Permanent, temporary and freelance contracts

Contracts set out the terms someone works under, including how long the job is expected to last. Businesses mix contract types to match their staffing to demand.

Permanent contracts

A permanent contract has no end date. It continues until the employee resigns or the employer ends it with the agreed notice period. Knowing their income is secure can make staff feel motivated and loyal, so they stay longer and the business spends less on recruiting and training replacements. The trade-off is a fixed wage bill that continues when trade is quiet, and staff who are harder to cut back quickly. The employee gains security but must give notice to leave.

Temporary contracts

A temporary contract lasts for a fixed period or until an agreed end date. A garden centre might take on extra staff for the weeks before Christmas, when demand for trees and decorations peaks. The business can add staff for busy periods, cut back afterwards and use the role as a trial before offering a permanent job. However, temporary staff may be less motivated and loyal, and each intake needs recruiting and training. Workers gain experience and flexibility but have little security or certainty over income.

Freelance contracts

A freelance contract is when a self-employed person, not an employee, carries out short-term work for clients. A wedding photographer who is booked for one event at a time works for themselves and serves several clients. A business can buy specialist skills only when needed, avoid a permanent salary and scale work up or down. The drawbacks are less control over availability, higher hourly rates and less influence over how the work is done. The freelancer gains independence and variety but has no guaranteed income, holiday pay, sick pay or job security.