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Employee or Contractor which fits your business best?

Updated: Jun 29, 2020

It is an ongoing question for Business owners and leaders to decide whether it is better for the growth of their business to recruit a permanent employee or to find and start working with a self-employed contractor.

Benefits of Employees Permanent Employees Are “All In”

When an employee accepts employment the likelihood of a full commitment towards an employer is much higher. Employees are given employment security and with that security comes a much stronger commitment with respect to time, effort, creativity and drive each day to do the best job possible for the company and the company’s customers.

Permanent Employees Give Employers Reliable Ongoing Long-Term Results.

Employers know it is very important to hire and retain great permanent employees for a business to be successful. Clients and customers count on companies to provide the product or service being paid for to work and to one they can count on. Full-time employees provide the consistent service level needed by employers and counted on by customers.

Benefits of Skilled Self-employed Contractors

Bringing in a Skilled Contractor Solves an Immediate Staffing Need.

Companies often have slow periods and other times they have super busy periods. Skilled contractors give companies the ability to be fully staffed when times are busy and be staffed appropriately when business is low. Skilled contractors deliver a strong set of skills, produce quality work and they keep allow the regular staff to meet customer demand with top-notch services or products with no reduction in quality. Contractors can be brought in quickly and will be up and running fast so they allow continuation of business process.

Skilled Contractors Deliver High Quality Work Skills

The occasion arises when complex projects or a job is outside the scope of skill sets of a company’s permanent employees. Bringing in a skilled contractor will when a complex job needs to get done solves many problems. They make sure the job gets done and it eliminates the improbable task of training regular staff to do the job right and on.

Skilled Contractor Are Often Less Expensive than Permanent Employees

If the wages are the same, a skilled contractor most likely will cost less than a full-time employee because of the associated costs that come with all permanent employees. Those costs paid by employers are the employers half of National Insurance payments as well as the compulsory benefits required by law such as paid Holidays and Parental Leave, to name just a few.

HMRC and IR35 Increasingly in recent years the UK government through the HMRC has been challenging whether contractors really are self-employed or whether they are actually employees. In the past the HMRC had a 10-point test of whether a contractor was an employee, however recently they have taken a much more holistic approach and look at the whole situation before deciding. However key factors still remain, some of these are:

  • Does the Contractor have an agreement that clearly states they are a contractor?

  • Do they work full time for the company or do they do other roles with other businesses?

  • Do they provide their own work equipment or tools or does the company provide this?

  • Are they able to substitute someone else equally skilled to do the tasks?

Which Worker Makes More Sense—A Skilled Contractor or Full-Time Employee?

The answer to that question depends on the skill set needs of the job or position, and the on-going needs of the employer. It really depends a variety of factors. Once an employer assesses the job or the project hiring a contractor versus a permanent employee hinges on if the needs are short term, or long term. But in any event it is really important to have a relevant agreement with the worker, whether an Employment Contract or an Agreement for Services, in any event Better Talent can help you decide and provide the relevant paperwork with either.

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