Deciding on the right type of contract

Years ago you either worked or you didn’t – and if you worked it was usually full time.

These days employment has many different forms, with many different types of contracts and arrangements on offer for both employees and employers – including full time, part time, fixed term, agency, contractors, and the controversial zero hours (which we looked at in more detail a couple of months ago).

All of these have their own pros and cons, and as an employer, the tax and employment responsibilities you have for your staff will depend on the type of contract you opt for.

But with such a plethora to choose from, how do you decide what will work best for your organisation?

–       Duration: Is the role ongoing, or only required for a fixed period – such as to cover a period of maternity leave or to complete a particular project?

–       Flexibility: Does workload fluctuate significantly in a manner that affects your resource requirement? This may benefit from agency or contractor support, or the use of Zero Hours Contracts.

–       Speed: Recruitment can take time, but agency workers and contractors can often start at short notice and start delivering results.

–       ‘Try before you buy’: Hiring decisions that don’t turn out as expected can prove costly for employers – taking up valuable time and money. Some employers use short term contracts, agency workers, or contractor as a way to give an individual a trial run before offering them a permanent contract (which would then usually include an additional probationary period).

–       Responsibility: When an individual is employed by you (regardless of whether it is permanent or fixed term) you will be responsible for their tax, National Insurance – including registering with HMRC – and  providing a payslip detailing these deductions to employees. You will also be responsible for ensuring your employee’s compliance with the European Working Time Directive, as well as covering sick pay, holiday pay, and parental leave (maternity, paternity and adoption). While agency workers tax and NI will be covered by the agency, after 12 weeks they are entitled to the same terms and conditions, such as rest breaks and sick pay. You will be responsible for the Health and Safety of all types of workers, including contractors.  

–       Cost: While recruitment can be costly, in the long term it may prove more cost effective than prolonged periods of agency or contractor use. 

Regardless of the contract type chosen it’s important to make sure that you understand your responsibilities and put in place the correct mechanisms to support those.

For advice on what contract type might best suit your business, recruitment, and contract production, contact Turnstone HR on 01229 615 280 or email us at info@turnstonehr.com