Contracting 101 for Employers: Everything You Need To Know
You asked. We listened. Welcome to Contracting 101 for Employers. Based on our latest webinar, we have put together and answered some of our client’s most frequently asked questions about hiring contractors.
The mindsets of the modern workforce are evolving. Skilled workers are no longer satiated by roles with long-term stability, but are instead looking for experiences and growth; hence, the rising workplace trend of hiring contractors. For a variety of reasons, businesses are also seeking flexible talent solutions and therefore discussions around contracting are becoming more common.
Click here to watch the recording webinar, otherwise… keep on reading!
Let’s get started!
Why would I use a recruitment agency for contractors?
A skilled and reliable recruitment agency can bring a lot of value in terms of talent acquisition to both the contractor and businesses. It is all about connecting the best talent to the right roles and the benefit of recruitment agencies is that they already have a pipeline of talent on hand. This means the entire process is made easy and convenient for employers while specialist recruiters use their extensive networks to find you the best talent on the market.
Why would I want a contractor compared with a full-time employee?
Why hire a permanent full-time React Developer when really you only need them for a 2 month project? The core benefit for hiring a contractor is flexibility and rapid impact. For employers, it is a highly flexible way to scale up or down your resources when needed. A contractor can come in, execute the project at a high level and then, when the work is done, they can move onto a new role or flow back into the talent pool without costing your business more in terms of pay etc.
Who handles payroll? Who pays them?
This is a very common question. It is also the reason we partnered with Oncore. Essentially, a contractor is employed by the agency (e.g. Hunt & Co.) and then provided to you. The contractor is then paid through our internal payroll department, using Oncore, while you simply receive an invoice. That is how easy and streamlined it is.
How does it work? What is the hiring arrangement?
Formal contractual engagements are made between the corporation/business, recruitment agency and Oncore to ensure that all is handled in a fully compliant way.
What about insurance?
This is something many businesses don’t factor in or even consider when hiring a contractor. We can cater for and manage PI/PL and employment based insurances. Insurances within Oncore’s PAYG setup include:
- Professional Indemnity insurance (up to $20 million AUD)
- Public Liability insurance (up to $20 million AUD)
- Workers Compensation (except in the ACT)
- Certificates of currency are available on request
How do I know how many hours the contractor is working?
Most of our seasoned contractors use their choice of a variety of project management tools such as Clockify, Toggl and Harvest to track their efforts. Many corporates also have their own internal time and attendance capture. Alternatively, we can facilitate this as part of our service delivery where the contractor will submit a weekly timesheet to their manager in your business for approval before the invoice is issued.
What happens if I want to hire them full-time?
If you end up loving your contracting candidates as much as we think you will, we will work with you and the contractor to make that full-time permanent placement a reality. What that looks like is pretty similar to any full-time permanent placement. Our one-off fee would come into play here, all covered in our TOBs (available on request).
What if they don’t fit my business?
No worries! All contractors will enter a flexible contract with the standard being a 7 day notice period. However, this goes both ways meaning that your contractor can give 7 days notice as well.
* please note: 7 days is the general notice period. That will vary with each engagement.
Do they BYO tools and equipment?
Most seasoned contractors will already have their own equipment and be more than happy to enter into a BYOD contract. However, given the current circumstances, some regular full-time employees are taking on contracting roles and may need tools and equipment to be supplied. It also depends on the engagement itself and your company’s security i.e. someone’s personal computer might not be able to access your system. This will all be discussed before contracts are signed.
Can I have all my full-time employees as contractors?
So you might be thinking ‘contracting sounds great, why don’t I just make all my employees contracts?’ but there are some rules around that and we recommend checking out FairWork resources that compare the differences between employees and independent contractors. Some key differences include hours and expectation of work, superannuation, tax, financial risk and leave entitlements.
What if I want to extend the contractors contract?
It is always good policy to retain contract based talent by negotiating contract extensions as early as possible. A professional recruitment agency should make this a very easy process for all parties. It is simply a matter of updating paperwork, getting it signed off by both parties and submitting it to our friends at Oncore. If any negotiations or support is required to make the extension beneficial for both parties, we can help with that too.
What happens if I want to cut the contract short?
All contracts will have a notice period. Generally for contractors it will be around 7 days, however this will differ from contract to contract.
What if I don’t know how long I need a contractor for?
Rolling contracts are very common. For this, we discuss what an average term would look like, set that as the timeframe from a contract/ paperwork standpoint and then keep re-evaluating, making sure everyone is kept up to date.
Why is this conversation relevant right now?
A highly skilled flexible workforce is an excellent solution for corporates to react quickly to changes in the market. Due to the trauma inflicted by Covid-19, many businesses have lost their confidence to make permanent decisions and are wanting less-committal options. Therefore, contracting presents a convenient, fast and flexible approach to getting resources onto urgent projects.
What is the pay arrangement (e.g. with rate + GST/ + super)?
The contractor rate is all inclusive with regards to super. The preferred method at Hunt & Co. is PAYG which is the contractor’s base rate whether that be hourly, daily, weekly or FTE, including super. The other option is to hire the contractor as a Pty Ltd. to ensure they are correctly insured and your business is protected, we do not accept sole traders at this stage.
What are the benefits and pitfalls of hiring a contractor?
The main benefits are flexibility and access to a highly skilled workforce without long term commitment. Their hourly cost is more expensive than a permanent employee, but then at the end of the day you are paying less over the full lifecycle of that team member!
As for the pitfalls, due to Covid-19 and the growing trend of moving from full-time roles to contracts, you may lose some of the contractors you hired during Covid-19 to other full-time roles. Also, if your plan is to move them to a full-time permanent placement, it isn’t always possible. Not all contractors are open to that and like moving on once a project has wrapped up.
What do I need to do in the on-boarding process? (On-boarding remotely)
Whether your employee is a permanent full-time or temporary, a good on-boarding process is critical to ensuring they meet the standards of your company, your culture and completely understand your service/product and their role in the bigger picture. For a contractor or temporary employee, the on-boarding process can be sped up (like us after our third coffee), but it is still important to have a process in place. Some corporates may have their own very specific needs, especially when it comes to sites that have important safety standards.
How can my contractors be part of the culture?
This is critical. Contractors that are treated the same from an inclusion perspective as permanent members of staff by their managers and co-workers, are far more likely to stay for the duration they are needed, and come back to the company when their skills are needed again. If you treat your contractor (offshore or local) like a disposable resource instead of a critical team member, the engagement won’t be nearly as successful as it could be. Embed them into your culture, help them understand the bigger picture and then you will reap the rewards.
What is the personality of a great contractor?
A great contractor should be confident, a fast learner, highly adaptable and also autonomous. Along with proven experience from their previous contracts, a great contractor should absolutely bring a ‘roll up their sleeves’ and get it done attitude to your organisation to succeed.
If you are looking to hire a contractor and have no idea where to start or just need some help, come chat to the super friendly team at Hunt & Co. and let us take the hard work out of finding top-tier talent.
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Want to learn more? Click here to watch the recording webinar.