Offered a fixed-term contract instead of a permanent job – should you take offence?: Opinion

Picture this: You are an employee dissatisfied with your current role, and have been searching for a new job for a while. Finally, after sending out your resume multiple times and after several interviews, you receive a job offer. The role is interesting, and the pay is fair. But the catch? It’s a contract role, not permanent.

Employers are increasingly offering fixed-term contracts instead of permanent roles.

In 2024, the proportion of fixed-term contract employees in the resident workforce rose to 7.3 per cent from 6.6 per cent the previous year, according to a Ministry of Manpower’s Labour Force report.

Highlighting this shift, The Business Times in March reported that contract hiring is more common in sectors with project-based work or those undergoing digital transformation, and for roles in software development, data analysis and engineering.

Amid challenging and uncertain economic conditions, it is understandable that many employers are reluctant to maintain a workforce that ends up being too large or inflexible.

Offering contract roles creates more flexibility to scale their workforce in response to fluctuating demand and economic uncertainty.

Even the public sector – often perceived as a bastion of job security – employs contract workers. Anecdotally, the trend appears to be for some public sector workers to be initially offered contract roles, before subsequently being offered permanent roles.

This approach is understandable from the taxpayers’ point of view. Given the widely held perception that permanent public sector jobs offer an “iron rice bowl”, such jobs should not be offered so easily, or to all and sundry who have yet to prove themselves, especially if it might be the case that it is difficult to let go of underperforming permanent public service workers.

Given these circumstances, contract roles may no longer be a stopgap but a new normal that both employers and job seekers must increasingly reckon with.

The downsides of contract work

As a consequence, a growing number of employees are now contract workers.

And let’s be frank: it’s not great to be a contract worker. There’s the uncertainty of whether one will still have a job at the end of the contract period, since it’s up to the employer to offer a new or renewed contract – or not.

There’s the lack of ongoing job security, since the perception is that, if jobs need to be cut, contract and non-permanent workers will be first on the chopping block.

And there are often reduced employment benefits, since some companies differentiate between contract and permanent workers on this front.

Workers are right to be concerned about the downsides of contract roles. But the unfortunate reality is that, in an employers’ market, workers may have no choice but to accept contract roles, if those are all that are on offer and the alternative is joblessness.

In this light, contract workers can instead consider how to reframe their perspectives and make the best of their circumstances.

Some positives about the situation

Contract workers can take some comfort in the fact that, in terms of strict legal protection, they may not be significantly worse off than permanent workers.

For example, even where there has been no misconduct or poor performance, employers are legally entitled to terminate a worker’s employment with notice – regardless of whether he or she is a permanent or contract worker.

To give another example, even permanent workers have no legal entitlement to retrenchment benefits (although many employers do pay out such benefits for practical or commercial reasons).

Both permanent and contract workers also enjoy the same childcare leave entitlement.

True, contract workers may feel demoralised because they have yet to be offered permanent roles. However, being offered a contract role is not a slight on their competence or employability.

It is now common for employers to offer new joiners only contract roles, and offer permanent roles only months or even years down the road. This is especially so for popular employers who have their choice of candidates.

So, being offered a contract role should not be seen as an insult.

For those who want a permanent role in that particular organisation or industry, surviving a stint as a contract worker may simply be the price to be paid, especially if that is all that the organisation is prepared to offer, or if this is the norm in that industry.

In any case, fixating on the differences between permanent and contract roles is a waste of energy and headspace.

Worrying about something we have no control over is unlikely to change the outcome. Instead, workers would do better to focus on improving themselves and their prospects.

If workers are able to, over time, add more value to their organisations to the point where they become indispensable, they will enjoy significantly more job security, bargaining power and even the freedom to switch employers – regardless of whether they are contract or permanent workers.

After all, employers owe no obligation to offer permanent roles. It is up to individual workers to demonstrate why it is in their employers’ interests to offer them permanent roles.

A worker who fails to display his worth cannot be surprised if his employer chooses to offer him only a contract role.

As for those who do the hiring, some may think that, in an employers’ market, they have the privilege of stringing workers along with a series of contract roles. They might constantly dangle permanent roles just out of reach, hinting without quite promising that the contract employee just needs to hang in one more year.

But they do so at their own peril. If this approach spurs their workers to improve themselves and increase their options, employers should not be surprised if, by the time they offer a permanent role, the worker has outgrown the organisation and is no longer interested in staying on.

This boils down to employers treating workers fairly, and not just meeting the bare minimum standard to keep them in place for just one more year.

And if employers choose to take for granted that their employees will stay regardless of their employment terms, they do so at their own peril: A recent study by professional services firm Aon found that 67 per cent of Singapore employees are considering changing jobs within the next year, and 21 per cent feel undervalued.

So for workers: You have more power than you think. And for employers: Your move.

Khelvin Xu is a director specialising in disputes at boutique firm Covenant Chambers LLC.

Source: The Straits Times © SPH Media Limited. Permission required for reproduction.

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