How to hire contractors the right way

While employees are under a contract of employment, contractors take on contractual obligations to provide a specific job.

There are different ways you can hire people to help with your business. However, there are a few things to consider when determining what type of employee makes the most sense for your business. For example, factor in whether they require deep industry knowledge or specific expertise, whether you need them full-time or on a project basis, how fast you need to fill and onboard the role, and the long-term influence the role could have on shaping the organisation.

We’ll explore some of those factors in more detail, the implications on the HR department, and how software can make it easy to hire and manage contractors.

What is the difference between employees and contractors?

Permanent employee

  • Work under a contract of service. The employer tells how to perform a task, what task to perform, when to perform it, and where it should be performed - known as 'how, what, when and where' tests.
  • Sign an employment contract
  • Must follow company health and safety guidelines and the employee handbook
  • Eligible for auto-enrolment
  • Eligible for enrolment in benefits packages
  • Must contribute to national insurance
  • On payroll

Independent contractors

  • Work under a contract for service
  • Sign an IR-35 compliant consultancy service agreement via a service company, including a detailed outline of the work, timeline, and fees.
  • May sign an NDA
  • Self-employed and in charge of their tax return
  • Not required to receive the employee handbook
  • The employer is not required to enrol in any of the company benefit packages.
  • Is allowed to provide a substitute
  • Eligible for enrolment in benefits packages


What do these differences mean for HR managers and business owners?

The employee has some long-term involvement and adheres to the company's culture and success. However, an independent contractor has usually a short-term commitment to the company and little incentive for its success.

As contractors are used more often, managers suffer from extra paperwork and confusion due to the different employment statuses. The two types of workers can also differ in hiring practices, tax reporting requirements, onboarding, the value of work, and payment methods. Moreover, the new rules for off-payroll workers, known as the IR35 regulation, has increased the confusion by tightening the lines between the two statuses.

Therefore, it is more important than ever to have an easy-to-use HR technology to book, manage, and pay staff so that business owners can save time and money on non-revenue generating tasks.


What to look for in HR technology

Ability to scale with on-demand contractors

The first step is finding the right talent. Need to move quickly or require specific expertise? A talent marketplace can be an inexpensive way to find someone quickly instead of a recruitment agency or headhunter. Understand how the marketplace vets their talent and how their processes work to ensure you gain efficiency instead of wasting time.

For example, Moonworkers asks each of our contractors to complete a rigorous screening and interview process. You can even chat with their previous employers.

Browse hundreds of talented UK-based contractors and temporary workers, send them booking offers, get replies in minutes, and streamline the paperwork process. 

Simple automated onboarding

Once you find a reputable contractor, the paperwork and onboarding process begins. HR software can help you manage templates and maintain the appropriate legal information so you can focus on onboarding the employee.

Do you want your contractors to go through a different onboarding than your full-time employees? HR software can customise those workflows, so you don't have to recreate the wheel for contractors. 

Moonworkers offers a flexible onboarding workflow that enables you to specify which tasks and subtasks are required, who should work on them, and the due dates. 

Seamless document tracking

Of course, bringing on any new hire requires a lot of paperwork. Avoid overloading your computer storage with documents and keep templates fresh with an e-signature solution. Not only does this save you time on repetitive tasks, but you can also track progress and save final versions all in one place.

Thanks to Moonworker's integration with HelloSign, uploading, signing, and filing personalised contractor documents is a breeze.

Simple-to-use timesheets

Once your contract worker is up and running, make sure it's easy to track their work hours. Manual and paper timesheets are no longer needed to understand work hours.

Time-tracking software makes it easy to clock in and out, see and swap upcoming shifts, and auto-generates timesheets and hours worked, so all you have to do is approve the time.

Moonworkers provides a central, transparent platform for you and your team to ensure that payroll is always in sync.

Pay contractors through Moonworkers

Timesheets approved? Nice! With your time-tracking and payment systems all in the same software, you eliminate potential mistakes or repeated data entries. Along with the contract, your HR software should include pension, benefits, and documents all in one place, so everything is in one place and is easy to find.

Make sure the software you choose is HMRC approved so you can automatically file to them and save even more time.

Conclusion

As organisations continue to transition to hiring professional contractors for services, Moonworkers continues to evolve with them. From efficient & digital onboarding to accurate payment and job costing, the type of worker shouldn't affect your HR process. If your business frequently works with local contractors in the UK, Moonworkers is the HR solution for you. 

Take a free tour today to see why we're top-rated in the industry!


Sophie Mourou

Project Manager

Sophie has over 15 years of experience in film and digital project management. She has always worked on innovative products and creative marketing campaigns.