Temp, Contract, and Direct — Understanding Employment Types

In the complex labor market, hiring managers typically have three employment types to choose from — temporary hires, contract-to-hire, and direct hires. By getting different types of hires on board, organizations can fulfill their staffing requirements during economic turmoil and peak productivity seasons. But you need to know the differences between the three types and which types are best for the positions in your company.

Finding and hiring the right candidates for each position can be a daunting task, however. In fact, 42% of employers are worried they won’t be able to find the talent they need. Sound like you?

To help you determine the best hiring solution for your organization, we’ve created this useful guide that covers the advantages and challenges of different types of hires.

Temporary Hires

According to the Department of Labor, an employee whose tenure lasts up to one year is termed a temporary hire.

Temporary employment allows organizations to get help as needed and when required without overburdening their payroll. There is typically an “employment end date” or “deadline” associated with this type of employment, agreed upon by the employer as well as the employee. Throughout the employment, the candidate is on the staffing agency’s payroll. More than three million temporary hires work for America’s staffing companies every week.

Advantages of Temporary Employment

●  Saves your organization time and money
●  Helps to quickly fill vacant positions caused by employee absence or seasonal demand
●  Allows candidates to explore new career opportunities without long-term commitment
●  Helps candidates build skills and gain experience

Challenges of Temporary Employment

●  Training is required irrespective of experience level
●  There’s always an undefined adjustment period
●  There can be morale issues if temporary and permanent hires are working together
●  Temporary hires are not entitled to the same benefits as permanent employees

Direct Hires

A direct hire is a full-time employee on a company’s payroll. This type of employment is typically used when organizations have a long-term or high-skilled job opening.

Advantages of Direct Employment

●  Direct hiring often attracts highly skilled and top performing candidates
●  Direct hire employees tend to have a better sense of loyalty and stability toward the organization
●  Direct hire employees are entitled to better benefits and compensation

Challenges of Direct Employment

●  From a financial point of view, direct hires are costlier than temporary or temp-to-hire employees
●  The hiring process may take more time as direct employment involves making long-term decisions and evaluating the pros and cons of hiring a candidate


A temp-to-hire employee is typically recruited for approximately six months or more. During this period, the employee stays on the staffing agency’s payroll so that the organization can evaluate the worker’s performance before deciding whether to offer a full-time role or find a more suitable candidate.

Advantages of Temp-to-Hire Employment

●  Provides organizations with a better chance to make smart, qualitative decisions for long-term success
●  Provides organizations with the time to assess the expertise and skills of a potential candidate before hiring them full time
●  You can save money and time by hiring staffing agencies to find temp-to-hire employees for your organization

Challenges of Temp-to-Hire Employment

●  Temp-to-hire employees take time to integrate with direct hires and work as a team
●  If you want to hire the temp-to-hire employee on your payroll, you may have to pay the staffing agency a fee to buy out the employee or wait for the 60 or 90-day employment contract to end

Since 1997, ClearStaff has specialized in providing employers in the Chicagoland area with Temporary Hires, Contract-to-Hires, and Direct Hires. To learn more about our expertise and discuss your hiring needs, please contact byron@clearstaff.net.