Common Types of Employees: Definitions and Key Differences
By Indeed Editorial Team
Published 8 November 2021
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
As the labour market becomes more complex, businesses may hire different types of employees, from full-time employees to contractors, to meet their demands and goals. This creates more opportunities for professionals to gain employment. Understanding the various kinds of employees and how they're different can help you choose the type of employment that fits your professional goals. In this article, we explore the common types and categories of employees, the benefits they enjoy and the differences between traditional employees and contingent contractors.
5 types of employees
The five most common types of employees include:
1. Full-time employees
Full-time employees are those who work for a business full time. They usually work an average of 35 to 40 hours per week and receive monthly or yearly salaries. They're also eligible for other employment benefits such as paid leaves and pension schemes and receive protection under the Employment Ordinance. Full-time employees usually represent the company's values and culture.
2. Part-time employees
Part-time employees are individuals who usually work less than 40 hours a week and are typically paid by the hour rather than salaried. They enjoy the same benefits and protection as full-time employees, although the exact benefits may vary from one employment contract to another. Part-time employees may work for more than one business at a time. The Labour Department of Hong Kong doesn't have a distinct set of rules to distinguish between full-time and part-time employees, but it mostly depends on the number of hours an employee works for a company.
3. Seasonal employees
Seasonal employees are those companies may hire according to the seasonal demands. For example, a retail company may hire five extra seasonal employees during their peak season when the stores encounter more traffic. They may not enjoy the same benefits and protection as full-time and part-time employees, since they're only employed for a set period.
4. Temporary employees
Temporary employees are those that are hired on a temporary basis, often for a set period, such as six months. They also may work on a specific project and stop working for the company when the project is complete. Temporary employees may not enjoy the same degree of benefits and protection as full-time and part-time employees.
5. Leased employees
A leased employee is an individual a staffing agency hires. The agency then leases them out to an organisation to complete a specific job. Leased employees typically work with the company that hired them for a year or longer. While still considered an employee, leased workers are on the payroll of the staffing agency and also receive any benefits through the employment agency rather than through the organisation they're working for.
What are employees?
Employees are individuals who work for a person or a business to, also referred to as the employer. According to the Labour Department of Hong Kong, the meaning of the word employee refers to anyone who has entered into a contract of service with an employer in any form of employment. Employees enjoy different forms of employment benefits under the Employment Ordinance of Hong Kong.
Categories of employees and employment benefits
The different types of employees can be further sorted into two categories:
1. Individuals employed under a fixed employment contract
Individuals employed under a fixed employment contract are those employed at a business for a pre-determined set period. If they wish to continue working for the same company that they're working for, they're responsible for extending the contract or proposing a new one. Because of the fixed nature of their contract, these professionals are only eligible for basic protection and benefits under the Employment Ordinance, including:
fair and timely wages according to minimum wage laws
protection of their wages
receiving rest days on statutory holidays
2. Individuals employed under a continuous employment contract
Individuals employed under a continuous employment contract are those who work a minimum of four weeks with at least 18 hours in a week continuously for an employer. They are usually full-time and part-time employees. They enjoy all the protections and benefits under the Ordinance such as:
fair and timely wages according to minimum wage laws
protection of wages
paid annual leave
paid statutory holidays
maternity and paternity leave
protection against employment dismissal
government or company pension scheme, such as the Mandatory Provident Fund (MPF)
What are contingent contractors?
Contingent contractors are individuals who companies hire to perform specific duties on a non-permanent and non-employee basis. They may not enjoy the protection and benefits that professionals with employment contracts do. They may work remotely or in an office, but aren't employees of the company. Contingent contractors are typically experts in their field who complete certain projects based on their skill set. Examples of contingent contractors include freelancers, consultants and independent contractors.
Contingent contractors often perform under a mutually agreed contract with the employer. Once a project is complete, the contractor no longer works for the company, although the company may hire them again.
4 types of contingent contractors
Below are the four most common types of contingent contractors hired by individuals and companies:
1. Independent contractors
Independent contractors are people or firms sourced by a company to perform work or services. They're usually regarded as self-employed and aren't eligible for benefits through the companies they work with. They may work on a permanent basis for the company, work on a single project or as-needed. They usually work remotely or online. Independent contractors are also known as freelancers or subcontractors. Examples of independent contractors include freelance writers, graphic designers and actors.
A contractor is a person who is retained by an organisation for a set period to perform a specific duty or task. The wages the contractor receives and the hours they work are pre-determined and mutually agreed upon by both parties beforehand. The difference between a contractor and an independent contractor or a freelancer is that contractors follow a set of terms and agreements in their contract, while freelancers may cease working when they have completed a job.
A consultant is a self-employed person who offers professional advice in their field of expertise. For example, a consultant may specialise in education, law or marketing and provide companies and businesses with expert advice to help them improve in these specific areas. Consultants provide their services on a temporary basis, but companies may hire them again based on their consulting needs.
An intern is a person who performs work for a company on a paid, unpaid or partially-paid basis in exchange for the work experience gained. Many high school and university students participate in internships to prepare for their careers after school. Internships usually last for a period of one to six months. After this period, employers may offer high-performing interns a permanent contract with the company.
Differences between employees and contingent contractors
The differences between employees and contingent contractors lie under these aspects:
Employees employed under both fixed and continuous contracts enjoy all or some employment benefits, such as pension schemes, paid leave and sick allowances. Alternatively, contingent contractors aren't eligible for these benefits from the companies they work for. Instead, they're responsible for setting up their own benefit schemes.
Degree of control
Professionals usually have a low degree of control over where, what, when and how they work. Instead, they work under the terms and conditions that the employer has stated in their employment contract. For instance, employees usually work from 9 am to 6 pm on Mondays to Fridays. Alternatively, contingent contractors enjoy more flexibility and work according to their needs and schedule.
Nature of work
Employees usually work in jobs that call for a high level of monitoring, supervision and control. Examples of this type of work are accountants, teachers and administrative officers. Whereas, contingent contractors work in jobs that are hard to monitor and control, such as consulting and creative jobs.
Employees often receive necessary equipment and machinery to complete their tasks at work by their employer. They can also request any necessary equipment from their employer. In comparison, employers expect contingent contractors to have and use their own knowledge and supply of equipment to complete a project.
Employees usually don't have substantial financial risks concerning the profits and losses of their employer as long as their wages and employee benefits are being fulfilled. Whereas, contingent contractors usually do work that directly impacts the company's financial losses and gains. This makes them more liable to financial risks.
Employees are usually subject to salary taxes based on the amount of salary they gain during a tax year. Contingent contractors are regarded as self-employed individuals. Thus, they're subject to profits tax based on the profits of their business or the business that they partnered with.
Please note that none of the companies mentioned in this article are affiliated with Indeed.
Explore more articles
- 9 Common Leadership Models to Manage Your Team Effectively
- What Is Shadowing for a Job? Definition, Guide and Benefits
- Public vs. Private Companies: What's the Difference?
- A Guide on the Photographer Skills You Need To Succeed
- What Are Production Strategies? (With Common Types and Tips)
- 10 Digital Marketer Skills To Develop for Your Career
- Contract vs. Permanent Employees (Explaining the Difference)
- What Is an SKU? And How to Generate Them (With Tips)
- Email Etiquette: All Your Complimentary Close FAQs Answered
- 16 Important People Skills to Help You Succeed at Work
- Accountant vs. Controller: What Are the Differences?
- A Guide to Strategic Positioning: With Definition and Tips