The Benefits of Contract-to-Direct Hire Conversions for Recruiters

  By Debbie Fledderjohann  |    Monday September 12, 2017

Category: Expert Advice, Recruiting, Technology


As a recruiter, you’re always looking for new ways to work with clients and make placements.

Contract-to-direct hire agreements allow you to make two placements for one job order. With contract-to-direct hire conversions, you reap twice the rewards from the same opportunity.


What is a contract-to-direct hire conversion?


In recruiting, there are different types of workers that contract staffers can place. Three common kinds of employees include temporary workers, direct hires, and contract-to-direct hires.

Temporary workers fulfill your clients’ short-term needs. They are hired for reasons such as seasonal changes, project work, or a full-time employee’s leave of absence. Temporary employees work for a predetermined period as stated in a contract.

Direct hires work on a long-term basis. You recruit direct hires for full-time positions. You find the right candidate, and the client hires them.

A contract-to-direct hire employee is a “middle ground” between temporary workers and direct hires. Sometimes, companies that hire a contract worker want to bring them on full-time. This is known as a contract-to-direct hire (also referred to as temp-to-hire or contract-to-permanent) conversion.

First, the worker is placed as a contractor and usually makes an hourly rate. After a specified time period (usually three, six, or 12 months), the client evaluates the worker and decides if they will offer a long-term position. The employee can accept or deny the offer.

If the employee accepts, they typically need a contract-to-direct hire salary conversion to go from hourly to salary. You are no longer connected to the employee after they are hired full time.

You place contract-to-direct hire workers with the intention of the client hiring them permanently. Placing a contract-to-direct employee does not automatically mean they will convert to full-time. The client is not obligated to hire the employee after the contract is up. And if the client extends a long-term offer, the worker is not obligated to accept.

Some contract-to-direct hire conversions are planned. Other times, a client decides they want to hire a temporary employee long term. Contract workers can convert to full-time employees before the time frame is up. Contracts can also be extended if the client is unsure about hiring the employee for full-time work.

Since a business can offer any temporary worker a full-time position, use a temp-to-direct hire contract with every client. Establish a contract-to-direct hire procedure before the employee begins work.

The temp-to-direct hire contract must include the contract period, as well as employee evaluation methods. These conversion fees also need to be included in the contract. Make sure your clients understand the contract-to-direct agreement before onboarding an employee.


Benefits of contract-to-direct hire workers


Contract-to-direct positions offer benefits to recruiters, clients, and candidates. Take a look at the following advantages:

Recruiter benefit: Placing contract-to-direct employees opens the door to future opportunities. You make an initial placement with the client. That’s a huge positive, not just because of the money earned from the placement, but also because of the potential it creates for future business.

Recruiter benefit: Contract-to-direct placements can be more profitable. You typically get paid twice for the same placement. You’re compensated for every hour the contractor works during the contract period. Then you’re paid a conversion fee once the contractor becomes a direct hire. The only thing better than getting paid for a placement is getting paid twice for the same placement!

Client benefit: Temp-to-direct placements offer companies the ultimate flexibility. Hiring authorities can see how the contractor will work before extending an offer of full-time employment. Those same officials are likely to remember recruiters who provided them with such flexibility.

Candidate benefit: Temp-to-direct hire arrangements also offer flexibility to candidates. The employee gets to try out the job and company culture before committing to full-time work.

Temp-to-direct placements are becoming more commonplace. You should regularly look for such opportunities with your clients.

Top Echelon Contracting recently rolled out a new back office service called TEC Express. This new Express model is designed for contractors who are “office professionals” and would qualify for the Workers Compensation Code 8810 (or equivalent). The good news is that since the Express model is targeting only office professionals, TEC can pass more profit along to the recruiter!

And there’s even more good news: you can now run an online quote for both Express and TEC Premium, the back office service level that Top Echelon has offered for the past 25 years. All you have to do is visit the contract staffing portion of the Top Echelon website (

To find out more about how Top Echelon can help you make contract placements, call (330) 454-3508 and press “1” to speak with a contract staffing specialist.

The Benefits of Contract-to-Direct Hire Conversions for Recruiters


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