Pros And Cons Of Full-Time Employees Versus Freelancers For Your Company

The saying, “successful businesses thrive on successful recruitment”, holds true in light of the fact that talents are the core of every successful business.

Indeed, Singapore’s talent pool has lots of potential for businesses to tap into, with tons of multiskilled employees as well as an increasing number of freelancers comprising 8.8 percent of the resident workforce in Singapore.

Thus, how can you, as a business, benefit from Singapore’s dynamic talent landscape?

Should your business focus on hiring and training in-house employees, or engage freelancers? 

What, then, will the implications be when you decide to go on either or both hiring routes?

What Is A Freelancer?

For the uninitiated, a freelancer is a worker in the gig economy who does part-time consultancies and projects. As a rule of thumb, a freelancer provides his or her products and/or services for an agreed-upon fee. 

Generally, a freelancer is compensated based on the amount and quality of output he or she produces or on the number of billable hours put in for a particular project. 

The origins of the term “gig economy” can be traced to Tina Brown, a journalist who initially coined the term back in 2009 when she elaborated on the gig landscape as “a bunch of free-floating projects, consultancies, and part-time bits and pieces”.

According to figures from the Singapore Ministry of Manpower (MOM), 211,000 Singapore residents worked as freelancers last year in 2019, whether by circumstances or by choice. 

The following points elaborate on the upsides and downsides of engaging a freelancer for your business.

Read Also: How Freelancers And Self-Employed Persons Can Protect Themselves In Trade Disputes

Pro #1: Save On Additional Hiring Costs When Hiring A Freelancer

When you hire a freelancer or part-time worker, you only compensate him or her for the total amount of output produced or the total number of billable hours, depending on your mutual agreements.

For example, when you hire contractors or ad-hoc gig workers, you need not pay them annual bonuses or cover their medical insurance policies. 

Pro #2: More Flexibility In Accessing Talents

Hiring freelancers or contract vendors can benefit your business because such work arrangements are usually on a fixed-term contract basis that can either be extended or discontinued by either party. 

Therefore, besides saving hiring costs, your business can also enjoy the flexibility to access a wider pool of freelance talents to undertake a specific business project or operation, as and when your business needs them. 

In crunch times, such as during economic recessions or seasonal periods of low demand, your business would have the option of not engaging these freelancers via these flexible and ad-hoc work arrangements. 

Singapore has various job platforms such as Cultjobs, Linkedin,, Jobs DB, Jobstreet, Upwork, Fiverr and many more for your business to access a diverse spectrum of freelancers for your business to select from. 

Con #1: Lack Of Freelancer Commitment 

A major disadvantage to hiring a freelancer for your business project would be that he or she might lack the necessary commitment to invest time and effort in your business as he or she might have other work and personal commitments elsewhere. 

If your freelance hire does not manage his or her time well, you run the risk of your hire producing subpar or incomplete work.

What could be worse is that given the sheer flexibility and remote nature of many freelance gigs, your freelance hire could go MIA (missing-in-action) when you urgently need a particular project to be done.

For example, if you desperately need the design for your new website to be completed as soon as possible, you will find yourself in a challenging position if your freelance web designer suddenly disappears on you. 

Con #2: You Cannot Hire Non-Singaporean/Non-PR Freelancers

Another pitfall to relying on freelancers in your hiring strategy is that you are unable to hire talented non-Singaporeans or non-Permanent Residents as freelancers. 

This is because current Singapore labour laws stipulate that only Singaporeans and Permanent Residents (PRs) can legally work as freelancers in Singapore. 

Foreigners working in Singapore need to be under an Employment Pass, a Special Pass or Work Permit. 

Even foreigners aspiring to be freelancers cannot apply for the Employment Pass unless they can incorporate their own company, set up a local Singapore company, seek partnerships with other organizations or raise a set amount of money or more. 

What is more, foreigners under a Dependent Pass (DP) or Long-Term Visit Pass (LTVP) have to apply for a Work Pass, Special Pass, Employment Pass or Letter of Consent (LOC) from MOM. 

In short, there is no official and legal route for foreigners to be legally certified to freelance in Singapore. 

Should you decide to proceed with the freelance hiring strategy, your business will be missing out on foreign hires in specific niche roles with a shortage of Singaporean/PR talents. 

Read Also: Singapore Budget 2020: 10 Announcements That Will Affect

What Is An ‘In-House Employee’?

An ‘in-house employee’ is one who conducts business activities or operations within a company, either physically or remotely. 

Typically, in-house employees are also full-timers who work an average of 35-40 hours a week, sometimes more.

Another thing to note is that in-house employees are usually paid a monthly salary, regardless of the output they produce. 

Here are some pros and cons of hiring ‘in-house employees’ below. 

Pro #1: You Get To Be The Boss 

A major benefit for your business if you hire an in-house employee is that you can expect full employee commitment to his or her role in your business, with your employee either reporting directly to you or another company staff.

Expect to have regular contact and communications with a full-time, in house staff.

Regular access to your in-house employee in the office will make life a lot easier for your business when it comes to arranging workplace meetings, discussions and even mentoring on-the-job. 

Moreover, as an employer, you can reasonably expect your employee to be available for any work assignments during office hours as stipulated in the work contract. 

Pro #2: Enhanced Opportunities For Team Bonding

A more intangible benefit of hiring an in-house employee on a full-time basis would be that your business can have a better chance of incorporating this new hire into the team as well as into the overall company. 

Your new hire will benefit from your company induction courses (if any) as well as build a stronger rapport with you and the other staff at your company. 

Experts have indicated that increased team rapport can lead to increased employee engagement and motivation, which then leads to increased workplace productivity. Moreover, enhanced employer-employee rapport can boost talent retention strategies in the workplace. 

If you and your in-house employee enjoy a healthy working rapport in addition to other employee benefits, he or she will more likely be loyal to your company should a competitor try to poach your hire. 

Con #1: Increased Hiring Costs 

Similarly, when it comes to hiring in-house staff, one limitation is that your business has to take responsibility for additional hiring costs besides your staff’s basic monthly salary. 

You would have to bear the costs of covering for your staff’s medical insurance coverage, year-end and performance bonuses, as well as any other costs your staff might incur as a result of performing work for your company.

Con #2: Reduced Flexibility

Another drawback when hiring an in-house employee is that your business will find it more difficult to reduce headcount during crunch times as well as during budget downsizes. 

As an employer of an in-house employee, you would have to be very familiar with Singapore’s Employment Act when it comes to hiring and firing your staff, lest you get into trouble with the law. 

Also, asking your staff to go on unpaid leave, as in the case of many businesses during the ongoing COVID-19 outbreak, could be a huge dampener on employee morale and output. 

Adopting An Agile Approach To Hiring 

As an employer, you should be familiar with the main differences between a freelancer and a full-time, in-house employee as well as the various labour laws that concern them. 

Having explored the pros and cons of hiring freelancers as opposed to in-house employees above, the onus is on you as a business owner to adopt an agile approach to hiring based on a thorough assessment of your business needs. 

Utilise a wide-range of recruitment strategies to attract the necessary and suitable talents for your business. 

A combination of both in-house and freelancers as and when your business requires them would be the optimal strategy to move forward.

Read Also: 5 Signs It’s Time You Need To Use A Headhunter For Your Hiring

Power your business with Digital Business Banking Solutions

OCBC Velocity helps you view all your accounts details, comes integrated with E-Invoicing and cash management capabilities as well as access to our award-winning trade financing solutions. Use OCBC Velocity, your business in your hand.

Subscribe To The DollarsAndSense Business Pass

Enjoy what you are reading and want more? Join The DollarsAndSense Business Pass and unlock access to valuable tools, exclusive networking opportunities, and tap into the wisdom of industry experts to fuel your business expansion!

You May Also Like