What is the Difference Between Permanent and Contract Staff?

permanent and contract staff

Does your company have open positions to fill? Is your business undertaking a special project that requires skilled personnel? Before you begin looking for candidates, you’ll need to decide whether you wish to hire permanent or contract staff. Are you looking for work? Before you apply for positions, you’ll need to decide if you’re interested in permanent or contract work. Both contract/permanent workers and contract/permanent positions offer benefits and both have drawbacks. Following is information that may help you make an informed decision regarding what type of position/worker is best for you/your company.

What is a contractor worker?

A contract worker, sometimes called a freelancer or independent contractor, is a self-employed individual, operating independently on a contract. This worker is not an employee. He or she is their own entity (limited liability company, sole proprietorship, limited liability partnership) and is hired by an organization to work on a specific assignment and/or project. The contract may be long or short-term and typically has a definite end date. A contract worker may work for more than one company at a time. 

What is a permanent employee?

A permanent employee works for a company, receiving a regular salary or wages directly from the business. There is no definite end date for permanent employment. Part and full-time work is available in this format. 

Contract staff vs. permanent staff

There are many differences between permanent and contract staff.

  • Function: A contract staff member completes a job in a specified period and is often hired to meet a particular demand or address a specific problem. He/she may work for more than one company at a time. Permanent staff members work a regular schedule, assisting a company with day-to-day operations. Typically, permanent employees work at one job with a single company.
  • Payment: Permanent employees are on the business’s payroll, receiving a salary or hourly wage determined by the company. Contract staff generally set their own pay rate and may be paid by the hour or by the project. They’re typically paid at a higher rate than permanent staff.
  • Taxation and benefits: Permanent staff typically receive benefits (health/dental insurance, paid vacation, stock options, retirement benefits, wellness program, professional development opportunities, tuition reimbursement, etc.). The business employing a permanent staff member is responsible for withholdings (provincial tax, federal tax, Canada pension plan, employment insurance premiums, union dues, etc.). This type of reimbursement makes the employee’s budgeting and financial planning relatively simple. Contract staff members are responsible for paying their own taxes and must independently obtain any benefits desired. As they may not be consistently employed, budgeting and financial planning can be challenging.
  • Autonomy: Contract staff have a significant degree of autonomy and flexibility. They may work at their own pace and in their own way as long as the goals of the project are met.  Permanent staff are hired to complete specific work in a particular time frame and must follow the practices determined by their employer.
  • Onboarding and training: Permanent employees generally participate in a thorough and lengthy onboarding process that assists them in understanding the company culture, team dynamics, and goals of the business. Training and development opportunities are often provided to enhance the knowledge and skills of permanent staff members. Contractors are generally given only the information needed to complete the project and are expected to have the required knowledge, skills, and experience. They typically do not receive training and/or development opportunities.
  • Career development: Permanent staff have the potential to receive promotions and pay increases within the organization. Contractors do not. To progress in their career, contractors must independently seek a position of higher importance and pay.

What are the advantages and disadvantages of working as a permanent staff member?

There are several benefits and drawbacks to becoming a permanent employee.


  • Ongoing employment/job security
  • Clear work expectations
  • Fixed salary
  • Ease of budgeting
  • Taxes remitted for you
  • Benefits
  • Onboarding provided
  • Vacation breaks/paid leave
  • Training and/or development opportunities
  • Possible career development/promotions
  • Possible company perks
  • Necessary equipment provided (computer, printer, desk, etc.)
  • Reduced stress levels
  • Social benefits/Integration with a team


  • Little flexibility/freedom (regarding schedule, daily tasks, etc.)
  • Projects are assigned
  • Limited to provided vacation breaks
  • Generally lower pay
  • Office politics
  • Little variety (perform the same role, in the same office space, with the same co-workers, day in and day out)
  • Boredom, feeling stuck in a routine, and/or the feeling of needing a change 
  • May feel the need to work long hours resulting in burnout and an unhealthy work-life balance
  • Restrains exploring other fields and gaining broad skills and knowledge 
  • Feeling trapped (difficult to walk away from permanent, secure employment, contractually and psychologically)

What are the advantages and disadvantages of working as a contract staff member?

There are many benefits and drawbacks of working as a contractor.


  • Flexibility/Freedom 
  • Ability to choose your projects
  • Self-determined employment breaks
  • Higher pay
  • Fewer office politics
  • More opportunities for networking
  • Varied work experiences with a variety of people
  • Can try out many employers/industries/positions
  • May explore other fields and gain broad knowledge and skills
  • Easier to maintain work-life balance
  • Short commitments
  • Less competition for positions
  • Wealth of opportunities


  • Sometimes required to provide your own equipment (computer, printer, desk, etc.)
  • Limited employment security
  • Must acquire own benefits and remit own taxes
  • Little or no onboarding
  • Lack of opportunities for training and development
  • Must seek own promotion possibilities
  • Budgeting challenges
  • High-stress levels
  • Little integration with the team/fewer social benefits

What are the advantages and disadvantages of hiring permanent staff members?

There are several benefits and drawbacks to the practice of hiring permanent employees. 


  • More oversight and control
  • Possibility of enhancing the performance of employees
  • An incentive for workers to perform optimally to advance their careers within the business 
  • High rate of productivity
  • Labour consistency to manage necessary workloads
  • Strong level of employee loyalty
  • Can create brand ambassadors 
  • Greater employee focus
  • Allows development of trust/can rely on employees when you need to
  • Permanent delegation of tasks frees up your time to do the jobs that are important to you
  • Less turnover/less need to onboard new staff
  • Time to induct staff into your business, help them understand the company and their role within it
  • Time and space to build a tight-knit team
  • Less costly termination


  • Additional costs (training, benefits, resources, office space, equipment, tools, etc.)
  • Extensive hiring/firing process (additional paperwork, cost, time)
  • Responsibility for employee training and professional licensing requirements
  • Permanent staff can become disengaged over time
  • Costly recruitment process with no guarantee of finding the right employee 
  • Recruitment mistakes that may not be discovered quickly
  • Tax, insurance, and benefits responsibilities

What are the advantages and disadvantages of hiring contract staff?

There are many benefits and drawbacks to hiring contractor workers.


  • Contribute special skills for short-term needs
  • Good for short-term projects
  • Simplified payroll (no tax or benefit withholds)
  • Cost-effective way to employ workers/save money
  • Contract workers are often excited to be working
  • Enhanced efficiency
  • Contract staff often work hard to acquire a good reference for the next project undertaken 
  • Flexibility to adjust staffing levels to suit current needs/projects
  • Tap into different age demographics (seniors, students)
  • Minimal training required
  • Reduced liability
  • Contractors often provide their own tools/equipment


  • Less control and oversight
  • Less developed relationship with contract staff, possibly less loyalty, and trust
  • Employee time and energy may not be solely dedicated to your projects as contract employees may also work for other employers
  • Costly termination (often required to pay out the contract)
  • Less integration of the contractor’s role

When is it best to use contract staff and when should you hire permanent staff?

Permanent employees are great for long-term employment, essential business tasks, and projects that need oversight. Contract staff are great for short-term employment, non-essential business tasks, and projects that do not require oversight.

Why use a recruitment agency for finding permanent staff and permanent positions?

A recruitment agency helps a business find the best talent by providing access to high-quality candidates. They save companies money and time, provide industry expertise, and facilitate business innovation and growth. Using an agency reduces turnover and quickly fills multiple positions. Agencies have a vast network of connections and candidates, are adaptable, and may even handle the onboarding process. For those seeking permanent employment, staffing agencies are generally free of charge for candidates and provide expert assistance in finding a position. They have knowledge of the current labour market, know which sectors/companies have opportunities, and quickly get candidates in contact with interested clients. Staffing agencies are first to hear about profiles that are needed and provide assistance for candidates from salary negotiations to intake interviews.

Why use a recruitment agency for finding contract staff and contracts?

A recruitment agency serves as a facilitator between contractors and organizations that need short-term/project-based help. They help contractors secure more consistent roles and assist employers in quickly finding candidates for projects. Agencies save contractors and employers time and effort.

Is it better to seek contract or permanent employment? Is it more advantageous to hire contract or permanent employees? The best choice is the option that suits the individual business or the individual job seeker. Be aware of the advantages and disadvantages of each choice so that you can make an informed decision. Need assistance? Consider using a staffing agency for help finding a permanent or contract position or support finding employees (permanent or contract).

Equation Staffing is a reliable, collaborative, innovative recruitment agency available to support you in your search for permanent and/or contract personnel and/or your pursuit of a permanent and/or contract position. Contact us today!