Employing a contractor


If you have a short-term project that needs to be completed by a person with a specific skill set, you may want to hire a contractor to do the job for you.

Contractors are usually highly skilled people who specialise in a particular area and who lend their skills to various companies or organisations under a contract.

Benefits of hiring a contractor

As an employer, there are many benefits to hiring a contractor to do the job instead of hiring a full-time employee. Employees are protected by employment law and taking them on incurs costs for a business. For example, under employment law employees are entitled to sick pay, annual leave, maternity or paternity leave and redundancy pay.

In addition, they may be able to claim for unfair or wrongful dismissal in an employment tribunal.

Using a contractor means an employer does not have to worry about these things under employment law. The contractor is not an employee and therefore employment law does not apply to the relationship.

The recruitment process and any training of employees also costs employers time and money. If a contractor is hired, these costs are significantly reduced as they are already expected to have the necessary skills for the job at hand.

Contractual obligations

However, the relationship between employer and contractor is not without structure despite the fact that employment law does not apply. Normal commercial contract law applies as there is a contract between the two parties. Employers should get expert legal advice from a specialist solicitor when negotiating a contract with a contractor.

Most contracts between an employer and contractor will have a specific end date, either a calendar date or when the project is completed. However, there may be times when the employer wishes to terminate the contract early. This will have to be done in accordance with the termination clause in the contract and therefore particular attention should be paid to this clause during negotiation.

Employers should also ensure that they process invoices promptly as contractors won’t be paid on time otherwise and this could leave employers open to potential legal action.

Once the contractor has finished the project or task, the employer can wave goodbye and the relationship is over, unless of course another contract is agreed upon for more work. This offers employers great flexibility and allows them to get temporary help when they need it without the commitment of employing a new employee.

Potential risks

One thing employers do need to be careful of is if they offer work on an ongoing basis for a contractor working within the company premises. There are certain situations in which a contractor could claim employee status.

This is particularly true under the Agency Workers Regulations 2010 if you hire a contractor through an agency.

For more advice on hiring a contractor, you can speak to a specialist solicitor. We can find one for you in your local area - call us or fill in a webform and we will be able to help you.

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