The workforce landscape is undergoing a significant transformation, with temporary and contract work now becoming increasingly dominant. This change is being driven by factors like technological change, globalization, and shifting worker preferences.
But what exactly does this seismic shift mean to employers? Well, it’s simple: That to stay competitive, employers must embrace the trend and leverage its benefits.
However, as you’d expect, adopting temporary and contract work arrangements comes with its own fair share of challenges for employers.
So, in this blog post, we’ll explore the rise of temporary work, its benefits and challenges, and most importantly, the best strategies you can use as an employer to navigate this change more effectively.
Understanding Temporary and Contract Work
Temporary work is just what the name implies — an employment arrangement that is non-permanent and has a predefined end date.
Temporary work can come in several forms; fixed-term contracts, seasonal jobs, and project-based roles.
When you’re in this form of employment, your collaboration with the employer ends by default upon the elapsing of the pre-defined period, when the season for which one is employed passes, or after the project employed to handle is completed.
Now, the number of people opting for this type of employment arrangement is surging. As of 2023, approximately 1.67 million people in the UK were working under temporary contracts, according to the Office for National Statistics. That’s about 6.4% of the country’s total workforce.
In the European Union (EU), around 24 million individuals (12% of total workers) worked under temporary contracts in 2022. Globally, the trend is similar.
But then, it's worth mentioning that there are some sectors where temporary employment is more common than others. Classic examples of such sectors are health care and IT.
Let’s take health care as an example. A report published by Tech Target shows that 96% of healthcare facilities have hired temporary health professionals in the last 12 months. That’s a huge percentage of employers relying on non-permanent workers.
However, unlike in most other sectors where temporary work is adopted by employers as a risk-mitigation strategy, the widespread adoption of temporary employment in the healthcare sector has more to do with the shortage of health professionals than anything else.
Difference Between Temporary & Permanent Employment
The primary distinction between temporary and permanent employment lies in job security. Temporary workers, unlike permanent employees, often face job insecurity and typically miss out on benefits such as health insurance, retirement contributions, and paid time off.
But on the positive side, they enjoy a lot of flexibility, making the work arrangement more appealing to those seeking to balance work with other commitments or hobbies. That’s unlike permanent employment, where an employee is hired for an indefinite time, usually on full-time hours.
But, of course, permanent employment comes with numerous perks usually not available in temporary contracts, for instance, health insurance, paid time off, retirement contributions, and other benefits.
Key Differences
|
Aspect |
Permanent Employment |
Temporary/Contract Employment |
|
Duration |
Indefinite |
Fixed-term or project-specific |
|
Benefits |
Comprehensive (e.g., health, PTO, etc.) |
Limited or none |
|
Job Security |
High |
Low |
|
Flexibility |
Low (set schedules, defined roles) |
High (short-term, adaptable roles) |
|
Employer Perspective |
Long-term investment |
Cost-effective, adaptable to business needs |
The Evolution of Work Models
Change has been inevitable in the workforce sector, much like in every other sector. How organizations hire and collaborate with employees has slowly been morphing, with temporary work arrangements becoming the new trend.
Let’s quickly examine how employment has changed over the years:
Traditional Full-Time Employment
For the most part of the 20th century, full-time employment with benefits defined the standard workforce model. This employment approach prioritized stability for workers and loyalty to employers.
However, economic pressures in the 21st century, such as the 2008 global recession, exposed the limitations of this rigid structure, leaving so much financial weight for employers to bear. So, companies began seeking more agile hiring strategies to reduce fixed costs, some of them turning to temporary and contract work.
Emergence of Temporary and Contract Work
Temporary and contract work started gaining traction as companies sought greater flexibility. Platforms like Upwork and Fiverr emerged to enable freelancers to connect with employers globally, and companies like Kelly Services began spearheading professional staffing solutions. The gig economy exploded, with major players like Uber and DoorDash offering workers flexible income streams.
Why Temporary and Contract Work is Gaining Popularity
But then, why are employers and employees both loving the switch to temporary employment? Below, we will explore a few reasons why this trend is becoming more prevalent:
Worker Perspective
Of course, there are several reasons fueling the preference for temporary employment among job seekers.
Here are some:
1. Temporary Work Provides More Flexibility
From a worker’s perspective, flexibility and autonomy are key motivators for pursuing temporary employment opportunities over permanent jobs. A study by FlexJobs found that 65% of workers prefer a flexible schedule over higher pay, reflecting a growing desire for work-life balance.
Elsewhere, a research report by People Management revealed that 77% (approximately three-quarters) of employees are even willing to decline an increase in pay in favor of work flexibility instead.
What does this mean? That employees are often opting for non-permanent employment because it lets them choose projects that align with their availability and interests, making balancing professional and personal priorities easier.
Molly Johnson-Jones, co-founder and CEO of Flexa, while emphasizing on the increasing demand for work flexibility, makes it clear that organizations can no longer rely on increased pay as a way to attract and retain employees.
“Many workers with different health needs or caring responsibilities are unable to work in office environments or during certain hours, and then there are workers who are simply unable to work well in traditional set-ups. A pay rise won’t change that.”
— Molly
2. Temporary Work Promotes Skill Diversification
Besides flexibility, temporary work allows professionals to develop diverse skills and explore opportunities across industries. It is especially beneficial for individuals with strong personal branding.
In one of the recent studies, Glassdoor discovered that a staggering 90% of the workforce wants to update their skills at least every year. This clearly shows how the current workforce has a strong drive to acquire new skills and refine their abilities, and engaging in temporary work leaves them with ample time to do that.
Plus, temporary contracts allow employees to work with multiple employers across different industries, allowing them to gain hands-on experience and exposure to new technologies, tools, and other methods of doing things. This not only makes their work more engaging but also gives them a competitive edge when seeking for future opportunities.
3. Temporary Deals Are Usually More Financially Appealing
Financially, contract work can sometimes be more lucrative than permanent roles. Contractors often receive higher hourly or project-based rates because they are not provided with traditional employee benefits.
For professionals with in-demand skills, this arrangement can result in significantly increased earnings over a shorter period. Furthermore, the opportunity to work for multiple clients or on varied projects enables contractors to diversify their income sources and potentially reduce financial risk compared to relying on a single employer.
4. Temporary Employment Eliminates The Need for Long-Term Employment Commitment
For others, contract work offers a way to avoid the long-term commitments of permanent employment. Some individuals prefer shorter engagements to explore different career paths, industries, or geographic locations without being tied down in a permanent work contract. This lifestyle is particularly attractive to younger workers or those in transitional phases of their careers.
Additionally, contract roles provide an opportunity for professionals to focus on their areas of expertise, avoiding the broader responsibilities and office politics often associated with permanent positions.
Employer Perspective
Employees aren’t the only side pushing the shift towards temporary and contract-based employment. Employers are also playing a significant part, owing to the benefits it offers them over traditional permanent employment.
Here are some of the employers’ motivating factors:
1. Temporary Employment Costs Less
For employers, temporary workers offer a cost-effective solution. With temporary recruitment, employers don’t need to worry about costs like healthcare, retirement plans, and other financial commitments associated with permanent hiring.
Plus, temporary hiring means that the employer doesn’t have to incur training costs since temporary workers have the necessary skills to perform the project for which they’re being hired.
Without having to incur all these costs, it becomes easy for employers to reduce overall costs, which is always a good thing for any business.
An average company can save 20 to 30% on labor costs when it opts for temporary employment instead of permanent employment. That’s a massive amount of savings for any company, especially at a time when the business landscape is becoming even trickier to navigate.
2. Increased Workforce Flexibility
Employers need flexibility just as much as employees, if not more. By adopting temporary work terms, employers can scale their teams up or down depending on the nature of the project at hand and the prevailing market conditions.
This flexibility is especially important for markets with a high degree of unpredictability as it can help businesses adopt the appropriate operation dynamics without the fear of being tied down in permanent employee contracts.
In addition, since temporary employment allows organizations to easily hire or drop workers, it becomes easier to manage short-term surges in workload, allowing businesses to add more workers only when needed without committing to recruiting them in the long term.
3. Temporary Employment Is A Risk-Mitigation Strategy
Employers also find temporary and contract roles attractive as they mitigate long-term risks. In times of economic uncertainty, avoiding permanent hires helps businesses remain agile without the burden of extended commitments.
Plus, temporary arrangements can serve as a trial period to evaluate potential talent before offering permanent positions, ensuring a better fit for both parties.
And, of course, the temporary hiring model enables companies to focus on their core business by outsourcing non-essential tasks. Contract workers can handle specialized or administrative functions, freeing permanent staff to concentrate on strategic objectives.
4. Legal and Regulatory Compliance
Legal and regulatory compliance is another consideration that makes employers prefer a temporary work model. Letting go of temporary workers is generally simpler than laying off permanent staff, which often involves navigating complex labor laws. This reduced liability makes temporary employment an appealing option for businesses aiming to stay adaptable without facing potential legal challenges.
Challenges for Employers in Adapting Temporary And Contract Work
As much as temporary employment has several benefits to employees and employers, adopting this approach isn’t a smooth process, and especially for recruiters.
Let’s examine some of the challenges giving employers headaches:
Maintaining Consistency And Continuity
One of the most significant hurdles to adopting a non-permanent employment scheme is maintaining consistency and continuity within the workforce.
Temporary workers often have shorter tenures, which can lead to disruptions in workflow, project delays, and a lack of institutional knowledge. That can be a significant hurdle, especially in situations where familiarity with company culture and processes is of great essence.
Temporary and contract work means employers have to invest additional time and resources to onboard and train replacements, which can impact productivity, especially in roles requiring in-depth knowledge of company-specific processes.
Building and Maintaining Organizational Culture
Since most temporary and contract workers often have limited engagement with the company, it becomes really challenging to cultivate a robust organizational culture across such a team.
That’s because these workers may not feel strongly connected to the company’s values or long-term vision as permanent employees, which can result in reduced motivation and commitment.
72% of organizations with robust cultures report higher employee engagement. That means in situations where there’s not enough time to grow into the company culture, employees are likely to feel less satisfied with whatever they’re doing, affecting their productivity and business profitability.
Plus, the existing divide between permanent employees and temporary staff can also lead to feelings of exclusion, lowering morale across teams.
Administrative and Legal Complexities
The administrative burden of managing temporary and contract workers can be substantial. Employers must handle multiple contracts, varied payment structures, and compliance with diverse legal frameworks.
Labor laws regarding temporary and contract work vary widely by region and industry, adding layers of complexity.
Misclassification of workers, for instance, can result in severe legal and financial repercussions, including fines and reputational damage. Navigating these intricacies requires significant effort, even when the workforce is intended to be flexible.
Ensuring Quality and Performance Standards
Although temporary workers are well-equipped with knowledge and experience in their specific domains, they may not consistently meet the quality standards expected by the organization. That’s because they only have limited time within the company, resulting in a lack of familiarity with internal processes and less accountability for long-term outcomes.
This can impact the quality of deliverables, particularly in projects requiring deep collaboration or a thorough understanding of company expectations.
High Turnover and Retention Issues
Temporary and contract workers inherently bring high turnover rates, which can lead to constant disruptions in staffing. Each new worker requires time to adapt to the organization’s expectations and workflow.
This period can last between 2 weeks to a year, depending on the organization's structure and processes and the individual employee’s ability to adapt to a new work environment.
This revolving door of employees means spending lots of time and resources acquainting the workers with requisite knowledge and skills, leading to inefficiencies, especially in roles that require intensive training and prolonged onboarding.
Protecting Intellectual Property and Confidentiality
Managing intellectual property and confidentiality is yet another challenge that’s often tied to temporary workers. Contractors who work with multiple clients may inadvertently share sensitive information or expose a company’s proprietary data.
Currently, the average cost of a data breach stands at $4.88 million, a 10% increase from the one recorded in 2023. Therefore, as much as it’s less likely to happen if working with professional temporary workers, it can be expensive once it happens.
This risk is exceptionally high in industries where innovation and trade secrets are critical to maintaining a competitive edge.
Focus on Short-Term Goals Over Long-Term Strategy
One of the big problems that comes with relying on temporary and contract workers is that it can lead to a shift in focus toward short-term needs at the expense of long-term strategy, especially if the employer is not careful.
The emphasis on flexibility and immediate results that come with temporary and contract work may come at the cost of building a stable, invested workforce capable of contributing to sustained growth. This short-term orientation can significantly hinder the company’s ability to maintain consistent progress toward broader strategic objectives.
Employers embracing temporary and contract work face these multifaceted challenges, which stem from the inherent nature of short-term employment. While the approach provides adaptability, these issues highlight the trade-offs involved in prioritizing flexibility over long-term stability and integration.
Strategies for Employers to Adapt
While using a temporary workforce has numerous benefits to both the employer and the employee, it also has several challenges, as can be seen. Therefore, to leverage the benefits attached to this talent management approach, it’s necessary for employers to adapt the right mitigative strategies.
Let’s examine some of these challenges:
Building a Knowledge Transfer Framework
To address the lack of continuity that comes with temporary and contract work, employers can establish a robust knowledge transfer process.
For instance, they can do that by documenting key workflows, procedures, and project updates. This approach is especially beneficial for roles that require precision and consistency, such as a conference photographer, where understanding specific project needs and expectations is crucial. Having all these well-documented will ensure that incoming temporary workers have the information they need to hit the ground running.
In addition, the employer should also consider creating comprehensive handover protocols between outgoing and incoming contractors. Having this in place can significantly minimize disruptions and maintain momentum on long-term projects.
Fostering Inclusion in Organizational Culture
Even though temporary workers may have limited stay within the organization, it’s still imperative to integrate them into the company’s culture as it can significantly boost their engagement and productivity. To do that, employers should include temporary staff in team meetings, recognition programs, and collaborative activities.
The employer should also try to provide clear communication about the company’s values and goals as a way to help contractors feel more connected, reducing the gap between temporary and permanent employees.
Streamlining Administrative Processes
Managing the logistical and legal aspects of temporary workforces can become easy by investing in centralized systems such as telecommunication solutions, employers can efficiently manage contracts, hours, and compliance requirements. They can also use employee monitoring software to gain insights into productivity and time management, helping temporary workers to meet project goals efficiently
Visual management tools such as Kanban software can also make collaboration and task delegation more efficient for employers and contractors. Such tools can also improve how you track your contractor’s productivity by using their performance data to understand how much work they accomplish within a given period.
Alternatively, the employer can consider partnering with staffing agencies or payroll service providers. Doing this can offload administrative burdens and ensure adherence to labor laws, reducing the risk of non-compliance.
Implementing Rigorous Vetting and Onboarding
To maintain quality and performance, employers should develop a rigorous process for selecting temporary workers. Evaluating candidates’ skills and experience ensures they are well-suited for the specific role.
A structured onboarding program tailored for temporary workers can help them quickly familiarize themselves with company processes, tools, and expectations, enhancing their productivity.
Retention of High-Performing Temporary Workers
Employers can identify high-performing temporary workers and offer incentives for continued engagement.
Rolling contracts, performance bonuses, and transitioning interested exceptional workers into permanent roles are some of the most effective strategies the employer can use to reduce turnover and maintain continuity.
Creating opportunities for repeat engagements allows businesses to build a pool of skilled contractors familiar with their needs.
Safeguarding Intellectual Property and Confidentiality
To safeguard confidential company information, employers should create clear confidentiality agreements and intellectual property clauses in contractor contracts. Providing training on data security and limiting access to sensitive information based on role requirements can further mitigate risks.
In addition, organizations should put more weight on regular data usage and compliance audits to reinforce a culture of confidentiality and trust.
Balancing Temporary and Permanent Roles
To avoid over-reliance on temporary workers, employers should maintain a balanced workforce by clearly defining roles suited for temporary or permanent employment.
Critical positions requiring long-term involvement and institutional knowledge should be filled with permanent employees, while project-based or specialized tasks can be assigned to contractors.
Aligning Temporary Work with Long-Term Goals
As much as employers are using temporary workers, it’s essential to ensure that their utilization perfectly aligns with broader strategic objectives. This involves analyzing workforce needs periodically and identifying where temporary staff can add value without compromising long-term stability. By focusing on strategic resource allocation, companies can create a flexible workforce that complements their growth plans.
Leveraging Feedback for Continuous Improvement
In the current business landscape, ignoring what workers say about your organization can be a deadly mistake. Therefore, collecting feedback from temporary workers about their experience can help you as an employer identify areas for improvement.
Understanding contractors’ perspectives can lead to better onboarding, support, and integration processes, ultimately enhancing the overall effectiveness of the temporary work model.
The Future of Work and Temporary Roles
Of course, as employers navigate the challenges that come with temporary work and contracts, it’s essential to have an understanding of what the future holds. That way, they can make decisions more likely to favor their organizations in the long term.
Now, among the many things that we expect to reshape the future of work and temporary roles is advancements in AI and automation.
AI and automation are taking over almost every aspect of life, and we don’t expect it to be any different for temporary work. In the coming days, we expect AI usage to become ubiquitous, especially for repetitive tasks, leaving gig workers to focus on creative and strategic roles.
In addition, we anticipate access to global talent pools will become easier than ever. Companies will, in the future, be able to tap into expertise from different regions, often at lower costs. However, this also requires managing cross-border compliance issues and cultural differences.
And as temporary work grows, we also look forward to new regulations that protect workers. Countries like Canada have already introduced stronger protections for gig workers. Employers must stay ahead of such changes to maintain compliance.
Conclusion
The rise of temporary and contract work is undoubtedly redefining the global workforce. While this shift offers unprecedented flexibility, access to talent, and many other advantages, leveraging its benefits demands strategic adaptation from employers — something most of them have struggled with until now. But by investing in technology, fostering collaboration, and ensuring compliance, companies can thrive in this new era of work.
Employers who proactively embrace this shift will not only attract top-tier talent but also position themselves as leaders in the future of work. Adaptability is no longer optional— it’s a business imperative.
