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Temporary Employees: Meaning, Advantages and Disadvantages

Last Updated : 19 Mar, 2024
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What are Temporary Employees?

Temporary employees, also known as temps, are workers hired by firms for a limited period, as opposed to permanent employees, who are regularly employed for a long term. Temps are brought on to manage fluctuating workloads, fill in for absent employees, or provide skills that the company lacks. Common temps are independent contractors, freelancers hired for specific projects, seasonal workers for busy periods, and staffing agency hires. They also do not receive benefits like health insurance, paid time off, or retirement contributions. The lack of job stability and benefits can be disadvantages, but temporary work allows flexibility and variety for the workers. Temporary employees are responsible for their taxes, including self-employment taxes for freelancers. In exchange for giving up job security and benefits, temporary workers gain short-term versatility in their assignments.


Geeky Takeaways:

  • Temporary employees, also known as temps, are hired by firms for a limited period, unlike permanent employees, who are employed for the long term.
  • Common temps include independent contractors, freelancers hired for specific projects, seasonal workers for busy periods, and staffing agency hires.
  • They do not receive perks like health insurance, paid time off, or retirement contributions.

Why do Companies Hire Temporary Employees?

1. Employee Leave: Companies often hire temporary employees to fill positions when regular employees take extended leave, such as for family or medical reasons. Bringing on temps allows the company to maintain productivity and progress while keeping the permanent employee’s position reserved for their return.

2. Seasonal Needs: Many firms experience a surge in demand during certain seasons or busy periods. Hiring temporary workers is a flexible way to scale up staffing to meet short-term increases in workload. For instance, retailers may hire extra staff for the holidays, or tourism companies may bring on summer help.

3. Short-Term Projects: Some firms hire temps for specific short-term projects or initiatives. It allows them to bring in specialized skills and labor without taking on a permanent headcount. For instance, hiring contractors for software development projects or extra staff for a marketing campaign rollout.

4. Filling Company Gaps: Temporary employees also allow companies to fill skillset or service gaps without committing to permanent hires. For instance, a law firm might hire a temporary paralegal if they lack that capability in-house. The temp provides the needed skills until the project is completed.

Benefits of being a Temporary Employee

1. Learning Opportunities: Temporary positions allow you to gain experience in a new industry or company and determine if it’s a good fit before accepting permanent employment. You can learn new skills from colleagues, get exposed to different corporate cultures, and gain insight into the day-to-day workflow. Temping lets you test-drive a career field or company before fully committing. The hands-on experience and networking connections can help clarify your career path and interests.

2. Potential for Permanent Work: Some firms convert high-performing temporary workers to permanent staff. Demonstrating your abilities during a temporary assignment can lead to getting hired for ongoing roles. Impressing hiring managers with your work ethic, attitude, and contributions makes you a strong candidate for permanent positions. Contract temping can serve as an extended interview and probationary period. If you thrive in the temporary role, it can transition into a regular full-time job.

3. Flexibility: The nature of temporary work provides flexibility in scheduling and allows you to accept or decline assignments. It can be ideal if you want to work while traveling, balance multiple interests, or maintain a flexible schedule. The short-term durations and ability to choose assignments mean you can more easily take time off for vacations, handle unexpected events, or work for reduced hours. Temping gives you control over your workload and schedule.

4. Variety: Temping allows you to gain experience in different companies and roles, rather than being stuck in one position long-term. The variety keeps things interesting by exposing you to diverse business environments, teams, and projects. It allows you to exercise different skill sets instead of performing the same daily routine. The change of pace can reenergize you and expand your capabilities.

5. Supplemental Income: Temporary gigs are a good way to earn extra income on the side, such as for students earning money over the summer or retirees wanting to supplement their fixed income. The short-term commitments allow for work-life balance. Temp positions provide a flexible way to meet financial goals or savings without the time commitment of permanent employment. They can serve as a secondary revenue stream apart from your regular job.

Traits of Temporary Jobs

1. Defined Contracts: Temporary jobs come with clearly defined employment contracts specifying the duration, pay rate, responsibilities, and other terms. It provides clarity on the short-term nature of the role. Having set start and end dates outlined in a contract distinguishes temporary jobs from at-will permanent roles. It sets expectations for both the parties.

2. Limited Duration: Most temporary job assignments last less than a year, though some may be extended. Going beyond a year often leads to the employer providing benefits. The finite nature of the arrangement provides flexibility for both employers and workers. Temporary workers can move on to new roles easily.

3. No Benefits: Firms typically do not provide health insurance, retirement plans, vacation days, or other benefits for temporary workers. The short duration makes temporary workers ineligible for these benefits. Not offering benefits like paid time off also reinforces the transient aspect of temporary roles.

4. Workers’ Compensation Eligibility: Temporary employees are eligible for workers’ compensation if injured on the job. However, determining responsibility can get complicated if both a staffing agency and a host company are involved.

5. Work Duration Limits: Many companies have policies limiting temporary workers to not more than 2 consecutive years to avoid misclassification and legal issues. Temporary workers may return after a break in service. Enforcing breaks in service ensures roles don’t inadvertently convert to permanent status.

6. Tax Considerations: Temporary workers are often classified as independent contractors responsible for paying their taxes, including self-employment taxes. Payroll taxes are not withheld, placing the compliance burden on the worker.

Advantages of Hiring a Temporary Employee

1. Cost-effective: Hiring temporary workers is more affordable than bringing on permanent staff since you only pay for the work duration without added costs like benefits and payroll taxes. This optimizes labor spending. Temporary workers help control personnel costs and provide labor flexibility. There are no costs associated with laying off time or salary commitments after assignments end.

2. Access Specialized Skills: Temps allow you to tap into niche expertise, like technical or creative skills, without permanently expanding your headcount. You get targeted capabilities for a finite period. This supplemental talent can help you take on specialized projects or manage temporary spikes in workload. Temporary workers bring hard-to-find capabilities.

3. Try before you Buy: Temporary arrangements let you evaluate workers’ abilities and fit before making permanent offers. It’s an extended interview and trial period. You can assess temps’ skills, work ethic, teamwork abilities, and culture alignment. This reduces hiring risks.

4. Build Talent Pipeline: Great temporary workers can become candidates for permanent roles down the road. Developing relationships with temps provides a readily available talent pool to draw from.

5. Handle Fluctuating Demand: Bringing on temporary staff allows the team to flex team size up or down to meet changing business needs and manage workload spikes. The temporary workforce provides agility. You can scale your capabilities while only paying for labor as needed.

6. Fill Critical Needs: Hiring temporary workers is an effective way to fill critical open positions while you look for the ideal permanent candidate. Temps provide stop-gap capabilities. This ensures continuity in key roles and avoids productivity lags.

Disadvantages of Hiring a Temporary Employee

1. Extended Ramp-Up Time: It takes time for temporary workers to learn processes and systems. Frequent turnover means repeatedly training new temps, rather than permanent staff only needing to be onboarded once. With temporary workers, you lose time getting them up to speed, and just as they become fully productive, they may leave. The constant churn shall result in productivity lags.

2. Higher Turnover Risk: Temporary workers may leave anytime for better opportunities. Some temps are not looking for permanent roles, so turnover can be higher than with permanent hires. You also risk losing temps with no notice, which can be disruptive for workload planning. There is little incentive for temps to provide advance notice.

3. Reduced Engagement: Temporary staff may lack buy-in and investment in the company culture compared to permanent employees. Their involvement is short-term. They may be less motivated to go above and beyond or make suggestions for improvement. Temps have less reason to be invested in the firm’s success.

4. Communication Challenges: Integrating a revolving door of temporary workers can inhibit communication and team cohesion with the permanent staff. It takes time for permanent employees to build rapport and working relationships with temps who won’t be around for long. This can hamper collaboration.

5. Quality Control: With temporary workers, there is a higher risk of getting subpar talent since you are not making long-term investments in rigorously screened permanent hires. Some temporary placement agencies may not thoroughly vet candidates. You have to rely on reviews and references rather than in-depth interviews.

Where to find Temporary Employees?

1. Leverage Staffing Agencies and Employee Referrals: Specialized staffing agencies maintain large pools of pre-screened temporary talent across various functions and industries. They can quickly fill temporary job openings and handle worker classifications. Referrals from current staff yield good temporary candidates since employees tend to refer people they know will perform well. Coworker referrals tend to be more engaged.

2. Post on Job Boards and Check Freelance Sites: Major online job boards provide access to broad applicant pools for temporary roles. Organizations can specify the temporary nature of postings to attract the right candidates. Freelance sites offer extensive networks of independent contractors who can provide project-based temporary labor, especially for specialized skills.

3. Attend Industry Events: Job fairs, conferences, and association events allow you to network and meet potential temporary workers in person. Being able to interact face-to-face can help find the best fit.

4. Promote on Social Media: Company social media pages provide a free way to advertise temporary openings. Social networks expand your reach to passive candidates who are not actively searching for jobs. Professional associations and alumni groups related to the industry are also great resources for qualified temporary workers with specialized expertise and passion for the field.

How long can you employ a Temporary Employee?

While being a temp offers flexibility, the designation is meant for short-term assignments, not indefinite ones. Employees retained beyond a year or without a clear end date in sight should be reclassified as permanent staff to avoid misrepresentation.

  • Some employers may try to take advantage of temporary workers by misclassifying them as temporary for extended periods. However, there are guidelines on temporary employee status to prevent abuse.
  • For federal temporary jobs, regulations state they must be designated as short-term and last no more than one year, with a defined end date. Private sector companies should follow similar standards when using temporary workers.

There is a risk of exploiting temporary workers if employers use long or open-ended temporary arrangements improperly to deny job security and benefits. Clear parameters protect both companies and temporary workers.

How many Hours can a Temporary Employee Work?

Many firms require at least a 3-6 month break in service after a temp has worked for 12-18 months before being rehired. Additionally, the law states temporary workers who log over 1000 hours (roughly 6 months full-time) at a firm in a year are entitled to participate in retirement benefits. These types of regulations aim to prevent the exploitation of the “temporary” designation and ensure temps are not retained indefinitely without workplace protections. While temporary work arrangements provide flexibility, employers do need to enact reasonable limits, transition temps to permanent roles when appropriate, and provide access to legally mandated benefits. It avoids the liability risks that can come with overusing temporary workers.

Frequently Asked Questions (FAQs)

1. What firms hire temporary employees?


Temporary jobs are found in distinct industries. Clerical and office roles, health care positions, retail jobs (especially seasonal roles), and skilled labor in legal or shipping companies often offer temporary employment.

2. How can you find a temp job?


Search on job posting websites or directly on a firm’s hiring page for temporary positions. Another way is through a staffing agency; submit your skills and background to the agency, and they’ll match you with employers seeking temporary staff.

3. Can temporary jobs become permanent?


Yes, temporary jobs can become permanent. Some job postings may indicate a temporary-to-permanent transition. You can also discuss this during an interview to express your interest in staying beyond the temporary contract.

4. How long can a temp job last?


Temporary jobs typically last up to a year, but the duration varies. It can be as short as a few weeks for seasonal roles or extended for months, depending on the type of employment and the hiring company.

5. How do staffing agencies work?


Staffing agencies operate like a regular job application process. Candidates submit resumes, have interviews, and become agency employees. The agency places them in positions based on skills and employer needs, handling payments and benefits. You can specify job preferences, and the agency contacts you when suitable positions match your criteria.

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