  • April 08th, 2015
  • CategoriesBlog

These days, work relationships come in all different forms: short-term, long-term, temporary, permanent, labour hire. This transition has proven tremendously beneficial for both employers and members of the workforce, as it provides for a new level of flexibility and creates partnerships which are satisfactory to all involved.

Perhaps the most common work arrangements involve traditional employees and independent contractors. Many clients are often curious to determine the differences between these two positions, to help them decide which option will better meet their needs. Yet it seems no single option outperforms another. Businesses and organisation can benefit from using both traditional staff members and independent contractors, as each will play a varied role in your workplace.

Traditional Employees

The majority of hired staff in most workplaces are traditionally employed. This means they are generally permanent team members (or perhaps temporary staff) who are engaged in ongoing work with a company. Work performed is under the direction of the employer and any supervisors. Traditional employees typically work set hours and have a specific role they play within the organisation. An employer will provide most resources, equipment, and tools necessary for the employee to complete his or her work tasks.

Traditional employees receive their pay on a regular schedule and are entitled to benefits such as superannuation and paid leave. As an employee, an individual is a separate entity from his employer, and bears no responsibility for the financial risks of the company. Lastly, an employer is responsible for deducting the appropriate income tax from their employee’s pay. In summation, a traditional employee depends upon his or her employer to handle the majority of administrative tasks involving his employment and pay; the employee needs only to focus on the tasks and responsibilities of their position within the organisation.

For businesses and organisations with little change in structure, traditional employees are the ideal employment solution.

Independent Contractors

Hiring an independent contractor represents a very different type of work relationship for a business or organisation. Typically, a contractor has a specific set of skills for which he or she is hired. In agreement with an employer, the contractor will be engaged for a certain period of time, perhaps to work on a single project or task. The employer will usually provide little hands-on guidance or supervision over the independent contractor. Following their initial contracting agreement, a contractor will decide upon his or her own hours (within reason) and perform work independently. In most cases, the contractor will use his or her own tools and supplies to complete the work.

An independent contractor operates as his or her own entity, essentially working as a private business. Contractors must pay their own tax to the Australian government as well as manage their own superannuation. Instead of receiving regular payments from an employer, a contractor must track his or her own hours and submit an invoice following completion of any work. In the event that there are concerns or issues with the contractor’s work, he or she bears full financial responsibility. Most contractors will have their own private insurance for this reason.

For organisations or businesses with variable projects and work patterns, or planning a big change, independent contractors are an excellent option.

Meeting Your Needs

If you’re a business seeking the services of a qualified contractor or traditional employee, On Line Recruitment and Labour Hire has the resources to get you connected. With our vast candidate database, thousands of highly-skilled workers are available right now to help your business succeed. Contact us today to get the recruitment process started.

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Written by On Line Recruitment

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