Part-Time vs. Full-Time Employee: The Pros and Cons
Erez Greenberg| May 04, 2023
When hiring, one of the first questions you may ask yourself is what is the scope of work and how many hours will it take to meet the team’s goals. Your answer to this question will impact whether your new hire will become a full or part-time employee.
As both types of workers come with their benefits and drawbacks, it’s important to understand the difference between the two, especially as they may have different financial and logistical outcomes.
Check out our guide to learn more about part-time vs full-time employment and how each will effect your payroll, business classifications, and daily operations. First though, let’s clarify what each label means.
The differences between part-time and full-time employees
From schedules, payments, and benefits, here’s a breakdown of each employee.
|Schedule||Working a full day (as defined by the company) and complete work week.||Shorter hours (often split into hourly shifts) and fewer days a week.|
|Payments||Full-time workers are typically on a salary and get a paycheck at least once at month or sometimes every two weeks.||Employees earn an hourly wage and payments must be made at least once a month.|
|Benefits||Companies usually provide benefits such as healthcare, PTO, comped meals, retirement plans, and more.||Less common for employers to give part-time workers benefits or full benefits.|
|Need to withhold payroll taxes?||Yes||Yes|
The above chart is a broader look into the differences between full and part-time employees. Let’s take a closer look into part-time workers and what they’ll mean for your company.
Part-time employees are workers who work fewer than full-time employees. Some employers schedule part-time employers for no more than 30 hours per week.
Part-time employees defined
Employers hiring a part-time worker are able to work with a more flexible schedule and cover your business’s needs at all times. You can also decide which benefits you’ll grant part-time employees. Lastly, it’s important to consider how hiring part-time employees will affect your payroll and overtime payments. Let’s go into each one a bit more in depth.
Your schedule for part-time workers will be flexible. They may work Monday through Wednesday from 8:00 AM to 12:00 AM and Saturday and Sunday from 9:00 AM to 4:00 PM. One week, you may schedule an employee to work five six-hour days and the next week, three eight-hour days.
You can even rotate employees to cover late-night and weekend shifts, schedule them as needed during busier times of the year (such as the holiday season), or cover for agents out sick or OOO.
In the U.S., no matter the employee’s status, you’ll need to cover benefits such as healthcare or health insurance, sick leave, annual leave, unemployment, maternity and paternity leave, retirement plans, and more.
But for those nonmandatory benefits, the employer can decide whether or not to give them to part-time employees.
Employers outside of the U.S. have different policies when it comes to benefits for those working fewer hours. Let’s take a look at a few countries to see how part-time employment benefits stack up:
- Australia – Part-time employees get the same minimum entitlements as full-time employees (paid leave, annual leave, sick/carer’s leave, family and domestic violence leave. etc) on a proportional basis.
- Canada – Workers working fewer than a third of the normal full-time workweek may affect eligibility for disability insurance, Public Service Dental Care Plan and Public Service Superannuation Plan.
- European Union – Businesses must offer part‑time staff the same employment conditions as full-time workers, including pay, leave, notice periods, and other rights and benefits.
- United Kingdom – Part-time workers get the same benefits as full-time employees, including: sick pay, maternity, paternity and adoption leave and pay, pension opportunities and benefits, holidays, etc.
- United States – Some benefits may depend on individual state laws, but on a federal level (depending on how many hours the employee has worked for the company), part-time workers may be legally entitled to: workers’ compensation, retirement savings plans, overtime pay, health insurance, and family and medical leave.
Calculating payroll payments will depend on your business and your local laws, but here are some general steps for part-time employees:
- Determine the employee’s gross pay – the pay they receive without taxes and benefits
- Calculate deductions – add up any taxes and benefits
- Subtract deductions from gross pay – get their net wages by subtracting deductions from their gross pay
- Calculate the payroll tax liabilities – factor this in to your payroll entry
- Calculate the total payroll cost – These are all the costs an employer has accumulated to compensate its employees, such as employee compensation and the employer-paid portion of payroll taxes.
The Fair Labor Standards Act (FLSA) doesn’t define full-time employment or part-time employment, instead, leaving the matter up to the employer. This makes it harder to determine who is exempt or non exempt from receiving overtime.
According to FLSA, non-exempt employees are entitled to overtime pay, while exempt employees are not.
That means as an employer, you would need to pay non-exempt employees who earn an hourly wage (often part-time workers) overtime for additional hours worked.
Exempt workers (or those who receive a salary) do not typically qualify for overtime.
Employing part-time employees means you may not need to cover additional benefits (those not required by law), can get creative with scheduling to fit your business, and have less money come out of your business’s pocket.
Pros aside, there’s also a cost to employing part-time workers, just as there is hiring full-time employees.
Challenges of employing part-time and full-time employees
Just as we mentioned above, each type of employee comes with their own challenges. Knowing what may lie ahead—from scheduling difficulties to paying more out of pocket—can help you make the right decision for your business. Let’s explore three of the most common roadblocks for part-time and full-time employees.
- Difficulty in scheduling – When every part-time employee has their own schedule away from the office, it can be tricky combining everyone’s availability into one organized schedule. Some employees may only be available Monday-Wednesdays, while others can only work Tuesdays and Saturdays.
- Higher turnover rate for part-time employees – Part-time employees may feel less loyal towards your company and may leave after the summer or when they graduate college. Higher turnover rates may make your company operations less stable because you’ll need to constantly find the resources to fill any gaps.
- Higher cost for benefits for full-time employees – Hiring full-time employees not only means covering the basic mandatory benefits such as Medicare and Social Security, but additional benefits to retain employees as well, such as gym memberships or stipends, dental care, or mental health support.
Of course the above are just a few considerations when making hiring decisions. Before you hire, you’ll also need to have a good grasp on your business category.
Differences in business classifications (SE vs ALEs)
Understanding the various employment classifications is important as it impacts your company’s benefits, responsibilities, and compliance.
The full-time or part-time status of the workforce can determine a company’s categorization. In the U.S., businesses fall into either Small Employer (SE) or Applicable Large Employer (ALE) categories.
ALEs are required to offer minimum essential coverage health insurance to their full-time employees under the Under the Affordable Care Act’s employer-shared responsibility provisions, also known as the “employer mandate.”
ALEs that don’t offer insurance must make employee shared responsibility payments (a kind of tax penalty) to the IRS. ALEs also have reporting responsibilities regarding health insurance coverage offered to employees. These responsibilities require employers to report information about the type and period of coverage to the IRS and receiving employees.
SEs that provide minimum essential coverage must also report coverage information to the IRS and employees. Though, it’s important to note that SEs can choose not to provide coverage altogether.
Stay compliant no matter your employees’ statuses
When considering full-time or part-time hires, you may want to factor in not only your budget, but any potential scheduling conflicts, turn over rates, and classifications that help you remain compliant.
No matter which option you choose or if you opt for a combination of the two, there’s a lot to familiarize yourself with when it comes to compliancy.
A workforce management solution can help you run payroll for all employees, ensure compliance by adhering to the relevant country’s laws, and give you one organized global payroll payments to manage payroll, payments, compliance, and HR activities.
Find out how you can easily hire and manage your team with our global payroll payments. Schedule a demo.
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