According to new survey data from the Association of Professional Staffing Companies (APSCo), professional recruitment firms reported that the number of candidates securing permanent roles in January 2018 increased by 10% year-on-year. Helen Wilson, Sales Director at GPRS gives her comments on the APSCo survey results:
Of course, this data isn’t industry specific and is a view across all sectors, but generally when times are uncertain, or when companies have short term projects, such as a course that needs delivering, the company doesn’t want to have the responsibility and commitments of employing permanent staff for several months. Companies tend to hire contractors or temporary staff – the flexible workforce.
The UK Temporary market really took off in the 1980s a response to the recession. Companies made redundancies, and then as they began to prosper they were unable to make new hires. Companies were worried about making hires, and then the distinct possibility that their workflow may plummet, so more redundancies would have to be made. Redundancies can be costly and are poor for staff morale, which at a time of financial constraint, is something to be avoided.
Recruitment companies saw this as an opportunity to introduce the Flexible Workforce. These were professionals, skilled, semi-skilled, and unskilled workers that could be hired and fired in line with work flow demands. It is fair to say that this strategy is still being utilised today because it can allow a company to still function if it cannot afford to hire.
The flip side of that is of course that if companies are feeling secure, they are likely to favour bolstering their workforce by making permanent hires.
So, when we see that permanent placements are up, and contract placement are down, it is a positive sign that employers are feeling confident about their business pipeline, and aren’t concerned that if they make a hire, they may not be able to keep the new people they employ.
Many people don’t know what the differences are between a Contractor and Temporary Staff, and think they are one and the same thing. Generally, and I am generalising here, a Temporary is an unskilled or semi-skilled worker, who is supplied to a client through an employment agency for a period of time; that time could be one day, one week, or one month etc.
The Temporary is an employee of the agency and are paid via PAYE. A Contractor’s work status (sometimes called a Freelancer) is usually self-employed, or they have their own limited company. This means that they invoice the agency or the client if they are working directly, for the hours/days they work.
The Contractor is able to offset work expenses and travel costs against taxable income. They are only paid for the hours they work, and generally receive no other benefits. A Contractor is usually a skilled or professional person and they join the client company for a set period of time. Contractors are generally paid more than Temporaries and they have no other benefits.
To make life easier, from here on in I am going to talk about Contractors, as the Work Based Learning sector is more likely to utilise the services of professionals for a set period of time.
Why Do Contractors Like Being Contractors?
- Contractors tend to earn more than a permanent employee doing the same job. This is because they generally don’t receive any other benefits such as holiday pay, sick pay, pension etc.
- Contractors can pick and choose the days and hours they wish to work and can only accept contracts that offer them what they are looking for, if they so choose.
- Contractors can offset travel and work expenses against their taxable income, so generally they earn more and are taxed less.
- If Contractors work somewhere they don’t like, they don’t have to stay.
- Contracting is a good way to find out whether a company is somewhere you’d like to work or not.
- Contracting is a great way to extend your skill base as every company and every assignment is different, and you soon learn to adapt and develop.
Why Do Contractors Not Like About Being a Contractor?
- Just because you are a good Trainer or Assessor doesn’t mean you are a good business developer, and you need to be proactive in marketing yourself out to give you a steady flow of contracts.
- If you are reliant on your income, rather that it being a second income, it can be quite scary when you don’t have any work, or when contracts come to an end.
- Contractors are responsible for keeping their own accounts and paying their own tax. The end of year quickly rolls round if you’ve not kept up to date accounts, and the tax man doesn’t accept, “I was busy.”
- Contractors have to raise invoices for the work they do. Companies don’t always pay on time, and Contractors are often uncomfortable chasing payment, meaning cashflow can suffer.
- Contractors are not an employee, sometimes they feel like an outsider and sometimes they prefer to be a permanent employee, where they feel part of the organisation.
- Contracts can be cut short and leave Contractors high and dry with no work and no income.
Why Do Companies Like Using Contractors?
- Contractors are an excellent way to bring in specialist skills without the commitment of a permanent member of staff.
- If a Contractor doesn’t work, they don’t get paid. A Contractor only invoices for the time they have worked.
- If a Contract comes to an end, a company can terminate the contract with very little notice, whereas a company would have to give a permanent member of staff notice, and pay them for that notice.
- A Contractor is an invoice and not head count.
- There is little risk with a Contractor: if the Contractor isn’t suitable, their contract can be terminated. If the Contractor is employed through an agency, it is the agency’s responsibility to reference check to assess suitability.
- The Contractor is only paid for the work they do – there is no additional Employer’s NI to pay; a saving of 13.8% on top of a salary.
- A Contractor doesn’t get paid holiday or sickness pay.
- A Contractor generally doesn’t get paid travel expenses as they claim this themselves.
Why Employers Don’t Like Using Contractors
- A Contractor is usually more expensive – so frequently the cost to get the training delivered is more expensive than using a permanent member of staff.
- A Contractor can up and leave at any time without notice.
- A Contractor is usually chosen for their ability to do the job. This means that unlike a permanent member of staff, a Contractor hasn’t been chosen for their personality, or their ability to fit into company culture or values.
- It can take a company as long to interview a Contractor who will be working a short period of time as it does to interview for a permanent member of staff.
Helen Wilson, Sales Director, GPRS
About Helen: Helen has over 20 years experience in recruitment and selection at all levels and across many, many sectors.
About GPRS Recruitment: GPRS Recruitment (Giraffe Permanent Recruitment Specialists Ltd) began in 2007 with the sole intention of providing an excellent standard of recruitment experience for both client and candidates, thus making us “head and shoulders above the rest”.
We believe that recruitment can, and therefore that it should, be done better. So, our service level remains exceptionally high, regardless of the side of the interview table you happen to be sitting at. You'll get exactly the same superstar treatment. We don't take advantage of our clients - because, quite simply, we want them to use us again and again. We don't under-represent our candidates - because we want them to remember us when they're sitting in the hiring manager's chair.
We are pleased to announce that we passed our Recruitment & Employment Confederation (REC) Audit again this year. The REC Audited scheme is recognised as the gold-standard for recruitment businesses. The audit is comprehensive, and goes much further than just compliance; requiring agencies to operate best practice in areas such as customer service, staff development, diversity, and client management. GPRS is one of only 0.5% of recruitment companies in the UK to be successfully Quality Audited by the REC.
- REC Awards – Winner of Best People Development Company, and Best Client Experience.
- Great Place to Work – Ranked 13th nationally in the small business category.
- Recruiter Awards - Top 10 Best Newcomer.
In addition, we also retained our Investors in people (IIP) Gold in the new standard this year, leading to us being finalists for IIP Gold Employer of the Year 2017.