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| What is Contracting? |
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Contractors offer consultancy services to a company for a set period of time. Companies may choose to engage
contractors instead of permanent staff to complete a one off project or to meet short term fluctuations in business activity.
You will contract with a company, usually through a recruitment agency, to perform predetermined tasks over a set
period of time, although it is commonplace for the contracts to be extended. |
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| What are the Advantages of Contracting? |
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There are some significant advantages to be gained when contracting. Foremost is that contractors can expect higher
rates of pay than their permanent counterparts. This applies to both basic pay rates and overtime rates. In some cases,
contractors can increase their “take home” pay by using limited companies.
Secondly, as a contractor you have complete flexibility in how you work. You can decide what holidays you want to take
and for how long – this is especially useful for people entering the UK on working holiday visas.
Thirdly, you will be exposed to a significantly higher number of companies and individuals. As a result you can gain a
greater breadth of experience more rapidly than you would in a permanent position. |
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| What are the Disadvantages? |
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Contracting is not for everyone. If you don’t feel comfortable working in different environments or working with different
people on a regular basis, you need to consider whether contracting is the right career path for you to pursue.
There are a number of disadvantages that need to be highlighted. Permanent employees enjoy access to company benefit
schemes such as contributory pensions, healthcare and training. A company may also provide their employees with full
sick pay, as a contractor you will have to settle for statutory sick pay so you will need to have a reserve fund to help
you through these periods.
Finally, you may find that you have time between contracts where you can’t find work. Market conditions or seasonality
are common causes. RHL will endeavour to ensure that you are out of work for the shortest possible time however,
the causes of the breaks between contracts are generally outside our control.
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Now you have decided that you want to work on a contract basis, you will need to get in touch with a RHL Consultant.
They will talk to you to find out what type of work interests you and then forward your CV to our clients. They will
then guide you through the interview process and negotiate pay rates with the client on your behalf. Once you are
offered the position we will guide you through the administration, after which you will be working as a contractor.
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Each week you will be issued with a timesheet. At the end of each week you will complete the timesheet with the number
of hours / days worked and get your line manger to authorise it. You would then send the timesheet to RHL for processing.
RHL will then pay all timesheets received on the following Friday direct into your bank account by electronic transfer.
(Note: processing deadlines are stated within the contract that you will receive from RHL).
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| Can I work through my own Limited Company? |
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Yes. Working through limited companies is becoming increasingly popular with contractors.
Individuals new to contracting generally opt to be a PAYE contractor. This means that the recruitment agency will deduct
Tax and National Insurance at source and pay to you the net amount. This is probably the easiest form of contracting.
Contractors wishing to operate through a Limited Company have two choices of how they would like to administer their
affairs. The first choice would be to form your own limited company. You would be the director / sole shareholder of
this business and would be responsible for all the tax and regulatory duties.
If you are put off by the additional administration, then businesses have emerged offering outsourcing solutions to
contractors. Commonly known as umbrella or composite companies, they will handle all the administrative duties leaving
you more time to do other things. There is however a fee for this which varies depending on the level of service provided.
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