Pros and Cons of engaging a Part-Time or Contract employee

27 June, 2019
By G-Team in Human Resource

Pros and Cons of Engaging A Part-Time or Contract Employee

The gig economy in Singapore has been rapidly growing in recent years. Traditionally, fresh graduates would rush to look for full time jobs even before their graduation. However, survey results show that a higher proportion of these graduates are taking on temporary jobs instead of permanent full-time jobs after university.

According to survey results from the 2017 Graduate Employment Survey, which polled close to 11,000 fresh graduates from the three local universities (National University of Singapore, Nanyang Technological University and Singapore Management University), 80.2 per cent of graduates who found work within half a year of finishing their examinations secured permanent full-time jobs. This is lower than the figure reported in 2015, which was 83.1 per cent.

The rise of the gig economy is also largely attributed to the increase in demand for these gig workers as well. Companies today are actively hiring freelancers due to the shift in nature of work. Certain industries such as food delivery services rely heavily on freelancers. Additionally, some departments within large organisations are very project-focused. Hiring freelancers help to reduce the human capital cost given that they are only hired when there is a spike in projects with tight deadlines.

However, while part-timers or freelancers can help to address the labour issue for short-term projects, there are certain cons to relying on these gig workers instead of hiring a full-time employee.

1. You only pay them when you have a job that needs to be done

When you hire a full-time employee, you still have to pay them their full-time wage even if there is insufficient work to keep them occupied for the full working hours. On the other hand, part-timers or contract employees tend to be paid by the hour. Additionally, when the workload dwindles, there is no pressure to retrench them. Instead, you may simply end their contract term.

2. There is no need to pay CPF or provide employee benefits

Employers are obliged to contribute the employer's portion of CPF to the employee in addition to their monthly salaries. Additionally, employers are obliged to bear the cost of any benefits, for instance medical insurance, paid annual leave, claims reimbursements and so on. In the case of a part-timer or contract employee, employers are not obliged to do so.

3. Employers do not have control over how gig workers work

For a full-timer employee, they still have to turn up for work whether they like it or not. This then makes it possible for the manager to control and delegate tasks to get things done. However, part-timers or contract employees might work offsite at times, leaving employees almost no control over the work that they do. Additionally, given that these gig workers are not subjected to performance review or promotional grading, there is no "incentive" for them to produce quality work.

4. These gig workers are not integrated into the company culture

Part-timers and contractors come and go. This can then create a cold and incohesive company culture, whereby everyone simply focuses on their own work. In the long run, this may also affect the full-time employees motivational and productivity levels as there is no sense of belonging to the company.

There is no right or wrong to engaging part-timers or contract employees for your organisation. On one hand, they are short-term solutions to projects that have tight deadlines and help to reduce labour costs as well. However, it might be worthwhile to note that if time is require to train each time a new part-timer or contract employees comes in. As such, it might be more cost effective to invest in a full-time employee.