What Is Contract Recruitment?

business meeting discussing what is contract recruitment

When the word ‘contractors’ crops up, most people imagine painters, plumbers, and construction workers. However, contract workers can exist across many sectors.

Certain industries such as administration, technology, and healthcare have some of the highest levels of contract professionals. This tends to be due to the prominence of project work and freelancing opportunities within these areas. Businesses utilise contractors as a flexible alternative to permanent employees, and the demand is growing in many sectors.

So, whether you are exploring the world of contract recruitment in order to fill a temporary skills gap, for cost efficiency, or to secure specialist skills, it could be the right avenue for your business.

In this blog, I will answer the key question, “What is contract recruitment?”, in addition to giving an extensive explanation of why it is popular, and how the contract recruitment process works.

What is contract recruitment?

Contract recruitment is a staffing arrangement that involves sourcing and securing a professional with specialist skills on a contractual basis, either directly or through a contract recruitment agency. A contractor will have a contractual relationship with your company, where they agree to deliver their skills/services to your business for a set period of time. This can range from a few days to a year. can range between a few days to a year. However, 6-month contracts tend to be the most popular among businesses. Whilst this contract can be renewed, each contract will have a set end date that will need to be renegotiated each time.

The relationship between a contractor and your company will be different from you employing a permanent team member. You do not have the same responsibilities towards contractors as permanent employees, such as pension contributions, paid annual leave, etc. This is because contractors work for themselves via a limited company or via an umbrella. They provide you with their specialist skills and knowledge for a specified period, before moving on to the next contract.

Why is contract recruitment popular?

According to statistics from the ONS and APSCo, businesses are turning to contracting as a staffing solution, with contract vacancies increasing by 13% in the year up to April 2022.

In fact, The Recruitment & Employment Confederation (REC) recently scored IT contractor demand for August 2023 at 51.9, the highest it’s been since April 2023.

If you are wondering “Why would I need a contractor?” – there are many reasons why a contract might be useful to your business. For example, some of the reasons we regularly hear from companies are that contractors:

  • Fill skills gaps: If you have a permanent member of staff on parental or long-term sick leave, or you have a need for elevated levels of staff over certain periods, a contractor can temporarily fill the skills gap.
  • Provide specialist skills: If you need a certain niche set of skills for a project, a contractor can support you and/or upskill your permanent members of staff so they can carry it out.
  • Are flexible: If you are undergoing a business transformation or have a particular specialist project, taking on a contractor could work perfectly for you. Contractors can be contracted for any length of time, meaning you can upscale / downscale people resource depending on your business needs.
  • Can be cost-effective: Whilst contractors tend to command a higher day rate than a permanent salary equivalent, they can be a cost-effective option depending on how long you need the specialist skills for.

Permanent employees are a long-term investment for any company. Whereas, contractors are a much more short-term flexible option, where you only pay them for the length of time you stipulated in the contract. Contract recruitment could be a real benefit to you if your business is going through transformations, regular projects etc.

How the contract recruitment process works

Now that we’ve answered, “What is contract recruitment?”, it is time to discuss the contract recruitment process. If you are deciding whether to use a contractor, there are a lot of aspects for you to consider.

My colleague went into detail on the exact steps of a permanent recruitment process in one of VIQU’s recent blogs, and contract recruitment process isn’t wholly different. However, there are a few key distinctions you should be aware of:

On/ Off Payroll (IR35)

Unless you are a small business, it will be down to you to determine if the contractor should be considered “On-Payroll” or “Off-Payroll”. In simple terms, the off-payroll working rules ensures contractors working as ‘disguisesd employees’ are taxed at a similar rate to standard employees.

Determining whether the contractor is working in a way that can be deemed as on or off-payroll is something you need to determine early on in the contract recruitment process before you start advertising the role. For more information on what that means, click here for the GOV.UK breakdown of IR35.

Turnaround time

The permanent recruitment process can be a much longer affair with multiple stages. This is due to the importance of ensuring a good long term fit within the company. In comparison, contractors tend to be required for an immediate business requirement or short-term project, meaning that businesses often only want to do a single video interview in order to get them on-site quickly.

An agency may already have the talent you need on their books

At VIQU, we have relationships with vast numbers of contractors, with a large number of specialists available on our system at the click of a button. If you urgently need someone to fill a role, or you have a very specialist contract to fill, we may already know of a suitable contractor who can do the job.

Renegotiations

This is not something to forget! As the name suggests, a contractor will only be contracted to work for your business for a set period of time. Therefore, you need to stay on the ball when your contractor is nearing the end of their contract. Most contractors will start looking for a new opportunity in the last 4-6 weeks of their contract; so if you want to retain their skills by extending their contract, you’ll need to expect them to renegotiate their rate. If you are working with a contract recruitment agency, a good recruiter will actively support you through this process.

 

Now that you are aware of what is contract recruitment, if you would like to hire a contractor, contact us today for assistance in finding you the talent your company needs.

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