Guide

Using contractors and subcontractors

Advantages and disadvantages of using a contractor or subcontractor

Your business may need additional resources to carry out specific or specialist tasks. You may want to use the services of a contractor or subcontractor for this, although it is important to weigh up the advantages against the disadvantages.

Advantages

  • You can hire a contractor/ subcontractor when you need more flexibility.
  • You can use a contractor/ subcontractor for one-off jobs and jobs requiring specialist expertise or fast turnaround.
  • Your permanent staff can concentrate on the core business.
  • Some contractors/ subcontractors can start the work or project at short notice, even when large numbers of workers are required.
  • You can often specify the type and duration of contract you need for the job.
  • You have no PAYE or National Insurance contributions administration for contractors/subcontractors.
  • You can obtain temporary cover for a permanent staff job or work that needs doing.

Disadvantages

  • Contractors/subcontractors may cost your business more than the equivalent daily rate for employing someone.
  • By relying on contractors/subcontractors, your business does not acquire or develop skills in-house.
  • Permanent staff may resent contractors being paid more money for doing similar work to them.
  • If you use a contractor that then uses a subcontractor, you have no direct control over the quality of subcontractors' work.
  • Contractors/subcontractors may not appreciate your business culture and may lack the motivation and commitment of permanent staff.
  • Workers can be employees or subcontractors of the contractor - you need to understand relevant tax implications and other rights. For more information, see employment status - implications for tax and workplace rights.