From Contractor to Full-Time: Screening Considerations When Converting Contingent Workers

In recent years, Australian organisations have increasingly adopted hybrid workforces. This blend of full-time, part-time, contractor, and gig workers has transformed how businesses operate, adapt, and grow. As of 2025, over a third of Australia’s workforce now works in contingent roles, reflecting a shift towards flexible work arrangements designed to quickly respond to changing market demands.

As a result, many businesses are now looking to convert successful contractors into permanent employees. It’s a win-win situation: workers who have already proven their capabilities and gained some institutional knowledge can transition more smoothly into long-term roles, while the company retains top talent and reduces recruitment costs.

But converting a contractor to a full-time employee is not as straightforward as simply updating their contract. Contractors are often hired quickly to fill immediate needs — so they  might not undergo the extensive background checks typically applied to permanent hires. Fail to vet your new full-time hires and you could expose your organization to safety, financial and legal risks you could have avoided with a background check. 

This article covers the essential considerations employers must address when transitioning contractors into permanent positions. 

Contractors typically enter a workplace quickly, brought on to handle immediate projects or urgent workload demands. Because of this speed, screening processes can sometimes be overlooked or abbreviated. 

In contrast, full-time employees typically go through rigorous background checks, including police checks, qualification verifications, employment history confirmations, and reference checks. 

These discrepancies matter because the risks associated with insufficient screening can significantly impact the business. For example, studies have found that up to 42% of Australians admit to lying or exaggerating details on their CVs. When workers have access to sensitive information, financial assets, or key company systems, inadequate screening can expose businesses to theft, fraud, or severe reputational harm. Businesses should treat these conversions with the same vigilance as a new hire, ensuring no overlooked detail leaves them vulnerable.

Consider a scenario where an IT contractor is hired to resolve urgent network issues, but isn’t thoroughly vetted. If that individual has undisclosed criminal history or falsified qualifications, the organisation’s entire IT infrastructure could be put at risk, whether because the employee has bad intent or because they can’t perform the duties of the role as advertised.  . 

Conducting a thorough background screening, including criminal checks and employment/education verification, at the point of hire will help you identify any skills gaps or falsifications — and minimize your risk. 

Australian businesses converting contractors into permanent roles must comply with several key regulations. The moment a contractor becomes an employee, a different set of legal standards applies, including those governed by the Fair Work Act, National Employment Standards, Immigration Act, and Privacy Act.

One of the most significant legal obligations involves verifying the individual’s right to work in Australia. Companies are responsible for confirming that every employee, including transitioning contractors, has appropriate legal work rights. For foreign citizens, they must check the candidate’s right to work via the Visa Entitlement Verification Online (VEVO) system, which provides up-to-date information on an individual’s specific visa, and visa conditions as they relate to ability to work.

Under Australian immigration laws, employers face severe penalties (up to $315,000 per illegal worker) for failing to adequately verify work visas and statuses.

In addition to right-to-work checks, organisations must manage privacy and consent carefully. Any background checks, whether police checks, credit checks, or reference verifications, require explicit consent from the employee under the Australian Privacy Act. 

Employers must handle personal information securely and transparently, communicating clearly with workers about what information is collected, why, and how it will be used.

Anti-discrimination laws also influence how businesses conduct screening processes. Employers must only collect and consider information directly relevant to the job.

For example, spent convictions unrelated to the position or personal details irrelevant to job performance must not influence employment decisions. Screening procedures should be fair, objective, and transparent, ensuring businesses remain compliant with Equal Opportunity laws.

Industry-specific compliance requirements can also be significant. 

For roles within education, healthcare, finance, or aged care, additional mandatory checks such as Working With Children Checks, financial services licensing, or specific health clearances might be required. If a contractor moves into a permanent role in these sectors, organisations must perform any outstanding regulatory checks before employment begins.

When converting a contractor to a full-time employee, businesses should treat the process as rigorously as hiring someone new. This means taking the opportunity to refresh any background checks that might have been previously missed or only partially completed. 

Conducting thorough, updated screenings at this stage helps ensure the individual fully meets all employment standards.

Consider how much time has passed since the contractor joined your organisation. Background checks performed at the outset, if any, might now be outdated. A police check completed two years ago, for instance, won’t reveal recent convictions or offences that occurred after that date. Refreshing these checks gives  your company the most  current, complete information. 

The key types of background checks businesses should refresh or newly complete at this point include:

These refresh checks depend heavily on clear communication.  Businesses should openly inform the transitioning contractor that updated background checks are routine and apply consistently to all full-time hires. 

Clearly articulate this requirement and reassureeach hire  that these checks do not reflect distrust, but that they are  standard practice designed to protect your employees and the company.

Using a professional background screening provider can streamline this process significantly. External screening partners can help maximize  efficiency, accuracy, and compliance, saving  HR departments time from potentially complex and time-consuming verification tasks. 

With professional assistance, results typically arrive promptly, minimising disruption to hiring timelines and avoiding undue delays to onboarding the new full-time employee.

Some roles also benefit from periodic background checks, even after hiring. Positions with ongoing security, financial, or safety responsibilities could justify regular annual screenings. Establishing such practices when transitioning contractors to permanent employment ensures long-term risk mitigation and organisational integrity.

Organisations sometimes adopt different risk tolerances towards contractors compared to permanent employees. Businesses might unintentionally believe contractors present fewer risks simply because their tenure is temporary. However, this assumption overlooks the significant access and responsibilities contractors frequently hold.

Contractors commonly interact with critical business assets, whether these are sensitive data, financial systems, or client information. 

For example, an IT contractor might access highly sensitive digital infrastructure, a finance contractor might handle company accounts, and a project contractor may regularly interact with major clients or partners. The risks posed by inadequate screening in these circumstances can be severe, regardless of employment status.

Adopting consistent screening standards, aligned to role-related risks rather than contract type, reduces potential vulnerabilities. The most effective approach involves setting clear, role-specific risk assessments for background checks, whether the individual is a temporary contractor or a full-time employee. 

Applying the same high standards uniformly ensures robust and continuous organisational security.

The process of converting contractors to full-time roles is the perfect moment to standardise these checks and bring them fully into alignment with your internal screening criteria. Doing so signals a clear commitment to consistency and security across the organisation.

Leadership should communicate to hiring managers, HR teams, and other stakeholders that risk assessment applies equally across all worker types. No employee should bypass necessary vetting processes. This consistent application of standards builds trust within the organisation and strengthens overall security.

A robust internal screening policy is essential to manage risk consistently. Businesses should develop clear guidelines that explicitly outline background screening requirements for both contingent workers and permanent employees. A well-documented, easily accessible policy ensures transparency, fairness, and systematic risk management.

Your internal policy should detail precisely which background checks are mandatory, recommended, or role-specific. For instance, identity and right-to-work verifications could apply universally, while criminal record or financial credit checks might depend on role sensitivity.

A helpful approach is to create a structured, tiered screening checklist as outlined below:

Clearly defining and documenting these requirements in your HR policy removes ambiguity. It ensures each worker (no matter how they join the company) undergoes screening appropriate to their role and risk exposure.

Internal policies should also address re-screening protocols clearly. For example, the policy could explicitly state that any contractor transitioning into permanent employment must complete a full pre-employment screening, regardless of previous checks. 

Additionally, detail whether certain roles require periodic checks, such as annual renewals for working with children or security clearances.

Training HR teams and hiring managers about these policies further promotes ensures compliance and consistency. Employees responsible for onboarding should fully understand the rationale and the practical details involved. Transparent, open communication about background screening helps maintain employee trust, reducing potential misunderstandings or objections.

Detailed documentation of all checks is essential. Record every completed background check in the employee’s personnel file, maintaining secure, up-to-date records for legal compliance and internal auditing purposes. Efficient documentation practices help manage future re-screenings and verifications, enhancing your organisation’s readiness for compliance audits or regulatory inquiries.

When consistently applied and clearly communicated, comprehensive internal screening policies provide organisations with a robust defence against employment-related risks. They reinforce organisational integrity, employee safety, and ongoing compliance, ensuring the your transition from contractor to full-time employee is always handled smoothly, securely, and professionally.