Subscribe to RSS
- Matthew Brown
Demand for contractors and their rates are on the rise. What compliance issues do recruiters need to be aware of? Matthew Brown explains
There have been a number of reports across the board of contractors from various recruitment specialisms noting that rates are increasingly on the rise as demand for niche skill sets grows. Added to this, the option to move into a contract role is becoming much more appealing as professionals look for a flexible career and greater skills development. It would seem, then, that now is a great time to be a contractor.
According to the Recruitment and Employment Confederation’s Jobs Outlook for 2014, almost half of employees plan to increase their contractor headcount over the next four to twelve months. These figures are up on February’s forecasts, indicating that contractor demand is strengthening. And in its latest employment trends report, Venn Group noted a 25% increase in opportunities for UK contractors during the first three months of this year. Contractors in the public sector appear to have fared particularly well, with a reported 44% increase over the same period.
In line with this rising demand, there is increased speculation pointing to the possibility that a contractor career route is becoming the ‘new norm’. Indeed, in our recent survey of engineering professionals, for example, 54% ranked work life balance as one of the most important factors influencing their decision to move into contracting, with a further 48% referencing skills development as a key driver.
It’s clear that contractor placement will play a key part of recruitment over the coming year. However, for agencies, this changing landscape will see compliance become a key challenge. So what do recruiters need to be aware of when placing these professionals?
A key example of an issue to be aware of is the legislation dealing with false self-employment claims that has been under close scrutiny of late. Essentially, the government is cracking down on any professionals being falsely declared as self-employed in order to avoid paying relevant income tax and national insurance contributions (NIC). Consequently, any agency placing self-employed workers will be the liable party for such payment, with the latest amendments to the Finance Bill stating that recruitment company directors will now be personally liable for any unpaid contributions should the agency be unable to pay.
While there is the need to ensure all information surrounding an individual’s employment status is thoroughly checked, there are other methods to certify that this is correct. One such solution to mitigating the potential risk associated with contractor PAYE and tax contributions is to use a professional umbrella employment provider that is part of the Freelancer and Contractor Services Association (FCSA). Any organisation that is a member will have gone through the relevant, stringent assessments and will be audited annually to ensure it is fully compliant.
Recruitment agencies also need to guarantee that, where they’re being used, offshore intermediaries remain compliant. It is the organisation’s responsibility to ensure that all offshore suppliers are paying the correct income / PAYE tax and NIC for all workers. If you are using any such partner to manage contractors, check for proof from payslips and other official documentation. Where you are engaging external suppliers it’s also vital that you have a complete understanding of how these intermediaries operate. Conduct an audit of the business as well as appropriate due diligence checks to guarantee you’re working with a fully compliant company.
While there are a number of considerations that recruiters must factor in when managing and placing these professionals, it’s evident that now is the time of the contractor. For agencies that are increasingly utilising this resourcing model, it can be a highly rewarding revenue stream, but without the proper care, it could also be a financial risk.
Matthew Brown is managing director of giant group
Print
Email
