HR & Management

5 tips for hiring and handling contractors and freelancers

3 min read

14 November 2013

Career contractors and freelancers have the potential to bring huge benefits to a business. As highly-skilled professionals they can solve problems, promote original thinking, plug knowledge and skills gaps and deliver vital projects. However, it’s critical that you exercise caution and carry out due diligence.

Failure to do so could result in confusion, disputes and legal wrangling further down the line. Here are five tips to ensure things run smoothly.

1. Check the contractor’s legal status

All UK-based businesses have a duty to ensure that members of their workforce are legally entitled to work in the country. This includes contractors, freelancers and other flexible workers whose services the business utilises. The recently-published Immigration Bill, due to come into force in April 2014, will introduce tougher financial penalties for employers who fail to carry out right-to-work checks. Some recruitment firms and outsourced employment providers, such as umbrella companies, carry out such checks on behalf of their clients. 

2. Research recruitment agencies

It pays to do your homework if you’re looking to bring a recruitment agency on board. In an industry that’s fiercely competitive, there is an opportunity to shop around for the best deal. Do not select an agency purely on price, however. Look for an agency that has experience of sourcing and placing contractors, preferably within your particular sector or market. 

3. Be clear on pay rates

It’s vital that you agree a rate that works for you, the recruitment agency and the contractor. After a few years of stagnation, contractors’ earning potential is on the up again as economic confidence finally returns. This is particularly true in sectors such as oil and gas, engineering and digital, where skill shortages are a factor. This means that if you want the best, you may have to be prepared to dig that little bit deeper into your pockets.

4) Determine employment status 

At the outset, ask yourself: is the individual whose services I am utilising employed, and if so, by whom? This is crucial, because the answer will decide who bears liability and carries risk in the event of a dispute, for example over an allegedly unfair or early contract termination. If the contractor is operating as a sole trader or via their own limited company, they are classed as self-employed. However, many contractors and freelancers are, in fact, employed – either by their recruitment agency or an umbrella company.

5) Consider outsourcing

Reputable umbrella companies or outsourced employment providers give their contractor employees an overarching contract of employment, entitling them to a wide range of rights and benefits. Any disputes or complaints brought by a contractor are handled by the employment provider, rather than the agency or you as the ‘end client’ that is utilising the contractor’s skills. Because the external umbrella provider is the employer in the eyes of the law, it bears ultimate responsibility if the contractor brings a claim or raises a dispute. This minimises your exposure to risk.

Jeff Blakemore is sales director at workforce management specialist Parasol

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