How Brexit will affect Contract Recruitment

There are currently 1 million EU nationals working on a permanent basis in the UK which is at risk due to the Brexit process, and with many industries already fighting a skills shortage which could worsen due to Brexit, an educated guess predicts that the struggle to recruit the right skill set is set to exacerbate.

“50 per cent of employers would be put off employing an EU citizen after Brexit changes to UK immigration laws.” (Recruitment International Blog, Sept ’18.)

Usually, contractors are taken on to fulfil initial projects that are then inherited by permanent members of staff. However, due to the brewing skills gap storm from the effects of Brexit, many predict that contractors will begin to satisfy permanent staff duties, thus increasing their importance.

This is magnificent news for existing contractors and it will also encourage permanent members of staff to make the transition to contracting. To gain a competitive advantage, businesses should begin to consider taking on contractors now, in the calm before the storm and adjust their internal approach to contractors to adapt to market changes in employment.

Is the price of contractors worth it?

For example, a £350-day rate cost of contractor is a price many employers initially deem as expensive. However, looking closer at it, the comparable figure to permanent daily cost makes it an option.

The main cost benefit to employers is the saving in NI contributions and pension, which companies do not have to pay limited company contractors. Looking at a c£50k per annum permanent employee’s daily breakdown of around £190 per day, this already adds on an additional £35 per day to employers.

Others costs savings include the number of benefits that permanent staff members receive from the company in comparison to contractors. When taking on permanent employees it is a given that they must provide their new employee with costly investments like training, equipment such as laptops and phones to do the job, admin resource for offers and onboarding, and then any cost to the business from holidays or any sick days. Contractors don’t receive any of these added benefits, making the cost gap between a contractor and a permanent member of staff much smaller than it may appear and these are only the tangible costs. Contractors also bring a wealth of experience and an entirely different perspective to a business, which may benefit the organisation massively, like a range of recent experiences from past or current roles or the latest ways to deal with the issues they may be having. Many can bring new software ideas and insight that can add commercial value to their proposition.

What are the advantages and disadvantages of Contractors v Permanents?

Advantages

Access to highly skilled staff – The contractor candidate pool is often filled full of candidates with coveted CV’s and niche skill sets they may not be able to easily access on the permanent market.

Speed of hire – Contract hire often eliminates the long drawn out hiring process that permanent hire entails. Why? Notice periods are abolished and culture fit is much less complex.

Time-effectiveness – Contractors can often get a project completed, to a high standard, in an estimated half the time of a permanent member of staff. Why? They are focussed and task orientated and not distracted by internal influences.

Cost-effectiveness – Contractors can save businesses money through the savings mentioned and can provide the flexibility to scale up or scale down the workforce depending on demand.

Disadvantages

Not as invested in the future of the business – A contractor often does the job they have been instructed to do, taking their skill sets and experience with them at the end.

Contribution to the company culture – A contractor’s relationship and commitment to the business and other employees may be limited.

Although there are pro’s and con’s to hiring contractors, it is clear to see that the advantages profoundly outweigh the disadvantages. If you feel that hiring a contractor with a desirable skill set and the ability to inject a wealth of knowledge and experience into your business is exactly what you need, don’t hesitate to get in touch with our Contracts Department today and discuss your options further. Contact our award-winning team on 0161 833 1044 or email [email protected]. 

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