Considering the contractor: Balancing local expertise and budgets

Engaging contractors is an effective way to ensure you get the right tech and digital skills on your team at the right time, at the right price! They represent a flexible and cost-effective resource to tap into to support your major projects, system upgrades and implementations, and even daily processes. What’s more, they’re agile resources that can work on a wide range of projects, helping you deliver your business goals on-time and within budget.

An expert recruitment partner, like Energize, can identify the key developments in employment legislation to protect your business, and ensure you are getting the optimal engagement and results from your contractors.

Why do companies engage contractors instead of hiring employees?

Engaging a contractor is very different to hiring a permanent employee. Many organisations choose to engage contractors rather than employ people on a permanent basis because of the many benefits of using contractors:

  • They’re cost-effective

Contractors only work on your projects for the contracted amount of time set out in the Terms of Agreement. That means you only pay their day rate or agreed upon fees, rather than the additional costs that you pay for a permanent employee. This allows you to plan on a variable cost basis without having to incur a fixed cost.

  • They’re flexible

Contractors allow you to resource a project with the precise skills required to complete it. This allows you to account for workload peaks and valleys, key initiatives and even consider and discuss availability for extensions.

  • They bring high-level skill sets

Contractors can range from mid-level to senior-level professionals. Engaging a senior contractor means you gain access to high-level IT and digital knowledge, skill sets, industry insight and market knowledge that may not be available in-house. Many senior contractors also offer legacy value by helping to upskill and impart knowledge on permanent employees long after the engagement has come to an end.

How to engage an IT and digital contractor

Engaging high-quality IT and digital contractors that have the necessary skills, experience and commitment to see a project and contract, be it short-term or long, through to completion can be a challenge. That’s why working with a recruitment agency that has established networks and specialise in providing the right IT and digital contractors to suit your company, your culture and your skills requirements can help you simplify the resourcing process.

Energize Group has the reach and network in Europe and North America to source the right contractors to support your IT and digital team, so that you can maximise on expertise without disrupting your budgets or compromising on local knowledge and language skills. We are knowledgeable on the current legislation and regulations that govern the different countries we support, including:

European Union, Germany, Belgium and the Netherlands:

We can help source local contractors so you can benefit from geography-specific knowledge and the language skills you need to see your projects through to success. For Germany, we are fully compliant with AÜG Labour Leasing legislation, ensuring contractor compliance for social security, taxation, expenses, insurance, and statutory entitlements.

United States of America:

At the beginning of 2020, California passed stringent legislation that converted almost 70% of the state’s Independent Contractors into W2 employees. We expect this stance to be widely adopted throughout the US, as the Biden administration explores ABC testing as a federal requirement.

Due to the pandemic, unemployment benefits were extended to Independent Contractors for the first time. California then saw a record number of Independent Contractors that were misclassified, and we anticipate the IRS will trigger ongoing audits and misclassification claims which will result in major fines and damages.

To protect ourselves and our partners, we have made the decision to move away from engaging with 1099 and C2C contractors. Energize will continue to best serve our customers and provide the highest quality of service in the engagement of expert W2 and T4 workers.

United Kingdom:

As of April 2021, medium to large-sized businesses within the private sector will have to adopt and adapt to the new IR35 legislation. We can ensure you have access to high-quality IT and digital contractors who are fully IR35-compliant and can guide you through the status determination process to ensure you don’t have to pay any unnecessary fees or fines.

How does IR35 affect UK contractors?

IR35 is a piece of UK tax legislation targeting contractors who were termed ‘disguised employees’ and effectively functioned as full-time employees but with the perceived benefit of a limited company – including lower tax rates. Those ‘disguised employees’ were deemed to operate inside IR35, and those who truly worked independently through their own limited companies or umbrella companies were deemed outside of IR35.

It is important to understand the new rules as the responsibility of determining whether a contractor works inside or outside of IR35 will lie with the end-user business and not the contractor. Getting the determination wrong can lead to not only fines from HMRC but could also incur unnecessary costs to the end-user business.

However, businesses should not be discouraged from using IT and digital contractors after April, as they are an invaluable and cost-effective resource for a wide range of major projects and roll-outs, right through to specialist support for backlogs or delays.

Get in touch and let’s find the right IT and digital contractors

With a global network of more than one million candidates cultivated over 14 years of recruitment expertise, Energize empowers organizations as you access high-value local talent supported by specialist Consultants experienced in scaling businesses with the experts they need.

Providing you with the best-possible recruitment experience is what drives us. We pioneered service standardisation within the recruitment industry via our implementation of Net Promoter Score®, and through our continual pursuit of customer excellence, customers choose Energize time and again, forming lasting relationships and enjoying a more effective hiring process.

The Energize Group offers niche, premium staffing solutions on both a permanent and freelance basis to customers in the United Kingdom, Belgium, Netherlands, Germany, and the United States of America.

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