Contract employees are hired to do a specific project for a particular duration and are paid a certain amount of money. Here, they are also called independent contractors or freelancers.

Usually, most companies hire contract employees due to their skillset and ability to complete work quickly. A company usually prefers to hire a contracted employee rather than a long-term employee to complete specific projects on time.

Difference Between a Contract Employee and Internal Employee

There are several things that differentiate a contract employee from an internal employee. For instance, the taxes of an internal employee of a company are deducted from their wages while those of a contract employee usually are not deducted. Contract employees also have no time off as compared to their internal employees’ counterparts.

Benefits of Hiring Contracted Employees

Some of the benefits that come with hiring contracted employees include;

  • Lowered Commitment

Contracted employees are hired to complete a particular project for the duration of the time they are employed. Hence, there is no much commitment on the part of the employer.

  • Lowered Labor Costs

It doesn’t cost a company that much money to hire a contracted employee as is the case with an internal employee. Contracted employees are usually paid on an hourly basis for a limited period and don’t need an annual salary.

  • Shorter Hiring Process

Since contract employees are not hired for the long term, the hiring process is significantly shorter. They can start working as long as they have the technical skills needed for the job.

  • Good Skillsets

Contract employees are well known to have particular skill sets that a company is looking for. With their highly skilled and niche experience, they can boost the performance of your organization.

  • Flexibility

Contract employees are very flexible and can help your company respond to market needs and demands. They are open to work in different environments at different times.

Disadvantages of Hiring Contracted Employees

Some of the disadvantages of hiring contracted employees include the following;

  • Short-Term Loyalty

Contracted workers usually lack the same loyalty to the company that employed them compared to internal employees doing a similar project.

  • Less Availability

Contracted employees usually work for different companies at once. Hence, they may not always be available when a specific company needs them.

  • Communication Hitches

If a contract employee is working remotely, they may not contribute to a meeting well or brainstorm together with other workers.

Requirements for Hiring a Contract Employee

Hiring contracted employees is less tiresome than hiring internal employees as it involves less paperwork. The following are some of the things to consider before hiring a contract employee;

  • A W9 Form

This form is one of the legal documents required before hiring contract employees. This is because this form documents their payment of taxes and salary.

  • Resume

A resume shows the skill sets of a contracted worker. This helps to determine if they are capable of working on the project assigned by the company.

  • Contract

It is vital for a contract employee to have a binding contract. It’s one of the legal documents required to show the company’s expectations upon job completion.

  • References

It’s essential to know the reference of the contract employee before assigning them a project to affirm their skillset and values.

Top Contract Employee Positions

Some of the most common contract employee positions include;

  • Web design and development.
  • Graphic design.
  • Public relations.
  • Online teaching.
  • Video game design and development.


Contract employees can be useful to an organization that wants to take another direction or navigate a transition successfully. Before hiring a contract employee, it’s essential to know their skill set and make your expectations clear to avoid the disappointment of shoddy work.

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