What does temp-to-hire mean?

Temp-to-hire, also known as temp-to-perm or temporary-to-permanent, is a staffing arrangement where a candidate is initially hired on a temporary basis with the possibility of being converted to a permanent employee after a specified period of time. When the employer hires the person onto its own payroll from day one instead, it is a direct placement.

What a temp-to-hire arrangement costs against direct recruiting is worked through on our staffing agency vs. in-house recruiting page.

What is temp staffing?

Temporary staffing, often referred to as temp staffing, is a hiring arrangement where organizations enlist the services of temporary workers to fill short-term staffing needs. These temporary workers, also known as temps or temporary employees, are employed by a staffing agency and assigned to work at client companies for a specified period of time or for the duration of a specific project.

Here’s how temp staffing typically works:

Client Requirements: An organization identifies a temporary staffing need due to factors such as seasonal fluctuations, special projects, employee absences, or short-term workload spikes.

Engagement with Staffing Agency: The organization engages a staffing agency to fulfill their temporary staffing requirements. The staffing agency recruits, screens, and selects candidates to fill the temporary positions.

Candidate Placement: The staffing agency matches suitable candidates to the client’s staffing needs based on factors such as skills, experience, availability, and location. Once selected, the candidates become employees of the staffing agency. That makes the agency the employer of record; if you have already found the person and only need someone to employ them, employer of record cost compares the two ways that service is priced.

Temporary Assignment: The temporary workers are assigned to work at the client company for the specified period or project duration. They perform tasks and responsibilities as directed by the client, under the supervision of client management.

Payroll and Benefits: Temporary workers remain employees of the staffing agency, which is responsible for their payroll, benefits, taxes, and other employment-related matters. The client company typically pays the staffing agency an agreed-upon rate for the temporary workers’ services, covering wages and agency fees.

End of Assignment: Once the temporary assignment is completed or the designated period expires, the temporary workers’ engagement with the client company ends. Depending on the client’s needs and the worker’s performance, the temporary assignment may be extended, converted to a permanent position, or terminated.

Temp-to-hire is usually bought as insurance against a bad hire. Our guide to the cost of a bad hire sets out what that insurance is actually worth, using your own numbers rather than a borrowed percentage.

Temp-to-hire definition, in one sentence

Temp-to-hire is a hiring arrangement in which a worker starts in a job as a temporary employee, usually on a staffing agency’s payroll, and the employer can offer that person a permanent position on its own payroll at the end of an agreed trial period. The three parts that make something temp-to-hire rather than plain temp work are the intent to convert, a defined trial period, and a change of employer when the conversion happens.

What is a temp-to-hire position?

A temp-to-hire position is an opening that the employer intends to fill permanently but chooses to fill through a temporary assignment first. For the worker, the job looks like any temp assignment at the start: the staffing agency recruits and pays them, and the client company directs the work. What is different is the agreement behind it. The client and the agency agree up front on how long the trial runs, what the client pays per hour during it, and what (if anything) the client owes the agency when it hires the person directly.

Those terms are set in each agency’s contract, and conversion fees and minimum trial lengths vary from agency to agency, so read that clause before you start rather than when you want to make the offer. How the agency’s bill rate is built is on our staffing agency markup page, and the full comparison with hiring someone onto your payroll from day one is on direct hire vs temp-to-hire.

For the candidate, a temp-to-hire position is a job with an uncertain second half. In the Bureau of Labor Statistics survey of contingent workers for July 2023, “44.8 percent of contingent workers would have preferred a permanent job as their sole or main job” (BLS), which is worth knowing if you are competing for the same people as employers who hire directly.

Temporary staff definition

Temporary staff are workers hired for a limited period or a specific project rather than for an open-ended job. They are usually employed by a staffing agency and assigned to a client, though some employers hire temporary staff directly onto their own payroll for seasonal peaks. Temporary staff are one part of what is called the contingent workforce, alongside on-call workers and independent contractors. Temp-to-hire workers are temporary staff until the day they are converted.

Permanent staff: definition and what permanent staffing means

Permanent staff are employees hired directly onto the employer’s payroll for an ongoing job with no set end date. In the US, “permanent” does not mean guaranteed: most employment is at will, so a permanent employee can still leave or be let go, but the job itself is not built to end. The employer, not an agency, withholds taxes, pays wages and provides whatever benefits it offers.

Permanent staffing, in agency language, means a recruiting service in which the agency finds a candidate the client hires directly, usually for a one-time placement fee, sometimes called direct placement or direct hire. Temp-to-hire sits between the two: temporary staffing first, permanent employment after conversion.

Frequently asked questions

What is the temp-to-hire definition?

Temp-to-hire means a worker starts as a temporary employee, usually employed by a staffing agency, with the stated intent that the client company can hire them permanently after a trial period. On conversion, the worker moves from the agency’s payroll to the employer’s.

What is a temp-to-hire position?

A job the employer intends to fill permanently but fills with a temporary worker first, so both sides can try the fit before a direct hire. The staffing agency employs and pays the worker during the trial, and the contract sets the trial length and any conversion fee.

What is the definition of temporary staff?

Temporary staff are workers hired for a limited period or a specific project rather than an open-ended job. Most are employed by a staffing agency and assigned to a client company, which directs their day-to-day work.

What does permanent staff mean?

Permanent staff are employees on the employer’s own payroll in an ongoing job with no planned end date. The employer handles their pay, tax withholding and benefits directly. In at-will employment, permanent does not mean guaranteed, only that the job is not designed to end.

Do temporary staff get holiday pay?

Not by federal requirement. The U.S. Department of Labor states that the Fair Labor Standards Act “does not require payment for time not worked, such as vacations or holidays” (dol.gov). Whether a temp is paid for a holiday depends on the staffing agency’s own policy and the worker’s agreement with it, since the agency is the employer. This is a summary, not legal advice.