Contractors vs employees

toasterman

I'm currently unemployed and struggling to find employment.

I've had a friend this morning ask if he can pay me to do something for him, and recently, someone else asked me if they could contract me to do something for them. Neither of these people has the work to pay me full time, but the contractor question has started popping up on occasion.

So my question is this:

Given the economy, lesser responsibility, easiness of terminating a contract, etc. over paying for the recruitment process, hiring someone, dealing with national insurance, etc., would you be more likely to contract someone in for services/days as and when needed, than you would to hire someone to work say 1 day a week on a part-time employee basis?

Might I be better off self-employed, and trying to sell myself in small chunks for contract work, rather than continuing to try and find someone who wants to employee me on a permanent basis?

The idea of working with lots of different people doesn't phase me - in fact - it sounds rather interesting.
I've previously dismissed the idea of contracting, as I don't think I'm a 'specialist' of a high enough level in any area to do it, but neither of these things I've been asked to do are what I would call specialist - yet they both need doing, these people don't have the time/ability to do them, and I do.

What do you think?

PlutoinCapricorn

It is said that freelancers thrive in a recession, and this is certainly true in my experience. It is often a lot simpler and cheaper to get someone in just to do a particular job, even though freelancers may charge more per hour than an employee doing the same job would get.

Working for many clients means that even if one has not got anything for you at the moment, another may have. You can't lose your job or be made redundant. You can turn work down, and have freedom and flexibility.

Even if you do register as self employed and get work, there is nothing to stop you taking on work as an employee too if a job comes up: many people do this.

A lot depends on what sort of work you do, and whether or not you have a lot of contacts and potential clients.

isplumm

Hi,

As someone who is an IT contractor, I would say go for it.

But remember that working for yourself than being employeed is harder.

Mark

bionic_banjo

Hi, If youre not sure about setting up your own business and you are going to work for a number of clients ad hoc, consider going as a contractor under an Umbrella company. Eg Giant or Contractor Umbrella. You will be responsible for getting the work but they deal with your books (charge about £26 per week) and pay you under PAYE etc. It passes the IR35 test and is pretty flexible. I work with Government type businesses so they want a VAT reg company but until recently i havent been ready to set up my own limited company. Now i've found my feet Im almost ready to set up the company. Also as I was an employeee - when I got pregnant last year and had a baby the Umbrella Company had to pay me maternity money / pay me a rate whilst i went to midwife appointments. (I did have to demand this money mind! as it came as a shock to them that they were liable for this!) but if you were female then this would be an aspect to consider.
Good Luck

InsideInsurance

It doesnt really "pass the IR35 test" it means you arent subject to IR35 as you are an employee just of the umbrella company rather than the client.

I believe even as a director of a Ltd company you would be entitled to statutory maternity pay, your company would initially pay you but SMP like SSP is then reclaimed from HMRC (http://www.hmrc.gov.uk/paye/employees/statutory-pay/funding.htm) Of cause if your using a LTD you are probably giving yourself a very small salary and so the SMP may not be as much, particularly in the first period.

If you can get a sustained amount of work coming in you can certainly be much better off being self employed (though in reality you will more likely be using an umbrella or a Ltd). As a very basic rule of thumb, take the annual salary, divide by 100 and that is your day rate. Given you're going to be working more than 100 days a year your money will be higher but you need to offset the loss of bonuses, pensions, insurances etc though generally the money is easily enough to buy those and remain quids in.

Obviously the flip side is you're easy to get rid of with no rights for appeals etc, you can be liable to fix your own mistakes at your own cost (ie without pay), socially contractors can be disliked and frequently given the bum jobs to do. All the places I have contracted at have been ok and other than not being invited to the company Xmas party no difference between how employees and contractors were treated. I have known others though who have been at places where there were constant comments about them being a "rich contractor" and not being invited to team events, being the only ones not allowed on team training or away days etc etc

bionic_banjo

Agreed with 'Insideinsurance' making a good point - you can get the bum jobs. You truly have to think about the money for every minute that ticks by when the going gets tough. And it does, and even wose you have to brown nose these people to keep the work flowing..

Ref the maternity thing - yes you can get 'Statutory' maternity pay and reclaim it via the limited company route. But if you can stack up a decent 3 month London contract job for say £50 an hour during the 'qualifying period' for maternity pay and hold it down whilst puking up then what you get for the first 6 weeks from an Umbrella co 'employer' will far exceed what you get via the Statutory route. Just something to consider if you are trying or have IVF lined up (like I did) - do your calcs...

toasterman

Thanks for the advice, everyone. Glad my question wasn't as stupid as I thought it might have been.

I have no use for maternity leave as I'm male, and have no desire whatsoever to have children. Good tip for anyone else who finds/is reading this thread though.