Having an idea about employment status is paramount as it will ease the hiring process for your company. Depending on the size, requirements, budget, and goal, you can hire employees for different positions belonging to different departments.
The status of an employee will also decipher what compensation and benefits they are eligible to receive. When you have a clear understanding of the employment status, you will know which type of contract an employee should be hired.
Let’s drill down to the types of employment status —
Types of Employment Status
Depending on your requirements and also the availability of job seekers, employment can be of various types. The following sections discuss all types of employment status at length —
Full-Time Employees
Full-time employees are those who work 40 or more hours a week. They hold permanent positions after completing their trial period. These are typically the jobs most sought after by candidates.
Employees holding full-time positions are also more likely to stay at the position longer and be more committed to their work & responsibilities. So, this is an upside of having full-time employees.
As for the downside, full-time employees will cost employers more as compared to other statuses. On top of that, full-time employees are eligible for company-sponsored benefits like health plans, provident funds, gratuity, profit shares, and so forth (Entitlement applies after the probation period).
Another downside of full-time employees can be complacency as the sense of satisfaction can make them feel safe and comfy within their roles. They may no longer have the urge to put effort to prove their worth to the company.
Part-time Employees
Part-time employees usually work more than 20 hours, but less than 30 hours per week. They can be paid a fixed salary or hourly, depending on a company’s policy.
What makes part-time jobs lucrative is that it lets people perform more than one job at a time. This allows for gaining experience in multiple fields at once. Retail, food service, sales associates, and warehouse workers are some examples of part-time jobs.
Most part-timers are classified as “non-exempt” and they qualify for certain benefits like health insurance, overtime pay, etc. As for overtime pay, if a weekly work hour passes 30 hours, part-time employees are entitled to receive overtime pay for the extra hours.
Temporary Employees
Temporary employees are recruited for only a short period of time. Temporary jobs are most often found through staffing agencies or an employee hired on a contract for a specific duration.
This can be a useful employment type for employers since they already know how much money a temporary employee will get paid for the job they are doing.
If you have a project with a specific budget, you can hire temporary employees for that job without worrying about overpaying them. With temporary job offers, you can expect work delivery within the deadline. This type of job also acts as a trial period for some employers.
Temporary jobs allow an employer to see if an employee is a right fit for their company as well as if the position itself is actually needed. One drawback of temporary positions is that they don’t always attract the best talent.
Also, some candidates hunt for more stability and long-term opportunities which temporary jobs sadly don’t offer. Having excessive temporary employees can also toughen to create a cohesive company culture, as these employees know they will last in a company for a short amount of time.
Contingent Workers/Independent contractors
A contingent worker or an independent contractor works as a contract employee but they aren’t on a company’s payroll. The perk of being an independent contractor is that it provides the freedom to build a unique schedule and finish projects at a pace, suitable for both employees and their employers.
Notable independent contractor roles embody freelance writers & designers, rideshare drivers, and food deliverers. For this type of role, working hours are dependent on a contract and compensation varies based on job responsibilities, contract length, etc.
That’s why independent contractors aren’t deemed employees of a company, so FLSA and company benefits aren’t always guaranteed to them.
Contract Employees
Unlike independent contractors, contract employees are on the company’s payroll. But they are hired for a specific period of time outlined in their contracts. The working hours for a contract employee are likely to vary for each contract.
A perk of working in a contract position is knowing the exact duration of each job at the time you start. Sometimes, there is also the potential to renew a contract after it expires. Examples of contract jobs include sales, IT technicians, and construction workers.
A contract employee is considered nonexempt and also qualifies for FLSA benefits. On top of that, there is the potential to complete multiple contracts in a year or more than one at a time.
On-call Workers
On-call workers are expected to be available to work at particular hours during the day but may not perform job duties during all work hours. They are expected to be on-premises for their complete shift or readily contactable if the position is remote, irrespective of whether they are called in.
Some on-call job titles encompass caregivers, public safety or security officers, and customer service representatives.
On-call workers are non-exempt as they are paid hourly. Hence, on-call workers are eligible for FLSA benefits like overtime although they sometimes have the option of working full-time or part-time.
Seasonal Employees
Seasonal employees are like temporary employees except for the fact they are hired at specific times in a year with employment duration shorter than temp jobs.
Their work hours tend to be set but can still differ depending on the needs of the business. Seasonal employees can be hired for the Christmas holiday to work only for December. Some seasonal employees can be hired for summer jobs.
Usually, those who seek temporary employment status tend to apply for seasonal jobs. However, they are more committed than temporary employees.
Additionally, they might be more zealous about the kind of work they do like holiday season, summer camps, and so forth. As seasonal work synchronizes with the holiday season or summertime, it’s easier to find employees for seasonal work.
A downside of seasonal work is that some seasonal workers lack dedication and commitment resulting in loss for your business.
Self-employed
A self-employed professional runs their own business and is solely responsible for its success. Unlike most employees who enjoy employment rights, self-employed people don’t enjoy that. People are deemed to be self-employed if:
- They don’t get a holiday or sick pay when they are out of work
- They send ‘quotes’ for their work
- They submit invoices once their work is completed
- They have a contract with their clients which will determine their obligations and the payment that they receive for that work.
Volunteers
Volunteer positions do not usually offer compensation and differ in terms of time commitment. These positions can assist in building a resume and gaining experience in the field of your passion.
Many volunteer positions also offer flexible schedules allowing you to work when you can. Examples of volunteer roles are free internships, event workers, animal care volunteers, and volunteers who work at organizations or charities.
Volunteer work is neither non-exempt nor exempt as volunteers are typically not paid for their time. Work hours in a volunteer position are also secondary and the tenure lasts at the discretion of the volunteer and company.
Understanding Employment Status in the US
In the US, employment status means a written contract between an employer and an employee implying whether the work is part-time, full-time, contract, or apprenticeship.
Unlike other countries, the term is not rigidly defined in the US. This is because the rights of employees are comparatively constant here irrespective of who a company has employed.
Understanding Employment Status in Canada
Unlike the US, employment status in Canada looks beyond a written contract between an employer and an employee.
As per the Canada Revenue Agency, the nature of the working rapport between an employer and employee also deciphers their employment status. This will determine if an individual is categorized as an employee or any other status.
Understanding Employment Status in Other Countries
In the UK and some other countries in Europe, employment status implies the legal status of an individual at work. Depending on the nature of the work, an employee can be categorized as an independent worker, employee, or self-employed.
Exempt employee in the US
An exempt employee is not granted benefits like minimum wage and overtime pay by the Fair Labor Standards Act (FLSA) but can receive perks from their specific company, like insurance, paid time off, and a 401(k). The exempt employees in the US look like this:
- Receives a fixed salary that stays consistent regardless of hours worked or work completed
- Earns at least $684 per week
- Takes up job duties pertaining to executive, professional, administrative, or as an outside sales employee
Non-exempt employee in the US
A non-exempt employee is eligible for FLSA benefits as well as company-specific perks like monetary benefits, working from home, flexible work hours, etc.
Non-exempt employees’ working hours per day or week aren’t restricted by the FLSA, nor are their potential hours of overtime. Some characteristics of these employees in the US:
- Paid on an hourly basis unless put on the payroll as a non-exempt
- Earns less than $684 per week
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What Employment Status You Should Go for Your Business?
To select the right employment status for your new hire, you first need to decide what kind of work you want them to do. Ask yourself certain questions like:
- How long this work may take to complete?
- Is it a long-term project or a short-term one?
- Should this work be completed within a deadline or can it be worked on at any point?
- Does this work take time to pick up, or can it be learned fast?
Once you are done answering those questions, you should be better off deciding which type of employment status they should come under.
- The ‘worker’ employment status is a very flexible arrangement, meaning you can’t force a worker to accept any work and also you aren’t compelled to offer them employment protections like you have to do for a full-timer.
- The ‘employee’ employment status offers way more stability, meaning it will provide you with an assurance that the employee will fulfill their duties, but in return, you have to offer an attractive employment package to the employee.
- The self-employed employment status offers an individual the most freedom and flexibility, but on the downside, they aren’t protected by any employment rights. But it can be a perfect option for a company that requires some help on a single project. Having said that, they can’t bank on that individual being available every time they need them.
So, If you have a short-term project with a clear start and endpoint, you may find that a freelancer under the ‘self-employed’ employment status is the go-to professional.
However, if your company’s work is an ongoing long-term one, you would surely benefit more from a stable permanent employee.
It’s Your Turn
Now the types of employment status are clear to you. Whether you run a small business or a large enterprise, you can now confidently decide which type of employment is right for a particular work. Don’t forget to consider the work type, length, and deadline before taking the plunge.
To make your hiring process easier for various employment types, make sure to avail of all-in-one HR software. This will make employee-related tasks like attendance tracking, task tracking, benefits management, etc. a piece of cake.
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