A contingent workforce can include temporary agency workers, independent contractors, freelancers and consultants. These people may work alongside permanent employees, but the arrangements through which they provide their services differ. Some run their own businesses. Others are employed by a staffing agency or consulting firm.

A company implementing a new finance system, for example, might bring in temporary accounting staff, an independent data specialist and a consulting team. All three support the same project. Each has a different relationship with the company, a different scope of work and potentially a different payment structure.

For employers, understanding the types of contingent workers starts with how each person is engaged.

Temporary agency workers

Temporary agency workers are supplied and paid by a staffing agency to carry out assignments for a client organization. They may cover employee absences, seasonal demand or additional workloads. The agency relationship and the duration of the assignment are separate characteristics: being supplied by an agency does not necessarily mean the work lasts only a few weeks.

A retailer might use agency staff during its busiest trading months. A finance department might need an accountant while an employee is on leave.

The client’s agreement with the agency should establish the duties, assignment dates, working hours and charges. It should also explain how extensions, timesheets and changes to the requirement are handled. Those details matter when an assignment continues beyond its original end date.

Independent contractors

Independent contractors provide services through an independent business arrangement. An organization may engage them for expertise it needs for a particular assignment, such as a technical review or a defined piece of project work.

For example, a manufacturer could engage an independent specialist to assess equipment performance and produce recommendations. The agreement would describe the service, expected outputs, timing and payment terms.

“Independent contractor” concerns the working relationship, rather than a particular occupation. Engineers, designers and consultants can all provide services this way. The title alone, however, does not establish the person’s status. Employers need to assess the arrangement under the applicable local requirements.

Freelancers

Freelancers take on assignments for clients, often in fields such as writing, design, translation and software development. A commission might involve a single deliverable or recurring work over several months.

A marketing team could hire a freelance writer for a research report, then commission additional articles later. Each assignment may have its own brief, fee and deadline.

Freelancers often operate as independent contractors, which means these categories overlap. “Freelancer” describes how someone offers their services; it is not a universal employment classification. SAP includes both freelancers and independent contractors in its description of a contingent workforce.

When planning work, employers should distinguish an ongoing client relationship from an agreement that reserves the freelancer’s time.

Consultants

Consultants provide specialist advice, analysis or implementation support. They may work independently or be employees of a consulting firm.

An employer introducing a new HR system might engage a consultant to assess requirements, advise on processes or support the rollout. The engagement could purchase a named specialist’s time or a service delivered by several people.

This is why “consultant” needs further explanation in workforce records. It tells the business something about the work, but little about who employs the person or how the service has been purchased.

Workers supplied through a service provider

Some organizations purchase a complete service from an external company. The supplier may provide a team to deliver technical support, maintain equipment or complete an implementation.

These individuals can appear in the client’s external workforce records even though the commercial agreement covers a service. In services procurement, a statement of work commonly sets out the work being purchased. SAP distinguishes this from individual contingent staffing assignments.

For employers, this means tracking both the supplier’s obligations and the individuals who need access to company facilities, systems or information.

Are fixed-term and seasonal workers also contingent workers?

They can be, depending on the definition used. Fixed-term and seasonal describe the expected duration or pattern of work. They do not identify whether someone is employed directly or supplied externally.

A seasonal warehouse worker, for example, could be hired directly or assigned through an agency. These arrangements should remain distinguishable in workforce reporting.

The US Bureau of Labor Statistics also separates temporary or non-ongoing jobs from alternative arrangements such as agency work and independent contracting. Its categories overlap, but they are not interchangeable.

Employers should therefore define which groups their contingent workforce program covers and record the underlying arrangement. AMS Contingent Workforce Solutions brings together sourcing, procurement and program management support to help organizations manage these different workforce needs.