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Contract employees are individuals engaged to cater specific services. An employer-employee relationship is established once you sign the agreement after carefully reading the terms and conditions. The contract outlines length or period of employment, bonuses and salary to be paid (if applicable) and many other benefits as per the contract rule. The role of employee would be specified in the document as well to remove the element of unambiguity. Contract employees are mostly found working closely with upper management on a particular or classified project.

As global economy moves at a fast pace and has become highly unpredictable, employers prefer hiring services of independent contractors as a way to save human resource cost and lighten the burden. But the real question is; do you have any long-term investment or a factor that would keep them motivated throughout the term? If not, consider incentive-oriented strategies that have been quite effective to build trust, loyalty and a means to boost productivity. In contrast, permanent employees are hired on hourly or yearly salary with certain additional benefits such as paid vacations, health insurance and more.

Contract employees are appointed to fulfil a specific function while payment is due per project requirement. If contract staff isn’t working directly on a particular project, they aren’t paid at all. Contract employees aren’t entitled for additional benefits except for payment of requested services and this is given from employer’s personal account. However, it must be noted that rules may change from one organisation to another as contract staff do qualify for specific remuneration and added benefits. Check out below for details!

Health & retirement savings

Although employers don’t contribute towards health insurance for contract staff or their families, there’re exceptions such as organisational policies that already qualify a person be it a permanent or contract employee to certain benefits. In this scenario, employer is indeed responsible to open up health plan access for such employees whereas cost of insurance premiums and deductibles are vested on the contract staff. These health insurance rates however are much lower as part of the group plan which is the reason private health plans are much preferred.

Retirement contribution plans are usually provided to regular and full-time employees however with a certain contribution from staff. Since contract employees aren’t permanent, they aren’t granted the same privilege as that of regular staff however there’re organisations that offer retirement savings to assist all employees thus practicing fair-play and equality.

Motivational factors

Managers and other higher-ups must ensure a platform where contract and permanent employees work in unison and face team-based challenges. Provide them a clear goal, be more productive and enforce a motivational aura. Rewards for team-based challenges should be universal that everyone can appreciate. A company-sponsored vacation trip is an excellent idea for team-based incentives that also give employees a break from routine tasks.

Provide regular progress report on where your business stands today. Be honest with contract workers about work performance and avoid neglecting opportunities to give credit where necessary. Try to establish a long-term relation and chances are more for IT contract staffing since employees with technical skills are most sought-after.

Execute individual-based earnings challenge as healthy competition is an excellent way to motivate teams. For instance, a laptop or specialised gadget for technical staff depicts that you’re willing to invest in their future but again, short-term staff must meet organisation standards and meet employer’s needs in the first place.


We’ve discussed contract employees in much detail with associated benefits and incentives. Go through the above information to have a good gasp over the concept.

About the author

Sheharyar Ahmed is a Digital Marketer, Working with Recruitment Agency in Dubai. He writes about HR recruitment tips, leadership, HR Management and in particular UAE. He likes guitar and linux mint. Also a business coach and author of local News Paper.