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HCMWorks Insights

Do I Need to Impose Tenure Limits on Contingent Workers?

Posted by Julia Fournier on 23 Dec 2019

The contingent workforce brings with it a wide range of benefits, from better access to top talent, significant cost savings, more efficient hiring processes, and increased agility and flexibility.

No longer are your company’s workforce needs static. They change from year to year, month to month and even day to day. The result? Your company needs access to highly-qualified workers at a moment’s notice if you are to hit modern workforce targets.

The contingent workforce, which is made up of contractors, freelancers, independent contractors and consultants, gives your organization access to a pool of talented workers that are ready to work for you at a moment’s notice.

However, the management of your company’s contingent workforce is complex. Any successful contingent workforce program must be managed by a highly-skilled and professional managed services provider (MSP).

Exploring Your Contingent Workforce Ecosystem

Contingent workers absolutely cannot be treated like full-time workers. That’s something Microsoft found out back in 2000, after the company agreed a $97million settlement on an eight-year-old class-action lawsuit filed by thousands of temporary workers. Those workers accused the tech giant of denying them the benefits given to permanent staff, despite the fact they had worked on temporary contracts for years.

To address these co-employment risks, many companies have imposed contractor tenure limits on their contingent workers - but is this really an effective contingent workforce management strategy? HCMWorks will answer your questions in this blog.

What is a contractor tenure limit?

Contract tenure refers to the length of time that a temporary worker has been on an assignment for your organization. However, there’s an ever-growing list of companies that are implementing a maximum length of time that they’ll keep a contractor.

A policy that limits the length of time that a contractor can work with your company on any one assignment is known as a tenure limit. Regardless of how long a specific project is expected to last, once that tenure limit is reached, the independent contractor can no longer work on that project.

By imposing this tenure limit, many organizations across the US and Canada believe they are lowering the co-employment risk for their company.

Are tenure limits effective?

Tenure limits have existed for a number of years, yet there’s no real proof that they remove the risk of co-employment. In fact, while there’s a number of factors that are examined when it comes to co-employment, the contract length is largely irrelevant - proper classification, onboarding and management is far more important.

Capping temporary workers can have larger consequences for your organization. Forced turnover of qualified workers can be expensive for your business and counter-productive to your workforce targets.

Tenure limits may have some benefits, however. For example, organizations that impose tenure limits can do so in a bid to shape the behaviour of their hiring managers. By setting a maximum amount of time that temporary workers can stay on an assignment, your organization can encourage hiring managers to practice temp-to-perm hiring.

To get around strict tenure policy, hiring managers have found ways to avoid these limits. Moving resources from a visible headcount towards statement of work (SOW) and other working arrangements can hide individuals from the organizations.

Are you looking for more information on whether your organization should impose tenure limits on its contingent workers? Contact HCMWorks today. Our team of contingent workforce management specialists will be more than happy to answer your questions.

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Tags: Contingent Workforce

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