Contract, contract-to-hire or direct hire
How the three ways of taking someone on differ, and when each one fits.
| Contract | Contract-to-hire | Direct hire | |
|---|---|---|---|
| Who employs the person | The recruiting firm, for the length of the contract | The recruiting firm at first; you, if you make an offer | You, from the first day |
| Typical use | A project, a busy period, or cover for someone away | A role you expect to keep, where you want to see the work first | A role you already know you want to keep |
| Commitment | For the agreed period | A contract period, then your decision | Permanent from the start |
| How it is paid | An agreed rate for the hours worked | An agreed rate, then the terms agreed for conversion | A fee agreed when you engage the firm |
Who employs the person
- Contract
- The recruiting firm, for the length of the contract
- Contract-to-hire
- The recruiting firm at first; you, if you make an offer
- Direct hire
- You, from the first day
Typical use
- Contract
- A project, a busy period, or cover for someone away
- Contract-to-hire
- A role you expect to keep, where you want to see the work first
- Direct hire
- A role you already know you want to keep
Commitment
- Contract
- For the agreed period
- Contract-to-hire
- A contract period, then your decision
- Direct hire
- Permanent from the start
How it is paid
- Contract
- An agreed rate for the hours worked
- Contract-to-hire
- An agreed rate, then the terms agreed for conversion
- Direct hire
- A fee agreed when you engage the firm
When contract fits
The work has an end date, you need someone quickly, or you are covering a gap while you decide on the role.
When contract-to-hire fits
You expect to keep the role but want to see the work, and the person wants to see the team, before either commits.
When direct hire fits
The role is permanent, the budget is approved, and you know what good looks like.
A note on classification
Whether someone is an employee or a contractor is a legal question with tax and benefits consequences. Ask your own counsel or accountant; this page is not legal advice.
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