What Is Contract-To-Hire and How Does It Work?
Learn about contract-to-hire, a flexible hiring solution that gives both employers and employees an advantage in today's job market.
When a company needs new talent, or a professional is looking for a new job, they tend to think of two options— independent contractor work or employee hiring.
There’s a third option, though, that can provide the best of both worlds: contract-to-hire. Whether you’re an employer who needs to fill a position, or a professional looking for your next opportunity, here’s what you need to know about contract-to-hire.
- What is contract-to-hire?
- How contract-to-hire works
- Best practices for contract-to-hire
- contract-to-hire FAQa
What is contract-to-hire?
Contract-to-hire roles allow professionals and employers to begin working together on a contract, with the ability to potentially develop a long-term employment arrangement.
When this type of agreement is reached with the help of a traditional staffing firm, it may also be called temp-to-hire.
Benefits of contract-to-hire for employers
Many employers like contract-to-hire agreements because they’re a way to assess the true need and value of filling a specific position. Contract-to-hire can also make it easier to start work on critical projects quickly.
“As our business needs change and grow, having experience working with a freelancer allows us to move them into full-time roles with confidence, because we've already seen their best work and we know there's synergy in the working relationship.” —Julianna Nikolic, Chief Strategy Officer, Reproductive Sciences Medical Center
Contract-to-hire may also lead to cost savings.
Hiring an employee—only to find out that they’re not the right fit for the role—can be costly. Some estimates place the cost of replacing a full-time worker at as much as two times their annual salary.
When you start work with a contract, you can make sure the role is a fit for all parties before discussing the possibility of employment.
If you know you’re interested in this kind of arrangement, you can label specific Upwork job posts as potential contract-to-hire opportunities. This helps to attract proposals from talent on Upwork open to permanent employment.
Benefits of contract-to hire for job seekers
Contract-to-hire provides many benefits to professionals, as well. It’s a great way to:
- Try out a new opportunity you’ve been interested in and make sure that it’s really the right fit for you
- Assess a company’s culture and make sure it suits your work style and life
- Showcase the value your work brings to a company
- Build your professional portfolio and resume
- Gain more expertise and experience working in a specific industry or sector
If you’re interested in contract-to-hire work, you can indicate this on your Upwork profile.
And if contract-to-hire work wasn’t on your radar, but you like a client and they offer you a permanent position, that’s okay too. Your client can migrate any Upwork contract by placing a contract conversion request through the platform.
How contract-to-hire works
The contract-to-hire process begins similarly to any other contract engagement. Clients and talent agree on the terms of a contract, including the period of time they’ll be working together. Sometimes this is a one-time project; other times it’s a longer term engagement that lasts several months.
If the client and talent enjoy working together, and they decide they’d like to consider engaging in a different manner, they may discuss the possibility of employment.
There are lots of variables to consider when deciding whether to employ talent. If that’s something you’re interested in, Upwork Any Hire can help.
Best practices for contract-to-hire
Contract-to-hire success depends on three key things:
- Clear communication. All parties involved in a contract-to-hire agreement need to be open about their goals and desires for the arrangement. They should also be transparent about how they feel the work is progressing.
- Thorough evaluations. Clients who have engaged a contract-to-hire professional need to be prepared to thoroughly evaluate if they have enough work to support a full-time position.
- Fair treatment. Contractors should be treated fairly by clients. This is true all the time, but in a contract-to-hire situation it’s doubly important to remember that this person may soon be a permanent member of your team. Treating them as a valued contributor from day one can help make your company an attractive option for future employment.
Neither the client nor the talent are required to transition a contract into an employment agreement, even if they expressed their interest in contract-to-hire arrangements.
If you decide that the job—or the person you’re working with—isn’t the right fit, you should let them know as soon as possible while still honoring the terms of your original contract.
Contract-to-hire FAQs
If you’ve never offered or worked a contract-to-hire job before, it may seem a little confusing or intimidating. It doesn’t have to be, though! Check out the answers to these frequently asked questions about contract-to-hire work and learn more about this flexible and rewarding way of working.
Is contract-to-hire a good idea?
While contract-to-hire isn’t a fit for everyone, many companies and workers find that they enjoy the flexibility of “trying out” a work arrangement before committing to permanent employment.
It can be a way for talent to see if they like a new role, and for companies to make sure they really have a need for specific skill sets on their team.
Because everyone’s on the same page, contract-to-hire is a great way to explore the world of remote, distributed work and find just the right fit for your business needs.
Do contract-to-hire jobs offer job security?
During the contract period, workers and clients should each be able to expect that the other party will fulfill the terms of the contract.
As with any contract job, there is no initial guarantee of a long-term position. The contract period is a chance for everyone to see if the job is a potential fit for all parties.
However, open communication from clients to talent during the process can go a long way toward allaying fears about lack of job security.
This way, all parties are clear about what the next steps are, and can make the appropriate decisions for their company or career.
Does contract-to-hire lead to part-time or full-time roles?
Contract-to-hire positions can lead to part-time work or full-time jobs, depending on the client company’s needs—as well as the talent’s desires to join the company.
Can I quit a contract-to-hire job?
When you enter into a contract on Upwork, you’re agreeing to deliver the work promised.
If you’re hired as an employee by a client, your continued employment is often guided by the laws of where you live.
All parties will need to follow state, province, or national laws around employment termination and unemployment compensation.
What is contract work vs. contract-to-hire?
Contract work is performed with the understanding that an independent professional is working with a company on a specific project.
In a contract arrangement, the independent professional and the client company are separate entities and neither is employed by the other.
Contract-to-hire arrangements may start out similarly, but with the understanding that all parties are open to the possibility of turning their contract into employment.
What is temporary employment vs. contract-to-hire?
Some companies choose to hire temporary employees instead of contractors. A temporary employee may work directly for their employer or for a staffing agency, who then shares their skillset to the company where work is performed.
Like contract-to-hire work, temporary employment typically has an end date but can potentially lead to permanent work.
Contract-to-hire made easy for everyone
You can offer—and find—contract-to-hire jobs on Upwork. It’s simple: clients can create a job post in Talent Marketplace™ and indicate that it’s a contract-to-hire opportunity. They can then wait to receive proposals from interested talent, or send invitations to professionals who’ve indicated they’re interested in contract-to-hire work.
When all parties are ready to full-time work, we help clients convert their Upwork contracts. From there, clients can either move their new hire onto their company’s employee management system or use Any Hire.
Ready to offer or find contract-to-hire work? Log into your Upwork account to start posting a job or browse contract-to-hire opportunities now.
Author Spotlight
Emily Gertenbach is a B2B writer who creates SEO content for humans, not just algorithms. As a former news correspondent, she loves digging into research and breaking down technical topics. She specializes in helping independent marketing professionals and martech SaaS companies connect with their ideal business clients through organic search.
