Guide to hiring the perfect contractor

10 min

Contactors provide an invaluable service harnessed by businesses of all shapes and sizes. Fo...

Contactors provide an invaluable service harnessed by businesses of all shapes and sizes. For example, suppose a start-up lacks the resources to get their company off the ground, or a multinational organisation needs support filling a skills gap in their team; contractors are the temporary solution to plug the gap in any scenario where headcounts are limited, and candidate availability is scarce. 

Due to our experience within many industries, from business services to retail, we recognise how instrumental contractors can be to businesses looking to overcome their interim hiring challenges. So we've put together this guide to hiring the perfect contractor to help you understand the importance of contractor services and how they can deliver the results to take your business forward.

Within this guide, you will unlock the following:

  • What are the benefits of hiring contractors? 
  • How to source contractors
  • What should you expect from a contractor's CV and interview? 
  • What does the onboarding process look like for contractors? 
  • How can you end a contract with a contractor?
  • Are there any legal regulations for hiring contractors?

What are the benefits of hiring contractors?

Hiring a contractor for short-term tasks or projects has several advantages over recruiting a new employee under a permanent contract. We've listed three top benefits of hiring a contractor to give you more of an idea about what interim talent can bring to your business. 

Specialised skill set

Contractors may offer your business knowledge and skills that you occasionally but transiently need. By hiring contractors, you can finish assignments as practically and cost-effectively as possible without committing to a long-term relationship with a permanent employee. In addition, contractors come with a wealth of experience. They can fill the skills gap within your organisation while slotting into your team and getting started on handling urgent tasks immediately on short notice. 

As a result, contractors do not require additional training outside the fundamental training they receive when working for a business.

More flexibility

Your business can choose when and how to complete particular projects by utilising contractors or freelancers. Contractors can be hired for a set duration allowing your business to bring in additional help as and when required to help with capacity and workload. Your business can concentrate its full-time employee resource on more long-term projects and offboard contractors after their contract expires on smaller projects. Offboarding an interim staff member is typically more straightforward than offboarding a permanent employee.

Project scaling

Without having to onboard permanent employees, your company can expand a team based on a particular project with a contract hire. This approach enables you to modify your personnel in accordance with your company's needs. For example, you can hire a freelancer to perform a task if it demands a specialised or technical ability that other tasks do not to assist you in reaching your goals.

These are only a few advantages of using contractors instead of recruiting a permanent employee. The workforce of many businesses, particularly those going through development or change, will be made up of both permanent employees and contractors. 

How to source contractors

Many businesses engage with recruitment agencies to fill their contract openings, especially when they need a hiring solution at short notice to combat their immediate talent and skills shortages.

Researching agencies you want to represent you is a great way to understand your market and get a feel for how an agency advertises similar contracts. In addition, shortlisting agencies based on research will allow you to feel confident that you have an extensive understanding of their respective industries, sectors and hiring experience. When researching, you must look for an agency with a readily available database of candidates with the specialist marketing and digital skill sets you require. 

In addition, you should qualify with your contract recruitment agency whether they handle contract invoices, payroll and regulatory contract compliance. Although the markup varies, an agency typically takes care of these stresses so that you can focus on your day-to-day business operations. 

Another way to source contractors is by posting contract positions on job boards or contract recruitment agency websites. Again, utilising specialist sites are beneficial because they will have a wealth of individuals with the qualifications and experience you need. For example, you may use a specialist marketing temp agency like 3Search to upload a vacancy if you're trying to fill a role for your marketing contract jobs. 

What should you expect from a contractor's CV and interview?

A contractor's CV may not follow the "standard" format you’d expect to see with a permanent employee's CV. They may only list their most current and pertinent contracts because they apply for certain projects requiring specific talents. Therefore, you will need to approach their CVs differently than you would with permanent candidates, looking for specific skills and experiences that indicate the contractor is right for the job.

Since this is a business-to-business transaction, the contractor should be ready to present their expertise and services to you during the interview. Onboarding a contractor often happens quickly; this is your chance to determine whether they have the qualifications and experience listed on their CV. It is essential to understand why the contractor is interested in the assignment, as is establishing whether they’ll integrate with the broader team and work within the contracted time period/hours. 

Additional considerations include confirming if the contractor has the relevant insurance, licences or permits required to undertake the work and establishing how any additional charges will be handled or if their work comes with a warranty or guarantee.  

What does the onboarding process look like for contractors? 

A contractor's onboarding process differs from how you would onboard a permanent employee. For example, you don't owe the contractor any employer contributions, as they are technically self-employed. So, in most cases, they manage tax requirements on their own. 

To help you ensure that the onboarding process is as smooth as possible, we've created a list of steps that you can take to provide the best outcome for you and the contractor. 

1. Create a clear and concise job description

This is seen as the first step in the onboarding process. It’s crucial that you create a job description that establishes the day-to-day responsibilities of the contractor. You should include the work hours and location within the description, to name a few examples.  

2. Draft an agreement

In addition to creating a job description, you'll need to create a contractor agreement. Again, this paperwork needs to be different from the agreement typically used for a permanent hire. The contractor agreement should establish the relationship between your company and the contractor. The document would need to contain the following: 

  • Scope of work
  • Work hours
  • Deadlines
  • Tracking tools that the contractor should use
  • Ownership rights 
  • Confidentiality agreements 
  • Payment and billing terms 
  • Invoicing terms 
  • Termination details 
  • Notice periods

3. Training

Everyone needs on-the-job training to understand the context of the business. For example, if you are looking to hire a contractor, you would need to create training schedules and customised training programmes to ensure that your contractor is up to speed with how the business operates. 

You can provide training material on safety issues, workplace behaviour, policies and procedures. By doing this, you are allowing your contractor to understand the culture of the business and how it operates before they begin work. 

4. Access tools and process documents 

Ensuring that a contractor can access the correct tools and process documents is vital to ensure the project can begin without delay. You must provide detailed and up-to-date process documents to prevent this from occurring. Often referred to as a knowledge base, these documents can prevent trivial issues, such as what to do if a contractor has forgotten a password or something more role-oriented such as using a management system. 

Placing these documents in a shared folder through a cloud file-sharing system would be beneficial. This will ensure that the contractor can work seamlessly and deal with job-related issues without requiring much help from the permanent team. It will also allow you to control what they see and when, giving you extra security for the period after the contract is finished.

How can you end a contract with a contractor? 

You might end a contract with a contractor for multiple reasons. For example, it might be due to quality of work issues, a reduced budget or a change in the needs of the business. No matter the reason, you need to be aware of the elements involved with ending a contract.

Legal factors

If you have decided to end a contractor relationship, regardless of reasonings, you must consider certain legal factors before proceeding. 

As a contractor is a self-employed individual, you can't terminate their employment as you would a permanent staff member. Instead, you would have to release the professional services agreement and the statement of work between your company and the contractor. 

You would still be responsible for honouring the terms of the contract, but you can review the original agreement with the contractor and follow the correct termination provisions, notice provisions and payment terms. 

If you need help understanding the legal aspects of terminating a contract, it would be beneficial for you to reach out to your in-house legal team for more advice. Seeking clarity on the legal elements of terminating a contractor helps you honour the agreement with them and minimise potential risks. 

HR best practices

Parting on good terms is always the best course of action when dealing with termination. Ideally, you would want to treat the contractor like a permanent employee. Contractors are well-connected to other contractors doing similar work and could share their experience with their network. If you present a positive and respectful workplace, you could receive more contractors wanting to collaborate on projects. 

Here are some of the ways that you can show consideration to contractors at the end of their contract: 

  • Give adequate notice when possible
  • Remind the contractor of any agreement terms regarding any intellectual property created during their time at the business.
  • Notify all internal employees who worked with the contractor
  • Allow for there to be an opportunity for goodbyes
  • Offer resources such as tax filing help with the accounting department or a contact to use if they need to request files for their professional portfolio.
  • Allow for there to be an opportunity for the contractor to return, if appropriate

When parting ways with a contractor, it’s best not to burn any bridges and ultimately leave things on good terms. 

Are there any legal regulations for hiring contractors?

Working with contractors can carry a few legal elements you need to be aware of before proceeding. However, in the relationship between a contractor and client, legal rights and responsibilities between both parties will be primarily determined by the terms and conditions of their service contract. 

A contractor's rights will stem from the client's contract. It should include the right to be paid a fee for the work undertaken. 

Contractor negotiations

Again, negotiating with independent contractors differs from doing so with a prospective employee. The significant points that need to be agreed upon during negotiation include the length of the contract, the contractor's daily or hourly payment, and what services the contractor will give because they will not receive any employee benefits like sick pay, holiday pay, pensions, etc. A specialist recruitment agency will often handle the negotiation procedure on your behalf if you need clarification on managing it yourself. 

Contracts and the IR35

As of April 2021, the new IR35  outlined the rights of independent contractors. Payroll rules can apply if a contractor provides services through their limited company or another intermediary to their client. An intermediary can be the contractor's service or one of the following:

  • A partnership
  • A personal service company
  • An individual 

The rules make it possible for a contractor who would have been an employee if they were providing services directly to the client to pay broadly the same Income Tax and National Insurance as permanent employees. 

A contractor's IR35 status is determined by control, monetary risk, equipment provision, right of termination, and employee perks. Consequently, IR35-friendly contracts will show that the contractor has different duties, rights, and extras than a permanent employee, which should also represent how they work. In addition, contracts that are IR35-friendly will help to retain contractors on board. 

Contractor rates

Most contractors are typically paid daily or hourly, with some receiving a fixed rate for the duration of a project. The market demand, the industry, the contractor's skill set, and their level of expertise are just a few of the many variables that will affect rates. 

To provide competitive contractor rates, you must conduct research, such as liaising with recruitment consultants and examining previous contract postings.

Looking to hire a contractor? Talk to our specialists today!

Working with a contractor can bring many benefits to your company, especially if your business is undergoing development or a large-scale change. It has become more common for companies to hire a mixture of permanent employees and contractors. Contractors provide professional services that can help elevate a business and promote its success through their networks. 

If you are interested in hiring a contractor for your business, you can talk to one of our job consultants today. We can help you find the perfect contractor that will help boost your current projects or support your existing staff. Get in touch to speak to a member of the team.

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