"Consider the five factors before converting independent contractors to employees. Assess talent, legal expertise, tax, employee benefits, etc."
Hiring independent contractors is an ideal option when a company requires professionals with specific skill sets for certain projects. Among independent contractors, global businesses mostly prefer to work with full-time contractors when hired beyond borders. There are two core reasons businesses choose a full-time independent contractor. Firstly, these contractors have the required skill set and prior experience handling similar projects for years. Secondly, businesses have no legal entity to hire permanent or full-time employees in the target country.
Working with full-time contractors, however, still has some challenges for overseas businesses. A high attrition rate, work alignment problems, a lack of control, and confidentiality issues are major challenges associated with independent contractors. Moreover, as a business owner, you’re likely to face additional challenges, such as work culture differences and compliance risks, when hiring independent contractors outside your country.
So, businesses often consider converting their existing professionals into full-time employees to address such formidable challenges. Before you finally decide on the conversion, however, you must prepare well to ensure that your employee transition is smooth and effective.
Through this blog, we’ll guide you on how you can prepare for a seamless transition from contractors to employees. There are five crucial factors you need to consider before converting your independent contractors into full-time employees. Let’s first understand the meaning and differences between independent contractors and full-time employees to gain a better perspective on why you need this transition.
Full-time independent contractors vs full-time employees: meanings and differences
Once you have a clear understanding of both terms, you can easily comprehend the benefits and challenges of converting their existing professionals into employees.
Who is a full-time independent contractor?
A full-time independent contractor is a type of employment arrangement in which an individual agrees to work for a company on a full-time basis for a certain duration. Unlike freelancers or part-time contractors, a full-time contractor needs to complete the stipulated time mentioned in the terms and conditions of the contract. For instance, a full-time contractor typically works for 30–35 hours a week. This type of arrangement is widely applicable in project-based work, consulting, and temporary staffing. Depending on the nature of the
projects, a full-time contract position can be short-term (which may last for a few weeks or months) or long-term (which can extend for a year or more).
For instance, companies hire full-time employees for a long period, say four to five years, as the project demands. However, a contract can be terminated at any time in the event of non-fulfillment of terms and conditions signed between employers and individual contractors. Otherwise, once the project is completed, the contract expires. If agreed upon by both sides, a contract can be renewed and its time duration can be extended.