The Ultimate Guide to Contingent Workforce Jargon

Jargon & Abbreviations

Many industries have their own jargon based vocabularies and recruitment is no exception. There is overall particularly unique jargon within the contingent workforce area of recruitment which can present a problem when looking to scale those efforts.

Straightaway, there are many TLAs (three letter abbreviations), industry terms and jargon which even to the initiated can seem pretty daunting and confusing. What’s more vexing is there’s no guarantee that experienced contingent recruitment professionals will be using the correct words or abbreviation in the correct context.

We’re here to help! Our Talent Works’ Contingent Workforce Solutions program managers have a crash-course in jargon as part of their onboarding so we thought we’d take their experience and translate to an understandable plain English dictionary of contingent workforce terms.

The Contingent Workforce Dictionary

In a loosely easy-to-understand order, here are the terms and abbreviations with their plain English explanations.

  1. Contingent Worker
    Any worker who is not on your company’s PAYE payroll in the UK nor your company’s W-2 payroll in the US. However, they may be on payroll for another company.
  2. Contingent Workforce
    The total part of your company’s workforce that isn’t on your company’s payroll. They may be called different things or have different contractual arrangements for how they are paid. Some of the popular types of, and terms for contingent workers are:
    • Contract Workers or Freelancers
      These workers are independent contractors (1099s in the US) and may be independently employed with a duration-based contract e.g. 3 months. Local regulations such as IR35 in the UK mean these workers in time may be considered de-facto permanent employees with all the compliance (and payroll taxes) that brings.
    • Temporary Workers (Temps) or Agency Staff
      These workers are on PAYE but through a 3rd party company that has been contracted by your company for services, or through an employment agency. The workers may be interchangeable and the contracted company is responsible for supplying workers to an agreed resource level.
    • Statement of Work
      The contract between your company and the company providing the workers contains a section, ‘statement of work’, that defines the duration the (typically highly skilled) workers are needed and / or the deliverables they are responsible for fulfilling. Your company pays the provider directly.
    • Gig Workers
      This type of worker has risen in number in the last few years. They are self-employed and deliver their services through a 3rd party company. In the UK and various US jurisdictions they have some statutory worker rights.
  3. Contingent Workforce Solutions Provider
    Is a specialist and an expert in designing complex Contingent Workforce solutions necessary to deliver the cost savings, compliance and supply chain management the employer needs.
    An MSP program is likely part of the overall contingent solution but depends on the size of end-employer and the general context.
  4. Misclassified Worker
    The type, the goals and the period of time (if defined) to deliver the work by a contingent worker should dictate the contractual arrangement between your company and the worker. If the contractual arrangement doesn’t match what’s required by your company’s policy, or more importantly, by local law, these workers are considered misclassified.
  5. Umbrella Company
    The IR35 regulations in the UK gave rise to umbrella companies which stand as the PAYE payroll entity for a contractor. In turn the umbrella company sends invoices to your company for the time worked by the contractor. However, umbrella companies are not created equally, most operate in a compliant way, but some have been used as tax avoidance mechanisms. Your company – the end employer – is legally liable if an umbrella company is somehow non-compliant with the law local to where the worker provided their services. Furthermore, what complicates matters is that your company may contract with an agency who in turn contracts with an umbrella company that pays the end worker. These layers may obscure the liability that cascades down to the end employer.
  6. MSP
    MSP can be used to refer to a Managed Service Provider. MSP can also be the abbreviation for a Managed Service Program. A Managed Service Provider runs a Managed Service Program.
  7. Managed Service Provider (MSP)
    Typically, this will be using a Vendor Management System (VMS, see below) to track all the necessary contract admin, invoicing, rates of pay, taxation and compliance between contingent workers, hiring managers and contingent talent suppliers.
  8. Managed Service Program (also MSP)
    Overall, there are different types of Managed Service Program and a Managed Service Provider will work closely with their client to ensure that they deliver the right type of solution. Here is a really quick guide to the main types:
    • Master Vendor: your Managed Service Provider takes responsibility for all of your contingent recruitment, acting as both preferred vendor and also managing the supply of talent through other vendors.
    • Vendor Neutral: your Managed Service Provider will partner with you to implement a Vendor Management System, but the responsibility for managing vendors and recruiting talent remains with the employer.
    • Hybrid Managed Service Program: a hybrid solution will normally involve the Managed Service Provider taking responsibility for the Vendor Management System and assuming Master Vendor status in selected geographies or areas of recruitment.
  9. Vendor Management System (VMS)
    A vendor management system is usually a web-based platform that supports the procurement of contract or contingent labour, and normally includes features that harmonise invoicing, standardise contracts, ensure compliance and bring candidates through a consistent onboarding process.

We hope this article helps demystify and disambiguate the terms around Contingent Worker programs.
If we have missed any terms out, drop us a note and we’ll add it, with an appropriate definition, to this article.