What is a disadvantage of using temporary and contract workers?

Since Russell Kelly created the first temporary staffing agency in 1946, offering the services of his famous “Kelly Girls” for clerical and secretarial work, the popularity of “temps” has steadily increased.

Temporary employees can be a huge boon to businesses that are rapidly expanding, have fluctuating production requirements, or need a specialized skill set on a limited basis. But there are also drawbacks to temporary employees.

What are the pros and cons of temps vs. permanent employees?

Which type of employee is right for your business?

Pros of Temporary Employees:

1. Immediate Availability

If you need help right away and you don’t have time to recruit, sift through resumes, and hold interviews, then you should probably turn to a temp agency. They’ve already done the work of finding and vetting staff – all you have to do is pick up the phone and call.

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2. No Wasted Hours

If you only need help for a certain amount of hours, or for a few weeks at a time, then a temp is an excellent choice. Instead of paying full-time wages, you can hire someone for exactly the time period and tasks you need done.

3. Effective Trial Periods

If you hire an employee on a temporary basis, you can “try them out” for a position that could be converted to full-time employment. If you like the employee, you can offer them a regular job. If their performance is mediocre, you can terminate the contract without worrying about the hassle of firing, severance, or unemployment claims.

4. Specialized Skillsets

When you think of a temp, you probably imagine some useless kid like Ryan from The Office, but the truth is that nowadays highly skilled professionals are available as temporary employees. If you need help with a high-skill project, but only on a limited or sporadic basis, then consider taking advantage of temporary labor.

5. High Productivity

You might assume a temporary employee would be less productive than a full-time employee, but in fact the opposite is true. In an extensive study conducted by Vox examining labor markets from 1985-2008, economists found that when deregulation allowed for more temporary employment, employment as a whole increased and the GDP per employed person (a key indicator of productivity) likewise increased. Far from being less efficient, temporary employees are actually highly productive and successful workers.

Cons of Temporary Employees:

1. Training Requirements

The more temporary employees you hire, the more new people you will have to train. You can ameliorate some of this difficulty by hiring the same temps as often as possible, but there will always be an investment of time and personnel to get your temporary employees up to speed.

2. Safety Issues

Because even highly skilled temporary employees are not familiar with your specific work environment, the frequency and severity of on-the-job accidents is higher with temps. As mentioned above, proper training is crucial for temporary employees.

3. Lack of Teamwork

Temporary employees often do not have time to integrate with your full-time employees, and regular employees may be resentful of interlopers, or hesitant to invest the time in employees who won’t be around for long. There is no easy way to build camaraderie, so temps might be best suited to positions that don’t require extensive collaboration.

4. Legal Issues

There are specific guidelines for hiring temporary employees, and you need to follow the rules or risk a lawsuit. A temporary employee cannot be treated as a full-time employee minus the benefits.

Temporary employees can be highly beneficial to your business, but only if you do your homework and follow the rules. Temporary employees are a specific category, separate from part-time employees or independent contractors. When used appropriately, temporary employees can save your company time and money while boosting your productivity with new skills, fresh dynamics, and new ideas.

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By Helen Akers Updated May 17, 2022

With the COVID-19 pandemic making remote work more acceptable to employers, temporary jobs are more abundant. In fact, 40 percent of companies surveyed in a 2020 poll planned on using temporary workers as a permanent staffing solution, according to talent placement firm PeopleReady.

People take temp work for many reasons, which can include many benefits beyond the pay. However, being a temp worker can have its downsides, as well. Reviewing the advantages and disadvantages of temporary jobs will help you decide when these situations might hurt you more than help you.

If you want to learn new skills, it’s often best to get them through on-the-job training. Taking a temporary job lets you try new things without the long-term commitment a regular, full-time job requires. Sure, you can quit a full-time job at any time, but you can burn bridges doing that. When you take a temp job, your employer expects you to leave sooner rather than later, so you get some basic training and experience and can then leave without upsetting your employer.

Temp jobs sometimes don't come with benefits like health insurance, a 401(k) contribution or other perks. Depending on your situation, the longer you go without seeing a doctor and the longer you wait to start contributing to an interest-bearing retirement account, the worse off you might end up in a few years – especially if you take temp job after temp job.

Temporary jobs are a great way to help you save for a vacation, house down payment or car. It can also be a way to help pay off credit card or student loan debt. If you use your extra income to fund discretionary spending, you won’t hurt your health care or retirement plans if you lose the temporary gig.

Some temporary jobs pay quite well, and you can live on them and sock some savings away. The problem with this type of work, however, is that it can end at any moment. If you’ve made plans on earning money from a temp job for three months and then your client ends the engagement after a few weeks, you’d better have a Plan B. The temp agency you signed up with might have new opportunities for you, or it might not.

It’s easier to cut ties with a client than an employer – at least where guilt comes in. When you ditch an employer, you can leave them hanging. They might have gone through a months-long candidate search, trained you and enrolled you in their benefits programs.

If you find you don’t like the work and want to quit, you put your employer through this entire process all over again. Not only is it a pain for a business to replace an employee, the job search cost and productivity loss can be expensive. Employers who hire temps understand that these gig workers often leave early, and so they are better prepared for your departure.

If you eventually want to take good-paying, full-time jobs that offer you a chance to climb the corporate ladder, recruiters will ask why you took one (or more) temporary jobs. You’d better have a good answer that isn’t, “I wanted to travel,” or “I didn’t feel like being tied down.”

Employers know that today’s workers are often gone within three years, but three months? Make sure your temporary work stints don’t look bad on your resume.

Telling an employer you took a three-month job with a nonprofit because you wanted to learn grant writing skills, or took a temporary job with a PR company because you wanted to improve your social media marketing skills, for example, is a plus.

Some business use temp workers, both temporary W-2 employees hired through staffing agencies and independent contractors, to avoid laws regarding full-time employees. Once you commit to your temp job or gig, you might find you’re being asked to work differently than you thought you would be and have more restrictions put on you. Check IRS rules to see where you stand if you feel you’re not being treated fairly.

Temporary staff have an employment contract with their employer but it is for a predetermined time period or until a specific task has been completed.

One advantage of having temporary employees is that they can be used to cover periods of increased demand. For example, in a seasonal business they will have increased demand during certain times of the year and temporary employees can be used to manage this demand. This is advantageous to the company as they do not have to pay the employees throughout the whole year such as times when demand falls low. Temporary employees therefore allow companies to match demand for their product or service with their supply of workers.

One disadvantage of having temporary employees is that these employees may be less motivated as they know that they are leaving the business at the end of the contract. This could cause a problem in a business which relies heavily on customer service and may suggest that the work quality provided by temporary workers is poorer than that provided by permanent workers. Therefore, one disadvantage of temporary workers is that they may damage the reputation of your business which may be even more detrimental if they are handling demand when it is at its highest.