Staffing agency: working with temp workers or freelancers?

As a staffing agency, you can work with freelancers or with temporary workers. This choice has a significant impact on your operation and is therefore important. Some agencies use a mix, and increasingly, temp agencies are also starting to use freelancers in our experience. It's all possible, but be aware of the consequences. We outline a few points of consideration for you.

First, some figures

The number of freelancers is skyrocketing. In 2018, there was a whopping 15% increase in freelancers compared to 2017. On January 1, 2019, there were 1.2 million self-employed individuals (ZZP’ers) working in the Netherlands. However, the number of temporary workers remains relatively stable. The share of temporary workers in the working population in the Netherlands was 3.1% in 2007 and 3.3% in 2017.

What's what?

What exactly is a temporary worker and what is a freelancer? A temporary worker is someone who is employed by a staffing agency. A freelancer is a self-employed entrepreneur without personnel. This means that you handle things differently in both cases, such as social contributions, pensions, and insurance. In the case of a temporary worker, the staffing agency ensures that premiums for income tax, insurance, and pension are paid. Freelancers are responsible for these themselves.

Different types of people

A temporary worker is not necessarily better than a freelancer, or vice versa. However, it's good to consider that you're dealing with different types of people. A freelancer is an entrepreneur, often with the accompanying entrepreneurial spirit. Freedom is highly valued, as is variety. Freelancers accept the risks that come with this lifestyle. A temporary worker, on the other hand, tends to prefer security and appreciates it when you handle things for them.

Different marketing and communication

These different types of people also require a different approach to communication and marketing. With one, you emphasise security, with the other, freedom.

The size of your pool

The difference in types of individuals can also affect your ability to deliver. Freelancers highly value their freedom, so you can't as easily dictate when and where they should work. This means that, to meet your requests, you need a larger pool of freelancers compared to what's needed with temporary workers. With temporary workers, you can often make more concrete agreements about the minimum number of hours they work.

Agreement or no agreement

A temporary worker is often seen as an in-house employee. Although it also happens that they work for multiple agencies, they are employed by you. Therefore, there's always some form of an employment contract. Freelancers must meet the requirements set by the Tax Authorities for entrepreneurship. This includes having multiple clients. Therefore, consider your freelancers as clients too. They can switch to another client, and there's not necessarily an agreement in place.

One point of consideration when working with freelancers is the DBA Act, a law aimed at preventing false self-employment among self-employed individuals. Keep in mind that as the client, you may also be held responsible for the financial consequences of this false self-employment.

Payment and invoicing

Freelancers are not on your payroll, temporary workers are. With temporary workers, you work with a conversion factor. This consists of labor costs, administrative handling costs – such as sickness absence and holiday pay – and a margin for recruitment and selection. In the freelance model, individuals are not on your payroll, but you charge a fee or commission for the mediation. In many cases, you charge a fee to both your clients and your freelancers. You provide value to both, so it's justified. Then there's the choice of whether you let the freelancer invoice themselves or if you do it on their behalf.

No better or worse, just different

There's no right or wrong, bad or better. With temporary workers, you enter into a more substantial agreement. The type of employment contract depends on how long the temporary worker has been employed, but generally, you enter into longer commitments. In the case of freelancers, both parties can say tomorrow: I quit. It's a risk, but also a business model with few assets.

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What do you choose? And how's that working out for you? Let us know in the comments!

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