What is a Contingent Worker?
A contingent worker is not the employee but a person hired who is given certain paid task(s) for a particular time tenure of a smaller scope project, for example, shutdown jobs in power plants, consultancy, freelancing, contracting, third party contractual workers; etc.
The contingent is derived from contingency which means conditional, dependent, subject to something, independent (in some cases), unforeseen, possible but not sure, unpredictable, intentionally for the utilization in certain uncertain circumstances, accidental, etc. A contingent is dependent upon other future circumstances.
- Contingent workers are paid sometimes more than regular job doers in terms of a project-based workload completion and this is unlike a never-ending task job employment
- This type of working relationship has less job security for the worker and hence there remains lesser responsibility on the employer as well
- They are every so often called temps, temporary workers, contract workers, independent contractors, independent professionals, consultants, specialized service providers, and freelancers.
- US Bureau of Labor Statistics (US - BLS) defines nontraditional workforce as various job holder(s), part-time, contingent, persons on alternative work engagements
- In the United States economy, these sorts of temporary jobs arrangements are representing a significant number in the workforce
- Too, nowadays four out of five employers use these sorts of nontraditional engagements
- Before the Industrial Revolution (1760 to 1820), the workers were working from home, when it was the clothing industry (home-made) weaving at home after cotton buying and then selling into the markets. But after the 1760s up to 1820s and until 1840s, industries started like weaving sheds, etc. where the employees had to work for six days a week twelve hours a day, and pay the fine for machinery broken parts, if any!
What are the advantages for the employers for hiring contingent workers?
Following are some advantages for the employers for hiring contingent workers:
- Labor resourcing made easy for the employers through contingent set up workers
- Benefits management lessen the burden on the employers: like in health, transportation, sick leaves, etc. that they are not to be paid to the contingent worker(s) by the employers
- Cut off on Payroll admin, human resource management jobs: recruitment and selection costs, training costs
- Tax benefits for the employers
- Cost-effective - Cost saving on Long terms retirement plans
- Accessibility to the market expert manpower on an immediate basis, this way a pool, of qualified and skilled talent, is also generated for future hiring of contingent staff if required
What are the disadvantages for the employers for hiring contingent workers?
Following are some disadvantages for the employers for hiring contingent workers:
- Workers’ deficiency of reliability
- Lack of control and command over the contingent worker(s)
- Unavailability of the contingent workers at the desired times for the organization
- Lessen devotion on part of the worker
- It costs to the organizational core values as the newcomers, especially for short time periods, can rarely understand the company culture
- It may cause disturbances in the workforce environment because of frequent in and out of new persons
- Organizational mission and vision may disturb in terms of the diversity of the contingency plans in bulk if any
Moreover, the contingent workforce is the way to minimize the costs extents on the labor markets on part of the employers. Indeed the employees’ salaries on a permanent basis are the biggest part of any organizational set up as its regular cost and pivotal most. Therefore, cutting costs on labor is the birth of the contingency plan workers for some specialized tasks and for a particular time span.
The employers usually call back the same contractors, temp workers, and contingency staff for the next short-term or long-term projects, based on the previous performance, for the completion as a success.
For specific projects, employers can also hire experienced contractors or contact staffing agencies with specialized skills to give more value to the project rather than assigning it to an inexperienced full-time employee of their company.
In contingency type of work arrangements, the employers are not concerned that how and when a worker works, rather the focus is the completion of the tasks expertly as well as timely.
Who is a Contingent Worker as per the United States Law?
It is worth mentioning here that if you categorize any of your permanent employees as contingent workers, you may face penalties!
Therefore in accordance with the United States Supreme Court decision of the judges, the following are the standards (of which the crux is being given below) which all must be considered for a worker to be placed under the shadow of the contingent workers management:
- The extent of the service provider to which that service is the essential part of the principal
- Is the relationship permanent or otherwise
- Purported temporary workers’ profit and loss prospects
- How much and to what degree is the control of the principal over the contractors
- How much investment is done by the contractors into the equipment facilities of the principals
- Organizations degree of operation and independence
- The market competition forces in terms of the contingent workers
To conclude, it is suggested to follow the steps appended below for not only contingent but overall workforce management:
- Business concerns need to do gap analysis in terms of need assessments for manpower requirements concerning specialized but temporary job tasks
- Staffing supply chain management initiatives be taken
- Pool management may be made as business coordinated collaborations amongst employers for hiring ease as one-stop solution as per tasks domains
- Risk management be taken care of, if contingent staff not hired timely, what risks could be there and do define what are the risk management and disaster management plans
- Sourcing and outsourcing strategies: choose the sources were from the prospects can be hired from, and follow the same throughout by the HR
- Inter-departmental coordination inside the business organization, along with the top strategic decision making level inclusion, for better understanding the contingent workers requirements so that to be in line with the mission and the vision of the company
- Any other as per your business succession plan, this might follow your previous best practice
Related: Worker, Independent Contractor