As the unemployment rate falls to 4.3%, many employers are finding it increasingly difficult to find the right talent to plug the skills gap. When business is booming the permanent candidate pool is declining – so what can businesses do to maintain productivity?
Temps, contractors and freelancers can be essential to keeping business moving. Below, we have outlined the different options so you can decide what works best for you:
FTC (fixed-term contract)
Typically paid as PAYE (see explanation below), like a permanent employee you will have a contract with your employer organisation. However, this contract ends on a particular date or on completion of a specific task, e.g. a project. This can also be paid using the payment terms described below.
‘Pay as You Earn’ is a method of paying tax and NI contributions. Your employer/or the agency will deduct tax and NI contributions from your wages on behalf of HMRC before paying your wages. This is how permanent employees get paid.
LTD or Umbrella?
Historically, the majority of freelancers have either set up their own limited company or used an umbrella company.
LTD company: Setting up your own company takes about five minutes, there are many websites which can talk you through how to do this we suggest, https://www.gov.uk/limited-company-formation. You will then need to open a business bank account and appoint an accountant, and can begin setting up contracts with either companies or agencies. Having a limited company gives you complete control over your financial affairs, meaning you will also have to complete your own tax returns and pay a yearly tax and NI contributions bill, rather than at source.
Umbrella: Working with an umbrella company is very easy – you simply enter your timesheet and expense details and wait to be paid. Tax and NI contributions are deducted before you receive your pay, so you may have no further taxes to consider. Someone else will be doing all your paperwork and this is ideal if you are working short-term temp roles. The only difference from PAYE is that you are reliant on the umbrella company to chase your payments from the agent.
A chance of permanent hire
After a contract has ended, employers sometimes decide you have added a huge amount of value to their organisation. They have already seen how well you work within the team structure, and that you have the critical skills needed for the role, so you should be in a good place to receive a permanent offer. The question is, are you happy staying independent, footloose and fancy free, or do you want the security of a permanent role?
To find out more visit www.gov.co.uk
If you would like to have an informal discussion, please contact Candice Hershkorn here about the roles we are currently working on.
Edited by Red Squirrel Digital.