What you need to know about being a temp or contract worker

What you need to know about being a temp or contract worker
PHOTO: The Straits Times

Being a temp or contract worker can seem like a nice, non-threatening, low-commitment way to dip your toes into the career pool.

Many companies now are making it a habit to hire on a temp-to-perm basis, meaning you'll often have to slog it out as a temp worker before finally being converted to permanent staff. But joining a company as a temp or contract worker isn't as rosy as it sounds.

You might be making an exit from the company in a few months' time, so the company might choose not to extend to you all the niceties regular employees get-like paid medical leave and vacation days.

Here are some reasons you might get the short end of the stick as a temp or contract worker.

Uncertainty of earning power

The most obvious drawback of being a temp worker is that once your contract ends, you're going to have to look for a new job. Many multinational companies have the habit of converting their temp staff into permanent employees, and if you do operations in a multinational bank chances are you got your foot in the door as a temp worker, too.

But there's always the danger that you won't get retained and will have to look for a new job all over again. In addition, temp workers generally tend to earn less than permanent staff doing the same job, so expect your wages to be depressed.

Your employer might shortchange you of your CPF contributions

By law, even if you're a temp worker, you are supposed to make CPF contributions, and so is your employer. You should be getting a 17 per cent contribution from your employer if you earn anything above $750 a month.

But here's where things get tricky. While employers are legally obliged to make CPF contributions and can get into trouble if they don't, a few sneaky ones still persist in not doing it.

Sometimes they tell employees that they can get a higher take-home pay by not putting some of it into their CPF without mentioning the fact that they'll be forgoing their employer's CPF contribution as well. Make sure your employer isn't cheating you out of your CPF by logging in to myCPF and making sure you're getting what's due to you.

Fewer benefits

The benefits the company chooses to extend to you as a contract worker can vary. Many years back, I worked in a 4 month temp role that did not entitle me to any paid medical leave or vacation benefits.

That basically meant that if I fell sick and couldn't go to work, I would not get paid for that day. It also meant that the only leave I could take was unpaid leave.

On the other hand, depending on the length of the contract, other companies might offer pro-rated vacation days or medical insurance. If you're working with a recruiter, be sure to ask about the benefits ahead of time. Otherwise, speak with HR to clarify what benefits you'll receive before you accept the contract.

Is a temp job ever a good idea?

Unless you are specifically looking for temporary or seasonal work, or just looking to try out a company on a trial basis before deciding if the job or industry is for you, it's a good idea to evaluate temp jobs for whether they can add valuable skills and experience to your CV, and how high your chances are of getting converted to a full-time employee.

As fresh grads have little to no work experience, temp jobs can be a good way to rack up a few skills and experience points that can make securing future employment easier.

You get paid more than an intern and also get real responsibilities. Just focus on securing a temp job that enables you to do work that perm staff with similar qualifications are doing, rather than purely administrative work.

As for whether there is a chance of being converted to perm staff, this issue can be a bit of a minefield to navigate. Question why you are being hired and whether the company has the capacity to take you on board as a permanent employee.

If you are being hired in a big multinational because there's been an increase in work, your chances of being retained are higher than if you're engaged to cover someone on maternity leave at a small firm. Still, it doesn't hurt to ask about whether the company is open to retaining temp staff.

If they are and you perform well, your chances of obtaining a full-time position are good.

This article first appeared in MoneySmart

MoneySmart.sg is Singapore’s leading personal finance portal, and aims to help people maximise their money with powerful tools and engaging content.

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