26 January 2021

Contingent Worker Definition: Your Complete Guide

Wayne Burgess
Wayne Burgess

The contingent workforce has grown exponentially in recent years, but while it may seem like the term refers to a specific worker it’s actually far more complicated than that. The type of non-employee worker that your company targets will depend on your specific workforce requirements.

Are you looking to work with a staffing agency to place temp workers into your organization, do you want to work with freelancers on an on-demand basis or do you need an industry expert to help you complete a project? 

These are just a few of the many questions that you’ll need to answer before truly optimizing how you use the contingent workforce. Understanding the different types of contingent workers available to your business will help to enhance how you procure workers from this workforce moving forward.

With that in mind, this blog will look at what the contingent workforce actually is, define the distinct types of non-employee workers that are included under the contingent umbrella, as well as determine how these workers are different to full-time employees. 

What is the contingent workforce?

The contingent workforce is a group of workers who are hired by your organization under a contract or temporary basis. These workers are typically hired to work until the completion of a distinct project or for a specifically-stated period of time.

In its simplest definition, a contingent worker comes into your company, completes a job or works for a specific period of time, gets paid and then moves onto a new job with a different business. 

The contingent workforce is made up from a wide range of workers that are classed as ‘non-employee workers’. These workers include independent contractors, freelancers, independent consultants, and temporary workers.

The use of this workforce has boomed in recent years due to its ability to provide organizations with increased agility, non- core hot skills, lower workforce costs, flexibility and a huge number of further benefits. 

What are the different types of contingent workers?

The type of contingent worker that you source will depend on your business's unique staffing requirements. While the umbrella term contingent workforce covers all non-employee workers, each individual type of contingent worker is procured, and works in, entirely different ways. 

Temporary workers

Temporary workers are typically employed through a staffing agency, and are placed in your organization by the vendor to fill a specific staffing requirement you have. They typically work at your company for a specific period of time, which could range anywhere from a couple of days to a couple of months. Temps are generally used by companies to meet seasonal demands, fill temporary positions or to scale up and down rapidly. 

Independent contractors

Unlike temporary workers, independent contractors are self-employed and are not represented by a staffing agency. The term independent contractor is also an umbrella term for other types of worker. An independent contractor could be a freelancer, a consultant who is an expert in their field or a gig worker. The most important aspect is that all these workers are independent, as in they are not represented or employed by a staffing agency. Since they are self-employed, independent contractors can work from where they want and in whatever time they want without interference from their hiring company. They are usually hired and paid to perform a defined set of deliverables and deadlines. 

For businesses, it’s crucial for compliance reasons that when sourcing independent contractors that they are incorporated entities and meet the criteria of an independent contractor within the local jurisdictions in which they are hired. Most jurisdictions will have a test online, which will help companies to determine whether a worker falls under the employee or independent contractor category. 

What’s the difference between these contingent workers and full-time employees?

When building a contingent workforce within your company, compliance is a crucial aspect to consider. Contingent workers are not employees, and it’s important to understand that to ensure your business achieves hiring compliance in the region that you are operating. 

The main differences between all of these contingent workers and your employees include:

  • Contingent workers are not on your payroll.
  • Contingent workers are hired either for a defined period of time or for a specific project only.
  • Contingent workers are not eligible for the same benefits (vacatime time, sick pay, bonuses, retirement plans etc.) as your employees are entitled to.

For true ROI, your company’s contingent workforce needs to be managed effectively

To effectively manage your contingent workforce, and ensure that you reduce costs, improve efficiencies, access the best non-employee workers and work with the best vendors for your specific needs, it’s important to manage the process with a vendor management system (VMS).

More information on why a VMS solution is crucial to the success of your contingent workforce management strategy can be found on our blog, 5 Ways a Vendor Management System (VMS) Will Improve Non-Employee Workforce Management

Alternatively, please contact Conexis VMS today. We have developed a VMS that’s specifically designed for organizations with smaller contingent workforce spend. In fact our VMS solution has no minimum spend requirements!

Wayne Burgess

Wayne Burgess

Prior to starting Conexis, Wayne was a tireless champion for clients within Accenture’s Procurement practice with specific experience across the Services and Contingent Labour spectrum. Wayne has run programs from as small as $5m to as big as $2bn. Wayne has deep consulting and operational delivery experience. He is a talented leader of organizations and has a proven track record of driving significant customer value.

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