Contingent Worker

Contingent workers are the individuals hired by the company to do the role or project-based work on its behalf and not as traditional employees. Companies are continuously trying to cut costs and maximize efficiency to increase profitability. Since labor is one of the significant business costs, companies look for innovative ways to get their work done and this is how contingent workers were born. 

Contingent workers can be defined as freelancers, independent contractors, consultants, or other outsourced and non-permanent workers who are hired on a per-project basis or role-based work. They can work remotely or on-site too. But they are not just temporary workers, instead, contingent workers are highly skilled experts in their fields.

These workers are generally hired to complete specific company tasks under a statement of work (SOW) provision. Once the project is over, they are asked to leave the workplace, though they may be called back when another project arises. As such, they are not employees of a company and the business owner has no responsibility to provide continuous work permanently. It is one of the best ways to get work done in any company. 

Contingent workers VS Employees


The very first thing that makes contingent workers different from employees is that they are not salaried. They do not receive any kind of benefits from the company apart from their pay. They are responsible for their taxes as they are not part of the company. Since they work for themselves, the company is not responsible for deducting federal and provision taxes, CPP, or EI. 

For business owners, the advantage of contingent workers is mostly financial. They do not have to pay taxes from workers’ pay cheques. They do not have to provide extra benefits as they provide to full-time employees like paid sick leave, vacation pays, and health benefits. 

Whenever a sudden urgent project comes up, contingent workers can be hired to perform the extra work. And the best thing, you do not need to lay off employees when you have contingent workers in case your business slows down. Contingent workers have expertise in their skills. Business owners can find highly qualified talent that ensures the completion of work with quality. 

Contingent workers can be referred to as freelancers, gig workers, non-payroll workers, outsourced employees, independent contractors, agency workers, or contracted consultants. They are experts in various fields like IT specialists, project managers, legal services, web designers, engineers, and content managers. 

While there are advantages, it also has its disadvantages. It may not be possible for a contingent worker to be available during specific hours to handle business needs. Also, using a contingent workforce brings on a whole slew of tax risks. If a business owner declares someone an independent worker where he should be declared as a full-time employee then the company can be hit with fines and penalties for not paying taxes owing to that employee. 

Companies are increasingly beginning to reap the rewards of the contingent workforce by increasing the non-permanent workers as part of their growth strategies. The need for contingent workers is likely to grow in the coming years. As per McKinsey Global Business Executives Survey, 70% of executives anticipate that they will hire more on-site temporary workers and freelancers in the next two years.

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