What Is a Contractor?

What Is A Contractor?

Contracting offers individuals and companies a flexible alternative to permanent employment. But what is a contractor, and how does contracting differ from other types of employment?

Contractors are professionals who provide skills or services to companies for a fixed period. They may be contracted for a set number of hours, a specific time frame, or for a project’s duration.
Contractors can be self-employed, work independently as sole traders, or run their own limited company. Independent contractors work for themselves and source their clients.

However, an umbrella company or agency can also employ contractors. Those who work for a company may not have to find their clients, as they can work with clients sourced by the company. The umbrella company will also pay the contractor and their taxes.

Whether working through an agency or independently, contractors can work on one or multiple contracts simultaneously. And with transferable skills, contractors can often work with various businesses.

The Difference Between Contractors And Employees

While employees are obliged to complete tasks set by their employer, contractors can choose to accept or decline work. They will be obliged to complete the work if they accept a contract. Once a contract is complete, if the client offers more work, the contractor can take on the additional work or decline the offer. This means they have the freedom to choose their own hours.

Contractors also set the terms of their contracts. This includes the fees involved and when and where the work is completed, so long as the work doesn’t have to be completed at a specific location.

Do Contractors Need To Complete A Risk Assessment?

You will have duties under health and safety law if you are a contractor. You should have already completed a risk assessment for the activities of your own business. When talking to a potential employer, ask for detailed information about the proposed work, and visit the work site, so that you can complete a risk assessment.

When hiring a contractor, you have certain health and safety responsibilities. If you are in construction, this might include a legal requirement to comply with the Construction (Design and Management) Regulations 2007.

First, you must identify all the work required and think of the possible health and safety implications. This should be communicated to the contractor, so they have the information upfront before they begin work.

Next, as the employer, you should check that the contractor you’d like to work with is competent and has the training and qualifications needed to complete the work safely. Don’t assume that someone can safely do the job just because they are offering to do it. You must verify this, particularly if the work involves specialist equipment.

The employer and the contractor should work together to ensure they can complete the work safely. It’s recommended that the employer and the contractor have meetings throughout a project, as often as needed, to ensure you can do the work safely. As an employer, you should think about how you will check that the work is being completed safely. Depending on the risks involved, you may need to arrange some supervision.

Download A FREE Risk Assessment Template

Why Businesses Use Contractors

Many businesses choose to hire contractors rather than permanent employees for certain roles or projects. Hiring contractors can be more cost-efficient — especially for special projects or processes not carried out on a day-to-day basis.

While contractors can cost more per hour or project, they can still cost businesses less than hiring a permanent employee. With contractors, businesses don’t have to cover payroll costs such as payroll taxes, vacation, retirement or insurance benefits.

Hiring contractors also gives businesses a chance to bring in individuals with specialist knowledge who are pre-qualified for safety-critical tasks. Different projects may require individuals with different skillsets, and contracting offers businesses the freedom to hire the specialists they need when they need them. Choosing the best person for the job can result in higher levels of efficiency and increased profitability.

The Benefits of Working as a Contractor

For many, working as an independent contractor is the ideal job because of the freedom it brings. Many contractors can decide their hours and fit work around their personal and family life, choosing when to take holidays. Contractors can also determine which businesses they work with, and the areas they’re willing to travel to for work (or whether they want to work from home).

Working with a variety of businesses can also be very rewarding and allows contractors to build their skills and experience. With every new project, contractors can build their knowledge, and with more skills under their belt, can move up the pay ladder faster than those in regular employment. Contractors tend to earn a higher rate than employees and have more potential to increase their wage. Completing additional training, or health and safety assessments, and becoming accredited are some of the steps contractors can take to increase their rate and attract more clients.

The Contractor’s Health and Safety Assessment Scheme can help match pre-qualified contractors with clients. If you’re a contractor looking to become accredited and reach new clients, become an accredited CHAS member today. Or, if you’re looking to hire pre-qualified contractors, sign up for a free client membership.