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Perm vs. Contract Staff: Which is right for your business?

Posted by: Francis Dunleavy
There are benefits to hiring both contractors and permanent members of staff, and many factors to consider when making a decision. You don’t always need to hire a permanent employee for every role, especially if your line of business is project-based, meaning certain skills are only needed for certain phases of the work. Here are some pros to hiring contracted, and permanent, staff members:

Pros to Hiring Contracted Staff

Financial savings:
Hiring contracted staff can have significant financial savings for a company – despite the fact that hourly rates tend to be higher than the equivalent pay for a salaried employee. Hidden expenses such as employee benefits and, if your workers are office based, space and equipment, can stack up. Plus there’s the bonus of not having to pay statutory sick pay or NI payments, and the administrative burden of tax lies with the contractor rather than the employer.

Contracted staff provide great flexibility: It’s very easy to quickly take on – or let go – contracted staff as they are not subject to the same workers’ rights as permanent employees (albeit they are fairly compensated for this in their day rates!). This can be really handy if your company’s workload fluctuates, or in hiring someone for a specific project or task.

Contracted staff are often highly specialised: Contracted staff will do what they do for a wide range of companies. With a permanent position inevitably comes a blurring of responsibilities which is not something contractors experience to the same level – they do one thing well. This means less downtime in training, so the contractor can get to work immediately.

Pros to Hiring Permanent Staff

More commitment from the employee: When your staff are working for you on a permanent basis, they are more likely to view the position as a long term career option. This will mean they are more willing to take on tasks that aren’t technically in their job description, they will take pride in becoming an ambassador for your company’s brand

Less inconvenient and disruptive: Sometimes it’s nice to know you’re going to see the same faces for a long period of time – you know the quality of work you can expect from permanent employees and can take corrective measures if it’s not the quality you expect or want.

Fewer audits: Because contracted staff are not subject to the same tax as permanent employees, you can sometimes expect frequent governmental audits to ensure everything is above board.

Acquisition of in-house skills: Permanent employees become an asset to your business, giving you skills that you can access for a long time to come. What’s more, any copyrighted work created during their employment belongs to the company – where in the case of contracted staff, this would belong to them (without written agreement).

Permanent employees help to build your company’s culture: Any employer worth their salt knows that workplace culture is extremely important – in terms of retention of permanent staff, recruitment of new staff and making your own time at work run much more smoothly.
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