Hiring a Contractor? – What You Need to Know

Of the companies who require project managers, most will only require their services temporarily. This will be because either the project is short-term or they don’t have enough projects to validate hiring a project manager on a permanent basis. This is where contractors come in, they are hired for a set period of time in order to manage the project from start to finish.

We have spoken on the Camel Blog before about what it is like to be a contractor vs a permanent employee. But what about the experience on the other side, how does hiring a contractor differ from hiring a permanent member of staff.

There are plenty of benefits of bringing in a contractor but there are also many things to consider such as: increased admin and legalities. Businesses may choose to use a contractor service like Payswell who specialise in contractor paperwork and HMRC compliant payments.

Benefits of Hiring a Contractor for Your Project

As a contractor will be working with your business for a short period of time they can provide many benefits. They will be someone who can come into the organisation and take control of the project straight away and see it through to completion effectively and efficiently.

Increased Flexibility – Contractors can be hired on a short-term basis, meaning that if a project is completed early or a budget is suddenly cut, then the contractor can easily move on.

Hiring a contract project manager means you are in control of who takes charge of each individual project that you take on. Instead of having to provide full-time employment for every skill set you’d like on your team, you can work with contractors and bring in the skills you need, when you need them. Hiring someone in who knows the task inside and out can have major benefits over someone who has never done that type of work before.

Aside from having more skills at your disposable, contractors will enable your business to respond to increased and unexpected surges in work. For example, if multiple projects come along at once you won’t be understaffed and you therefore won’t have to turn down work.

Save money  – Whilst they cost more per hour/day they are only there for a short time. If you don’t need a project manager all year round then there is not much point employing one permanently. When you hire an employee there are benefits they receive beyond their base pay. Things like: pension contributions, sick and holiday pay etc.

The fact that you are not required to pay these to a contractor means by the end of the project you will have actually saved money.

Things to consider

Hiring a contractor will come with increased admin work for the employers who hire them. Things like National Insurance, tax, and expenses all need to be processed for each contractor. These can vary from contractor to contractor depending on a number of factors such as: whether they’re classed as employed or self-employed, or what industry they’re working in.

Since the creation of IR35 working with contractors has been shown to increase the risk of being audited by the government so making sure that payroll and paperwork are done correctly is important. HMRC will specifically be investigating the working relationship between the contractor and your business trying to find any disguised employees.

IR35 affects all contractors who do not meet HMRC’s definition of self-employment. Therefore a company hiring contract workers needs to keep on top of who in IR35 affects and who it doesn’t. If you’re in breach of IR35, you’ll have to pay the tax and Class 1 National Insurance you should have deducted. Plus interest and penalties, of course.

Dealing with the Admin Issues

A good way of dealing with these admin issues is to use a contractor services company like Payswell. They will specialise in a number of different sectors, industries and legislation such as: IR35, GDPR, HMRC and FCSA. The main advantage of this is it significantly reduces the amount of time you as a business needs to spend on the admin of contractors (which can build up if you’re hiring multiple different workers) whilst also reducing the risk of breaching any legislation.

For some business hiring a contractor maybe just what you need to start growing and taking on more work, the benefits are there to be taken advantage of. However, what may work for one business may not work for another.

The only way to know for sure is to evaluate the decision for yourself. We’d love to know your experiences of hiring contractors, did it provide any benefits to the business? Let us know in the comments.


Payswell are a leading supplier to agencies and contractors offering elite payroll and payment services at affordable rates.

We were established to provide professional and efficient payroll services that are bespoke to us and have been written with the customer in mind. With our diverse backgrounds, we have all the required skills to enable us to continually enhance our service offering to meet evolving customer requirements.

> Download the Payswell brochure for more information.

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