What is Contract to Hire ?


What Is contract to hire (c2h)? What does it mean

What is contract to hire

Quick Summary : This blog will help you understand the following questions :

  • What is contract to hire (c2h) and what does it mean by contract to hire?
  • Is the contract the same as direct hire? (H) Contract hire vs direct hire.
  • How does contract hire work?
  • How does direct hire work?

Table of Contents

The hiring process in non-It firms has evolved in recent years in a tremendous way. Their hiring process was done in 2 ways: permanent employees or contractual employment for temporary projects. Both types of employment have their pros and cons. So those issues are dealt with by the new form of work known as Contract-to-hire

Contract to Hire

It is a new concept that allows businesses to test employees before hiring them permanently. So the employee is hired temporarily with the possibility that the company will hire them permanently at the end of the contract. This trial period helps employers to search for a suitable candidate for the long term.

How Contract to Hire Works :

The procedure of contract to hire proceeds rapidly. Those who provide C2H use a staffing agency to take on practical tasks of talent acquisition, including executive recruiting, resume analyzing, and shortlisting the candidates. Once the firm selects the candidate, the client should communicate with the agency and deliver regular feedback if the client feels the candidate is up-to-the-mark for the upcoming company project. Then full-time employment is offered to the candidate. The contract length varies depending upon the client’s project, but generally, it ranges from 3-12 months.

Searching candidates from the networks :

The hiring agencies have a vast pool of networks beyond the typical HR department of the company. They screen out the potential candidates at first.

Application reviewing and screening out the candidates :

The applicants are reviewed to select only the qualified ones. Not only this but also it is ensured that the applicants fit in well with the company culture.

Submitting the applicants for the final Interview :

The selected candidates are then interviewed and tested to understand their real potential.

Job offered and position filled :

The selected candidates are given the offer letters and hired for the work.

Read Also : Employer of Record

Contract to Hire Vs Direct Hire | Differences

Direct hiring includes searching, interviewing, and staffing the candidates permanently. Direct hires are primarily full-time with all the benefits.
The significant difference between direct hire and contract-to-hire is the payroll structure. The immediate hiring makes the new hire an employee of the end-user company. The contracting agency will be paying for the contract hire.

The key differences between the both include :

  1. Most contract-to-hire positions are primarily part-time, while direct hires are full-time.
  2. The straightforward hiring process is mostly slower as they are long-term positions, whereas the contract-to-hire are hired quickly.
  3. The actual company does not provide benefits to the contact-to-hire, although they can get help from the staffing firm.
  4. The contract-to-hire employee has this chance to evaluate the company before committing there full-time.

4 Pros of Contract to Hire

C2H helps with the employment gaps :

If you want to add your experience to your resume and can’t get a full-time opportunity quickly, it is wise to get any C2H chance. Not only will your employment gap be filled, but you will also gain more experience and skills. It is easier to explain your C2H role in your resume than to explain your employment gap.

Expanding the network :

One can gracefully expand their network by working in a C2H job. Every single person during your C2H role is your new connection. You can also get new links outside your company that can help you land a permanent job anywhere else. If you worked hard and have made a good impression on your employer, you can ask for a reference, recommendation, or referral for another job.

Compatibility with the company or role :

This type of job allows the company and the candidate to test their suitability for the position permanently. The contract period will enable you to determine whether the organization’s work environment, values, or goals are aligned with yours.

Salary Negotiation :

One can use their experience in a C2H job during salary negotiation time. The reason is that your experience can be used for your salary negotiation.

Good Read : What is DPA

4 Cons of Contract to Hire

The candidates must be aware of the cons of the contract-to-hire position.

Get a Written Contract-to-Hire Agreement :

The candidate must have a written contract-to-hire contract. The written agreement gives them proof that the candidate was hired. For example, if you were working under the manager and as Contract-to-Hire, if that manager leaves the job, the candidate has no proof of the contract.

Clarify the contract :

Clarity about the contract is essential to what is and is not included in the job. The agreement must have the proper start to the end date, what will happen at the end of the contract, paid or unpaid leaves, job description, and other benefits. Have a clear understanding of the health insurance provided by the company.

Knowing how to get hired :

How you are evaluated as a contract-to-hire employee is a must to know. One should be clear about the particular metrics related to performance during the job.
It is one of the crucial but overlooked elements of the C2H agreement. The candidate who does not understand the performance metrics may not perform the task accordingly and may not even get hired permanently.

Knowing how to leave :

What if you want to leave the job because you don’t like it? So that’s the point of understanding when to get out of the contract. What should a candidate do if they don’t like their job or want to quit? Do they have to serve the notice period? Will the staffing company not place you in another position?
Also, in the reverse case, what happens when you are offered a full-time permanent role at another company? Is it possible to leave the contract earlier? Any penalties in such a case?


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It is a relatively newer concept that allows companies to test potential candidates before hiring them permanently for the position. So the employee is placed for a short-term in the organization with the chance to be hired as a full-time employee at the end of the contract.

Some of the most important benefits of hiring the contracts are:-

  • The initial costs are lower.
  • Consistent payment amounts.
  • No worries about the depreciation.
The period required for direct hiring depends upon the position, organization, and hiring manager. Mostly it takes one month to hire directly.

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