A contract is a written agreement upon terms of engagement between two parties. If you decide to enter a contract, this can be a little difficult unless you possess an adequate understanding of how it works, and what advantages of benefits you can derive or lose from signing a contract. At the outset, it might appear that you will be better off, progress faster and achieve career goals if you were a permanent employee. However, before entering into a contract agreement consider all possibilities, even to the extent that you might lose opportunities for employment that could take your career to greater heights.
There are several different reasons for employers to hire contractors, and you can easily live up to their expectations and also market your skills in the best possible manner if you understand these reasons. The major reasons that employers contract out are; saving money, flexibility and having the best possible workers who are current with the latest technology, innovations, and trends in business. Employers need to watch their budget in any project, and they can hire the individual best suited for that project and in a given position. The employer obtains needed skills suitable for a specific project and has the advantage of choosing from a pool of available personnel.
Contract workers are usually hired from a recruiting agency, and the employer can use the time and resources that were to be used on jobs like making and maintain payrolls. Recruiters also have a larger pool of talent available and can select people who are the most suited to specific projects. Contract workers only supplement the permanent work force when the work load becomes greater, and are usually released when the work lessens thereby avoiding the expense of having un-necessary workers on the payroll. Hiring contract workers when needed also reduces an employer’s tax liability. Limited companies usually let contractors have total control of their own business, thereby reducing their own responsibilities and avoiding un-necessary paperwork and expenses. To help contract workers, some agencies offer monthly payments for effective management of their financial systems such as loans, mortgages and insurance payments.
There are several ways that contractors operate, including working through your own personal services company as an employee of an umbrella company or as PAYE (Pay as you earn). This relieves contractors the hassles of establishing their own companies. The parent or umbrella company bills the employer for work executed, and then pays a net rate for tax and insurance deducted. For individuals working on contract while seeking permanent placement, this is the ideal arrangement and is more suitable for a contractor if he/she is operating within certain regulations. Contractors can also be engaged by a PAYE individual, and the PZYE deducts the taxes and National Insurance contributions.