What Is Contract Job? Definition, Overview, and How It Works

Most businesses have short-term projects that they would like to outsource, jobs like the brand design or logo design do not require getting your full-time employees overworked. Companies hire contract workers for diverse positions for a specific timeframe.

When it comes to job preference, some people go for permanent positions while others feel comfortable working for various businesses through contracts.

In this article, we will be looking at what contract jobs are, the pros and cons, and the difference between permanent, temporary, and contract jobs.

We hope this helps you better in deciding which route you’d love to take.

What is Contract Job?

A contract Job can be defined as a process where an employee or worker is hired for a specified period of time to work on a specific project.

Contract jobs involve the hiring of people with specific skills or expertise to handle certain projects within a predetermined timeframe for a set fee.

Contract workers are also called contract employees, freelancers, or work-for-hire employees. In contract jobs, the contract states the task the expert will handle, the timeframe, and the amount of money the business will pay for the services rendered.

At the completion of the job the contract ends between both parties except the business rehires the contract employee.

How Do Contract Jobs Work?

Any business interested in hiring a contract worker or freelancer will have to post a job with a description of what it entails.

There are several marketplaces or platforms where businesses can post job listings such as WritersGig, Upwork, and Fiverr, these platforms also have experts and professionals who are experienced in various skills.

If a contract employee meets the specified requirements, then the business and the contractor will come to an agreement on the project fee and duration, if both parties are satisfied with the terms of the contract, the contractor can then commence the project.

The client or business can renew the contract if the contractor satisfactory completes the project and the business has other projects to be completed.

There are also contract jobs that last for 4-12 months depending on the role and client you’re working for. Other sites where you can find contract jobs include LinkedIn and Facebook.

Also see Stop and Shop Hiring Process | Job Application, Interviews, and Job Employment

What Are The Benefits Of A Contract Job?

There are several benefits associated with contract jobs, aside from the fact that you can terminate the contract if you’re unsatisfied with the terms you also:

Flexibility Schedule

Contract jobs offer flexible working hours, unlike full-time jobs. The type of job you’re doing determines the hour you’ll spend, you can decide how many hours you’ll work and the tasks you’ll do.

Contract workers also have the right to subcontract the job to other people. You can work whenever you feel like and you can also reject jobs if you’re not interested.

Exposed To Gaining Diverse Skills

As a contract worker, you also have the right to exploit other skills you’re interested in. This would give you the advantage of learning and gaining different experiences within a short period, unlike full-time jobs.

Since technology advances every day it is very important for you to keep updating your knowledge to get more clients.

High Demand

With the rate at which technology is advancing more contract jobs are being posted every day. Most businesses or companies have short-term projects that require contract workers.

Projects like logo design do not need full-time employees to execute them. There are also various jobs out there that require various skills and competencies.

Higher Fees

Since contract jobs are not full-time employment you have the right to agree on a specific fee with the company or client you’re working for.

Unlike permanent employment, contract jobs do not come with benefits or employee bonuses.

Higher fees compensate you for the lack of benefits that do not come with contract jobs.

Opportunity to Work in Diverse Industries

Another benefit of contract jobs is the ability to work for businesses or clients in various fields.

As a freelancer or contract worker, you can work in any field or undertake any project until you find your niche in the industry.

Larger Professional Network

Contract jobs also give you the benefit of meeting professionals in different fields.

Since you work for different clients or businesses, you get introduced to different experts which would build you a wide network.

You’ll also get connections to experts and professionals in different fields.

Shorter Interview Process

Unlike the full-time jobs where you go through rigorous interview levels contract jobs, on the other hand, come with an interview process that is faster and shorter.

In most cases, you just submit your proposal and go through a short interview with the potential clients.

Boost Your Resume

Working on different contract jobs builds your expertise.

It also boosts your resume, you constantly get new skills from contract jobs you’ve handled that you can add to your resume for potential jobs.

Less Competition

Contract Jobs come with lesser competition, unlike permanent jobs. You get to show off your skills without worrying about other competitors working on the same project.

With contract jobs, you get to be in direct contact with the hiring manager.

If you satisfactorily complete the project, you can be rehired for more contract jobs by the same clients for a longer period of time.

Testing Out Jobs and Clients

This is one benefit full-time jobs won’t give you. Contract Jobs allows you to check out various jobs and clients to find out what you like doing or what you’re great at.

With permanent jobs you can easily get dissatisfied with your current position and might want to change which is very challenging, contract jobs give you the benefit of trying out different jobs to find what you’re great at.

What are the Cons of Contract Jobs?

After looking at the benefits of contract jobs let’s look at the cons of contract jobs because anything that has benefits will also have disadvantages no matter how small.

They include:

Lack of Job Security

Contract employees do not have any employment acts or regulations guiding them, unlike permanent jobs.

As a contract worker, you are responsible for ensuring that there’s a legal document guiding any contract you have with a client or business.

Due to the lack of an appropriate regulatory body guiding contract workers, the contract can be terminated anytime for no reason.

Most of the time you won’t have the opportunity to meet and mingle with other coworkers like the permanent job because some contract jobs can be done remotely or on your own.

You might not get invitations to parties or casual hangouts. Even when you’re working temporarily at companies with permanent employees, you might not get invited to social gatherings because the permanent staff might feel you’re only there for a short time.

No Entitlement

Permanent jobs offer entitlements and benefits like vacations, holiday pay, health insurance, and retirement plans.

As a contract worker, you’ll miss out on such benefits especially if you were not hired through a staffing agency.

Deductions

Contract jobs come with deductions like tax fees, you’ll always be in charge of any fees you’ll pay.

This is one advantage of permanent jobs, you need not worry about such things since it will be deducted from your salary but as a contract worker, you’ll need to save up, calculate whatever deductions you’ve incurred, and make payments yourself this could be very stressful at times.

You’re Responsible for Damages

In the course of you executing a project and any damages occurring, you’ll be held liable for such damages. Your client or the company that hired your service will ask you to pay for such damages.

However, this depends on the type of contract job you’re doing, in some cases you might even be sued by the company.

To avoid cases like this ensure you carefully read the terms of a contract to avoid breaching it, you should also get professional liability insurance to protect you against such cases.

Mode of Payment

Contract jobs are usually paid at an hourly rate or a flat fee for a job. One disadvantage of the hourly rate type of payment is that you might not always get a normal working hour.

Sometimes you’ll be working and some days you’ll not which means that your income would be fluctuating.

While a flat fee is calculated for a set timeframe or when you’re done with the job before you receive payments.

Time Management

Another disadvantage of contract jobs is time management, this happens in cases where the contractor or freelancer takes up many jobs to get more money.

Time management is one of the skills that you learn gradually, where you don’t properly master how to allocate your time among jobs you end up disappointing your clients or the businesses you work for and this can make you lose your credibility and reputation.

Brand Creation

Another disadvantage of contract jobs is that to get more clients and businesses to work for you must have built a reliable and trustworthy brand.

Brand creation is not easy, it takes time and referrals from clients to build up a brand.

Before building your brand, you’ll have to work more for a little fee because at that point you’ll be more interested in building a reputable brand than making a profit, especially as a freelancer, it will require patience and determination to see this through.

Why Do Businesses Use A Contract To Hire Jobs?

We would know the meaning of the contract to hire jobs before knowing why businesses use a contract to hire jobs.

Contract to hire jobs is short-term jobs that allow the parties involved to try out a role before committing totally to full-time employment.

If a contract to hire workers performs well, the business can decide to hire them permanently. There are several reasons why businesses use a contract to hire and these reasons include:

1. Business Compatibility

Some businesses use a contract to hire to determine if a job applicant is compatible with the role.

It also gives you the job seeker the opportunity to research and know more about the business’s structure before deciding if your skills are needed on a permanent basis.

It helps businesses to know if they have the right person for the job.

2. Evaluate a Candidate’s Skills

Businesses can also check the potential worker’s experience in handling whatever role they’re likely to occupy.

It’s like an extended job interview but with a set, fee attached for a specific timeframe.

It is a great opportunity for businesses to carefully evaluate if a candidate is eligible for the position and has the professional skills required to become a permanent employee.

3. It Allows For Budget Flexibility

Contract to hire jobs allows for budget flexibility. There are expenses involved in hiring employees and if a business makes the mistake of hiring the wrong person it would cost them a lot.

They also need some time to properly draft a budget while still maintaining their level of productivity.

4. Staffing Flexibility

Contract to hire allows businesses to ensure they have the right number of employees to avoid overstaffing or understaffing.

It helps them save costs that would be spent on hiring permanent employees for seasonal or specific jobs.

5. Accommodate Growth and Expansion

Businesses cannot predict if they’ll expand in the future or not. You might likely get confused if you get a new client or expand an existing project on short notice and you can’t handle it.

Especially on short notice, even if the growth was expected, your current employees might not be able to handle it since they’re already occupied with a full workload.

This is where a contract to hire comes in handy, it helps you keep up with the level of your expansion and productivity by allowing you quickly hire the right people for the job.

What Is The Difference Between Permanent, Temporary, And Contract Jobs?

If you’re interested in working but confused about choosing one of these options, let this information guide your decision.

The difference between these job options lies in the employment status of each. We will be looking at each of these options separately.

Permanent Jobs

Permanent jobs are known as full-time jobs where employees work for a long period of time.

There’s no specific end date for this job except the employee is about to retire or feels like changing jobs. Permanent jobs come with salaries and other benefits.

You’ll be expected to work a minimum of 36 hours a week. Permanent jobs give you financial security and stability, you get to build large professional networks and get connected with fellow employees.

You will always be a PAYE at the company.

Temporary Jobs

Temporary jobs unlike permanent jobs are flexible for both parties involved. The jobs can last for some hours to a few years with the company or business. It has a set fee and a specific timeframe.

Temporary jobs allow you to try different roles without solely committing to one job. Temporary jobs give you a contract of service which will cover the period you work and you get to holidays up to 28 days annually based on the amount of time you’ve worked.

You might not get to enjoy the other benefits or bonuses available to permanent employees.

Contract Jobs

Contract Jobs are jobs where you’re hired for a specific timeframe maybe three to one year.

Basically, contract jobs are used when businesses have short projects or when they have lots of workloads. Also, contract Jobs are similar to temporary jobs because they both have an end date.

As a contract worker, you can either be self-employed, freelancing, or you can be an employee that works for a business and is employed by an agency.

Contract employees do not enjoy the benefits that permanent employees enjoy. You can try out various roles, clients, and businesses. You can also accept jobs you’re comfortable with as well as reject the jobs you dislike.

Contract employees can charge their fees based on hourly rates or according to the nature of the job, unlike permanent employees which means that your salary could be higher compared to a permanent employee that receives a fixed rate monthly.

One thing about contract jobs is that you have to keep upgrading your skills to earn more.

FAQs

Well, this depends on personal preferences, some people feel contract jobs are better than permanent jobs because of the flexibility while others feel comfortable with permanent jobs because it offers stability and security.

Yes, contract jobs receive higher pay than permanent jobs this is because contract jobs do not have any benefits like permanent jobs.

Contract jobs can last from 3_12 months, however, the duration generally depends on the type of project you’re handling or the role you applied for.

Yes, you can quit a contract job if you’re no longer comfortable with the terms of a contract or you find another opportunity that matches your interest.

When accepting a contract job you should look out for things like the pay rate, timeframe, terms of a contract, hours of work you’re required to put in, and the client or business’s history.

Conclusion

Most people prefer contract jobs because it gives them the flexibility to handle several projects at a time, get experience working for different businesses while making money. With the internet, some contract jobs can now be done remotely.

Contract jobs also have their pros and cons, choosing a permanent job or contract job depends on your preference however one thing you should know is that they both have their benefits and disadvantages so just go with what you like and feel comfortable doing.