Recruiters

How does contract recruitment work?

Valentina GolubovicValentina Golubovic
Last updated on:
August 19, 2022
Published on:
August 19, 2022

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There are two types of recruitment, contract and permanent. Contract recruitment involves sourcing a candidate for a client for a specified period or a specific project under fixed-term contracts. In contrast, permanent recruitment is where a candidate is hired as a full-time employee by the client.

What is contract recruitment?

Fixed-term contracts, where the candidate isn't tied down to an employer, have grown in popularity. The rise of working from home has increased the demand for more flexible working arrangements for candidates.

Contract recruiters look for people on your behalf to fill short-term roles that have a set lifespan.

Contractual workers explained

A contract employee is someone who is hired to work for a company for a set period of time. This is usually outsourced to a recruiter who will find you a candidate. After a successful recruitment process, the candidate will sign a contract with a fixed term.

As a business, you do not need to pay holiday pay, sick pay, national insurance or other permanent employee benefits. The company or individual you contract with will be liable to pay taxes.

Recruitment fees

For temporary staff, contract recruiters will charge the client a fee comprising the worker's base salary plus the recruiter's fee.

Usually, for permanent employees, recruiters will charge the client a percentage of the employee's annual salary. This can be anywhere from around 10% to 30%.  

Benefits of contract recruitment

Cost-effective

There is less risk than hiring someone full-time as businesses also don't have to pay taxes, holiday pay, pension or other employee benefits. A contract recruiter will source talented candidates, meaning you won't need to waste resources such as company time.

Quality candidates

When working with a contract recruiter to fill workforce shortages, your recruiter will be able to source quality candidates due to their extensive market knowledge and access to a pool of potential professionals. This leaves you to rest assured that you have the right candidate for the role.

Flexibility

Contract recruiting allows for flexibility depending on what your objectives will determine how you wish to proceed after the contract ends. You can keep the contractor on as a permanent employee if both parties are happy, or you can go your separate ways. Regardless of the outcome, this provides a flexible solution for you and the candidates.

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Why would a business need contract staff?

In our ever-changing economy, there might be many scenarios where employers want contractual staff on fixed contracts compared to permanent ones. These candidates are often referred to as the contingent workforce.

Maternity leave

In the UK, employees can take up to 52 weeks of maternity leave. If an employee goes on maternity leave, their role must be filled while absent. Companies that may not have the budget to take on another full-time employee will resort to fixed contract hires. This ensures that when the original employee returns, the contract for the replacement hire will end, and they will leave.

Projects

When companies are working on a specific project, post-completion date, they will no longer need the individual they brought in to help. A fixed-term contract will be suitable for the employer as they will be getting an expert to assist them with no obligation to extend their contract. This is also often beneficial for the candidate, as they can be paid much better than a normal employee.

'Temp to Hire' or 'Temp to Perm'

In this scenario, an employer will hire someone temporarily with the intention to bring them on permanently if they perform well. This benefits both parties as they can assess if the arrangement is a good fit before committing fully.

Interim management

Contract recruitment can be used for those difficult-to-fill positions, such as senior roles in your organisation. Replacing a legal counsel may prove difficult, given the complexity of the role. It will involve intensive interviewing, and even if you find the perfect candidate, they will most likely be tied into a longer notice period. You may be forced to use a recruitment agency to fill the role temporarily.

Why would candidates want contract positions?

With the rise of hybrid and remote working, especially after the pandemic, candidates want the flexibility to work when and where they choose. Job-hopping is prevalent among millennials and Gen Z’ers. CareerBuilder reports that millennials spend an average of 2 years and 9 months in a job, compared to Baby Boomers 8 years and 3 months. With average tenure falling, we may see a rise in professionals opting for short-term, contractual work and avoiding committing themselves to permanent jobs.

Experience

Some individuals prefer to work for various companies on projects to widen their knowledge and experience. If considering a permanent role, candidates can test first to see how it fits in with their career goals.

Flexibility

A contracted employee has no obligation to stay on after their contract ends, even if the company they were contracted to work for wants to keep them on. This provides options for individuals in differing situations. 

To conclude, write down your budget and objectives if you are thinking of hiring. This should point you in the direction of the type of hire most suitable for you. One of the most common uses for contract workers is in IT positions, where the work is often specialised and highly technical. If you need someone with specific software expertise, say for a project that lasts only a few months, it makes sense to hire them temporarily instead of hiring them full time on an ongoing basis.

About Legislate

Legislate is a legal technology startup which allows landlords, letting agents, recruiters and small businesses easily create, sign and manage contracts that are prudent and fair. Legislate’s platform is built on its patented knowledge graph which streamlines the contracting process and aggregates contract statistics to quickly unlock valuable insights. Legislate’s team marries technical and legal expertise to create a painless, smart contracting experience for its users. Legislate is backed by Parkwalk Advisors, Perivoli Innovations and angel investors.

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