The term contractor is broadly used to define a person or company that performs work or provides goods and services for other businesses under the terms of a contract.
Rather than acting as a full-time employee, a contractor is generally employed by an agency. The term can be used in a variety of different contexts, with the most common being construction and independent professionals who complete tasks for businesses on a short-term basis.
In most contractor arrangements, the employer will hire a temporary worker via an agency and will pay the company for their contributions. This means that it’s the agency’s job to provide skilled workers and pay their wages.
Why Use Contractors?
By using contractors with the help of a specialist agency, you can gain access to skilled workers to tackle short-term jobs or meet demand should something unpredictable happen. There are many reasons why you may turn to contractors as a business, including:
Fulfilling Seasonal Needs
Some businesses have exceptionally busy periods throughout the year, while at other times there’s little need for a large number of additional staff.
Bars and restaurants, for instance, are more likely to hire contractors during the festive period to help cope with higher levels of demand, while travel and tourism operators may look to bring in contract staff during the summer months.
Working in Events
Similarly, event-based employers could use contractors to boost their core staff over short periods of time to ensure that they can cope with the demands of a major event.
Meeting Fluctuations in Demand
Some employers have unpredictable needs and will know that they may need more workers at short notice, but may not be able to pinpoint when higher demand is about to occur. This can be the case for firms that may be awarded major contracts to perform a significant project that requires recruiting staff in a hurry.
Covering Absent Staff
Another common cause for recruiting contractors is that a member of staff is temporarily away from their role, and their workload needs to be covered. These absences can be caused by sickness, maternity or paternity leave, or even long holidays.
Contractor Agencies
Contractor agencies, otherwise known as temping agencies, provide staff as a service to help businesses find skilled workers who can be hired on a flexible basis. These agencies vet workers according to their skills so that they can be hired out to clients to support their operations.
When it comes to pay, contractor agencies will usually bill their clients hourly but will only pay a portion of the fees they receive as wages to staff, with income distributed to managers, recruiters, and administrators while covering utilities and rent.
Most agencies will have non-compete clauses within service contracts with clients, meaning that staff can’t be headhunted after completing an assignment. However, some agencies offer a temp-to-hire operational model that allows clients to hire workers they want to take on for an additional fee.
Contractor agencies are usually available via online platforms to quickly help connect workers with jobs.
The Pros and Cons of Using Contractors
Using contractors can be a great way to ramp up your operational efficiency without the economic burden of taking on more staff should cash flow become tighter in the future. But there are some key pros and cons of this approach to keep in mind:
It’s much easier to hire staff on flexible schedules
Plenty of the admin is already covered by the agency
Employers can quickly scale their operations when needed
Sometimes, temporary hires can bring greater cost-efficiency
Easy access to skilled workers
Workers can show lower levels of loyalty
There’s no guarantee that skilled contractors will be available
Using contractors can make you overly dependent on external talent
Agencies may not be able to provide the same workers consistently
FAQs
There are some major differences between contractors and freelancers, despite freelancers sometimes being classified as independent contractors.
While contractors are employees of staffing agencies, freelancers are solely self-employed, meaning that they manage their own contracts with clients, handle their taxes, and manage their benefits. All of these considerations are handled by agencies.
The legality surrounding the poaching of successful contractors depends on the contract that you have with your agency. If you’ve signed a non-compete clause within your service contracts, you won’t be able to hire a contractor until they leave their agency. If your agency has a temp-to-hire model, you could potentially pay a fee to take your contractor on full-time.