A contract-to-hire agreement is one where a contractor is hired by an employer for a pre-decided, probationary period of time, where the two parties check their compatibility with each other. There are various factors that you need to consider when it comes to working at a contract-to-hire position.
1. Why the company prefers contract-to-hire (C2H):
A very important factor in deciding whether to work at a contract-to-hire position or not is the history of the company when it comes to C2H. If the organization has a history of employing C2H workers, there’s a relatively greater chance of things going according to plan and the purpose of C2H being satisfied. Alternatively, if the company is hiring C2H contractors for the first time, there is a very high probability that the arrangement will fail due to lack of experience and exposure.
2. Limitations or expectations in the arrangement:
Don’t forget to “ask questions!” Ask the company what they want and expect from you. Ask them about things like travel allowances, vacation and overtime.
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3. Is it smart to leave a job for C2H arrangement?
Assuming that the company is established and they have answered your questions to your satisfaction. They must also have a respectable history with C2H arrangements. Let’s also assume that the company is providing a solid package, with a reasonable salary and an expected date of conversion from contract basis to permanent joining. After having checked these boxes, you can quit your job and switch to the C2H agreement in discussion, keeping in mind that the new contractual job is in-keeping with your aspirations and is designed so as to match your skill set.
4. Pay scale:
The most obvious factor is the pay scale. None of us wants to be paid less than what we are earn, which is why you need to discuss the wages beforehand.
5. Contract length:
The length of the contract needs to be kept in mind when deciding whether to accept a C2H offer. I’m sure you don’t want to be stuck on the same project for months.
6. W-2 or 1099 employee:
If you are offered a W-2 contract, the pay check you will receive will have already had tax deductions from it. On the other hand, if you choose to work as a 1099 worker, your paycheck will be larger but you will have to pay your own taxes, including self-employment tax, which turns out to be more than what you were paying in the W-2. However, in the 1099, the plus side is that you can save tax on many appliances and utilities. Think long and hard about which option is better for you before saying deciding on an offer.