Using contractors and subcontractors

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.