Glossary · Definition

What Is Contract-to-Hire? How Conversion Works

Contract-to-hire (also called temp-to-perm) is an engagement in which a worker starts as a contractor on the staffing firm’s payroll and the client may convert them to a permanent employee after an agreed period. Both sides test fit on the real job first. With ApTask the conversion fee steps down with tenure and reaches zero after six months.

Last updated · By ApTask Editorial Team

Definition

Contract-to-hire(Temp-to-perm · CTH) — Contract-to-hire is an engagement in which a worker starts as a contractor on the staffing firm’s payroll and the client may convert them to a permanent employee after an agreed period.

It lets both sides test fit on the real job before committing. See contract vs contract-to-hire vs direct hire.

How does contract-to-hire work?

The staffing firm recruits and employs the contractor, typically W-2 with benefits, and bills the client an hourly rate during the trial. If the client wants to hire, it pays the conversion fee set in the agreement and the worker moves onto its payroll. If not, the contract simply ends. ApTask shortlists contract-to-hire roles within 48 hours.

  1. Agree the terms up front. Put the trial length, the conversion fee schedule and the salary or pay range the worker would move to in the client agreement before the contractor starts.
  2. Run the trial on ApTask’s payroll. ApTask recruits and employs the contractor, typically W-2 with benefits, or 1099 / corp-to-corp where the role and worker structure support it, and bills an hourly rate.
  3. Decide. Release the candidate at any point in the evaluation period with no permanent commitment, or move to conversion when the fit is proven.
  4. Convert. Pay the conversion fee in force for that month, which steps down with tenure and reaches zero after six months of continuous engagement, and onboard the worker onto your payroll.

How does a contract-to-hire conversion fee work?

A conversion fee is what the client pays to hire the contractor onto its own payroll before the agreed period ends. It commonly steps down the longer the contractor has worked with the client. ApTask’s fee reaches zero after six months of continuous engagement, and the same declining ladder applies to pass-through workers you sourced yourself.

Converting after six months carries no conversion fee, but the trial is not free: the hourly bill rate includes ApTask’s margin for every hour worked. The cost to weigh against a direct hire’s one-time fee is that margin over the trial plus any conversion fee — see is contract-to-hire more expensive than direct hire?

Contract-to-hire, contract or direct hire: which fits?

Choose contract when the need ends on a date, contract-to-hire when the need is likely permanent but fit is uncertain, and direct hire when the seat is clearly permanent and you want the person on your payroll immediately. To compare costs, weigh the margin inside the trial’s hourly bill rate plus any conversion fee against a direct-hire fee.

Contract, contract-to-hire and direct hire under ApTask’s published terms
ModelWho employs the workerFeeApTask SLA and guarantee
ContractApTask (W-2) or the contractor’s entity (1099 / C2C)Hourly bill rateShortlist in 48 hours; two-week no-fee replacement window
Contract-to-hireApTask (W-2) or the contractor’s entity (1099 / C2C) until conversion, then youHourly bill rate, then a conversion fee that reaches zero after six monthsShortlist in 48 hours; release at any point in the evaluation period
Direct hireYou, from day oneA one-time fee, a percentage of first-year base salaryShortlist in 5 business days; 90-day no-fee replacement guarantee

The full comparison is in contract vs contract-to-hire vs direct hire.

Do contract-to-hire workers get benefits?

On ApTask’s payroll, yes. Most senior contractors choose W-2 employment with full benefits; 1099 and corp-to-corp are available where the role and worker structure support them. Workers on ApTask’s payroll are eligible for medical, dental, vision, 401(k) and state-mandated leave from the earliest date plan terms allow.

Benefits, eligibility and coverage are subject to plan terms and applicable law — see Strategic Workforce Staffing and Workforce Transition.

Frequently asked questions

Can I convert a contractor before six months?

Yes. The conversion fee in force for that month applies; it steps down the longer the contractor has worked with you and reaches zero after six months of continuous engagement.

Who is the employer during a contract-to-hire trial?

ApTask, for W-2 contractors, or the contractor’s own entity for 1099 and corp-to-corp arrangements. The worker joins your payroll only at conversion.

Can I end a contract-to-hire without hiring?

Yes. You can release the candidate at any point in the evaluation period with no permanent commitment.

Does contract-to-hire spend count toward supplier-diversity targets?

Hours billed through ApTask count as Tier-1 MBE spend on your diversity reporting until the worker converts onto your payroll.

Need this in practice, not just in theory?

Tell us the role, the program and the engagement model. A recruiter will map it to the right ApTask service and walk you through the terms.