Hire or Contract?

Right off the bat, let me tell you that I am not starting off a war on this topic…..LOL…. but just want to point out what are the thoughts and concerns as the best way to choose, if you are in the decision mode.

So in this article I am aiming to have a quick look at hiring an employee vs. a contractor. When you hire an employee, you have control over that hire – in things like: behaviour, workload, tasks, the order in which the tasks take place, etc… You also pay them a salary, so that means creating accounts and withholding taxes, CPP, EI, and filing the taxes along with benefits and the rise in those costs and so on. This actually is a costly business considering it takes time and expertise to accomplish this all, as well as money.

Contractors in general cost less. A contractor does whatever they are assigned to, issues an Invoice, and then that’s it…there are no employer tasks like taxes, benefits, sick-days, vacation, and training costs. No worries about overtime or retirement or pension costs.

So which one to choose? Well it really depends. What is your situation at hand?

• If you have an ongoing project that needs continual work with no conclusive end date then you may need to hire an employee unless the work requires high skills, knowledge and no direction from you.
• If you have a task list that includes what can be done remotely and if so then a contractor is the way to go for sure. This will free up valuable company funds that will not be spent on cubicles and utilities and other operational costs. Mind you, this can also be the way to go with your full-time employees, as more and more of Global Organizations are realizing and adhering to.
• If you’ve ever had to fire or package an employee for any reason, you know how painful that can be for both the employee and the employer. When it comes to contractors you simply need to cease the workflow.
• Although you usually have to pay more per hour, you will most likely save money overall in hiring a contractor, since it is not needed to pay them any benefits and do not need to commit to a salary.
• You have greater tractability with an independent contractor. When you have an employee that doesn’t work out, you may need to fire or package them, which can be a dragging, long and arduous experience.
• You can contract the right person for the task at hand, with a specialized service. They often come with many years of experience, so you don’t need to train them. Also due to the fact that they have dealt with a variety of situations, they have a shorter span of learning curve.
• Employees have a wide array of rights under many laws, and as such, a variety of legal claims they can potentially bring against their employers for violating those rights. Because contractors are independent businesspeople, they are not protected by many of these laws. Employees can and may be able to sue their employers for wrongful termination. Contractors, however, cannot bring this type of lawsuit to the table.

Hope this has been helpful….