As an employer, you might encounter a situation where you have a gap in your team, and you need a certain skill set. The next question you will ask yourself is: Do I recruit for a Contract or Permanent position? The best answer might even be Contract to Permanent. It is a critical decision for the business to ensure that both themselves and the prospective employee are aligned in their approach and share common goals.
Contracting: What It Is and the Benefits
Contractors (also known as Temporary, Freelance or Interim workers) often are recruited for project-based or time-sensitive roles that are carried out by professionals for a fixed period of time. They are typically brought in because they have the specialist skills needed for a project, to cover seasonal periods and current staff leave, or transfer knowledge to a team. It can be very useful in terms of handling periods of intense work volume or key projects that are only expected to last for a specific time period. Contracting is a great option to have in the current climate and the employer can enjoy the flexibility and the contractor see several benefits from their side.
Contract staff only get paid for the hours or days they work, this is done on an online timesheet process where the contractor fills in their week’s work and it gets sent to the manager for approval. Once approved we pay the contractor and invoice the client the agreed day / hourly rate. It’s that simple!
Hiring For a Permanent Role
Permanent, or Full-Time Equivalent (FTE), is where you work for an organisation as a permanent member of staff (or are contracted for a fixed period of time on their payroll). You will be subject to National Insurance and income tax costs. Other benefits payable include holiday, sick and bank holiday pay. Additional costs may have to be factored in like bonuses, pensions or healthcare plans. These benefits are not available for contractors. Permanent employment can be preferred where there is a need to build a strong team identity or handle sensitive information.
With certain positions, there are typically no other options but to hire permanent staff, this could be as there is a lack of immediately available applicants to look at the Contract to Perm route as the notion could be deemed “the good ones are in jobs” which in today’s world, isn’t always the case.
Filling the Skills Gaps with Contract to Permanent Roles
However, with upcoming IR35 regulations coming back into force in April 2021, seasoned contractors are looking to go permanent, but are often overlooked as they can be seen to have had “too many jobs to be loyal to us”. This isn’t always the case – you are engaging with a highly skilled individual that may have earned high day rates in the past, but their personal situation may have changed (usually family reasons) and they are seeking a full-time role.
Recently, we are seeing more clients requesting to hire permanent staff and opting to run the probation period via the contract method (Contract to Perm). Around half of contractors see flexible working it as a stepping stone to a full-time role. If all goes well during the probation period (typically 6 months) and both parties are happy, the contractor transfer’s to a permanent member of staff.
Statistically, it is proven that most staff that start on a contract basis and then transfer to a full-time position are more likely to work for that client for a longer period of time than those who are permanent from the outset (need source). This makes sense as a contractor that has transferred to a full-time role is likely to have had a chance to ‘bed into the role’ and have a better understanding of the company and its culture. Hiring a permanent employee from the start means they are assessing if this opportunity is right for them while they are on-site (this is also important for the client).
We can, in reason, draft a contract to whatever length a client feels fit, we can suggest flexible or staggered notice periods throughout the assignment. However, if you can’t afford to lose a contractor for a critical project, we can suggest a longer notice period on both sides of the assignment. It is completely flexible!
Marcus Donald People have the highest available Professional & Public Indemnity and Employers Liability Insurance for additional protection for added extra peace of mind.