Working as a Contractor

If you have already worked as a contractor or interim manager, some of the following may already be apparent to you.

But while this, page is generally for those that have not considered the option previously, please do read down and if there is any additional advice you feel should be offered here, please email us at interim@hrmrecruit.com and we will include it. 

“Contracting” or “Interim Management” are terms generally used and recognised to mean periods of work for fixed term or purpose, as opposed to permanent appointments. In busy markets, this is a lifestyle option some people choose. In tough markets, it can be the only choice for others.We currently see a lot of clients choosing to hire professionals on a contract basis to see how they contribute before offering them a permanent job.

Companies use contractors for a variety of critical purposes: to drive organisational change, implement new technology, launch a new product or service, restructure parts of a business or business process, cover a vacant role, manage an integration programme or simply erode a growing backlog of critical work.

With the extreme level of redundancies experienced by companies since the end of 2008, many companies are now reluctant to hire on a permanent basis and contract gives them that flexibility.

Contractors and Interim Managers, are not directly employed, by the company for whom they are providing the service. Generally they do not receive the conditions and benefits typically associated with permanent employment. So why contract?

Why Contract?
Contracting can be more financially rewarding than permanent employment. It provides an opportunity for experienced professionals to work with a variety of organisations, on a different tasks and projects. It enables building up a desirable portfolio of key skills and gives the added flexibility of being your own boss when it comes to when and where you work.

The reasons many professionals choose to work as a Contractor or Interim Manager include:
-    Premium hourly or daily rates
-    Tax efficiency, expense deduction
-    Greater flexibility in working when you want to work
-    The ability to work in a variety of sectors
-    The opportunity to build a personal network of contacts
-    Greater exposure to different types of management styles
-    Insight into different company structures and operations
-    Opportunity to learn or advance technical skills
-    Potential leads to permanent employment
-    Removal from corporate politics and limitations
-    Choose projects freely based on goals, location and personal/social preference

At any time, choosing to contract or work as an Interim Manager is a very important decision. In tough or emerging economies, choosing to contract can lead to significant gaps in employment.

Amongst other issues, you should consider the following:
-    You may need to use an Accountant to assist with finances and tax planning
-    There are no benefits provided by your employer
-    You are only paid for the hours you actually work, there is no 
     paid holiday or sickness days in most contract arrangements
-    While training may be a deductible expense, it is rarely ever
     paid for the company with whom you are contracting

All that considered, if you decide you want to work as a Contractor or Interim Manager, a key decision you must make, is which route to take in your set up.

1. You can be put on to the payroll of the recruitment company providing access to the assignment. As an “agency employee”, some of the advantages outlined above are limited.
2. You can set up as a sole trader or limited company.
3. You can work under an umbrella company, through a specialist service.

If contracting or interim management suits your personal situation and there is a reasonable chance of contract consistency, the benefits generally outweigh the negatives. If you would like to know more, contact a HRM Selection Consultant in your related vertical area.