The use of contractors within industry is commonplace. Many companies turn to contractors to supplement their own staff. They are also used for specialist tasks, often involving the most hazardous activities. This could involve maintenance, repairs, installation, construction and demolition or carrying out non-routine activities where there is a greater potential for harm if their work is not properly managed.
Why is effective Contractor Management so important?
While it’s true that external contractors are different from employees in many ways (and should be treated differently as a result) – there are still plenty of reasons why you’ll want to manage them effectively.
Here are the main reasons why contractor management is so important:
- High quality, specialised expertise is hard to come by: Hiring a contractor is beneficial for your business because it allows you access to people who have specialised skills without having to guarantee them a certain number of hours or pay for employee benefits. But our workforce is changing rapidly, and freelancers, consultants, and subcontractors are now more popular – and more in-demand – than ever. So, when you find a good one, you’ll want to make sure they’re motivated to stick around.
- Hiring is challenging (and expensive): Finding a good contractor takes a lot of effort. From advertising the job, to carrying out due diligence, interviewing, and onboarding, the entire process takes time – and there’s no guarantee that you’ll find a solid candidate right away. When you do, you’ll want to offer an environment that’s appealing enough to keep them coming back.
- Keeping Contractors safe should be your number one contractor management priority: Contractors are subject to even greater hazards and risks than staff because they are new to your business. Research has shown common causes of accidents to contractors to include fatigue, distraction, complacency, pressure, lack of resources or the incorrect resources, lack of teamwork, communication, and cooperation. These factors all need careful consideration in the context of your own business operations and effective management, starting with assessing contractor-specific risks and putting plans in place to mitigate them.
- Managing Cost is key: Contractors typically receive higher hourly rates than traditional employees, so you’ll want to be mindful of how you’re using their time. Being organised and efficient will help you get more bang for your buck – so you can save money while still benefiting from their fresh perspective and expertise.
Key Considerations for contractor management to ensure HSE Compliance:
Managing contractors in accordance with UK law involves several key considerations to ensure compliance and successful working relationships. Here’s a practical guide to help you navigate the process:
- Determine Employment Status:
- Understand the different employment statuses, such as employee, worker, and self-employed.
- Use HM Revenue and Customs (HMRC) tools or seek legal advice to determine the correct employment status for each contractor.
- Draft Clear Contracts:
- Create comprehensive contracts outlining the terms and conditions of the engagement.
- Clearly define the scope of work, payment terms, duration, and any other relevant details.
- Consult with legal professionals to ensure contracts comply with employment laws.
- Tax Obligations:
- Be aware of tax obligations for both the contractor and your organisation.
- Ensure that contractors are responsible for their own tax and National Insurance contributions.
- Stay informed about IR35 legislation, which determines whether a contractor is genuinely self-employed for tax purposes.
- Health and Safety Compliance:
- Include health and safety provisions in contracts, outlining responsibilities for both parties.
- Ensure contractors are aware of and adhere to relevant health and safety regulations.
- Conduct regular safety checks and inspections.
- Insurance:
- Verify that contractors have appropriate insurance coverage, such as professional indemnity and public liability insurance.
- Include insurance requirements in contracts and request proof of coverage.
- Right to Work Checks:
- Verify the right to work in the UK for all contractors.
- Keep records of necessary documentation and conduct periodic checks.
- Payment and Invoicing:
- Agree on payment terms and ensure they are clearly stated in contracts.
- Implement a transparent invoicing process and set clear guidelines for payment schedules.
- IR35 Compliance:
- Keep abreast of IR35 legislation, which can affect the tax status of contractors.
- Ensure that contractors working through intermediaries are compliant with IR35 rules.
- Data Protection and Confidentiality:
- Include clauses in contracts addressing data protection and confidentiality.
- Ensure contractors understand their responsibilities regarding sensitive information.
- Dispute Resolution:
- Establish a process for resolving disputes and document it in contracts.
- Consider alternative dispute resolution mechanisms, such as mediation, to avoid legal proceedings.
- Review and Update Policies:
- Regularly review and update your policies to ensure ongoing compliance with changes in legislation.
- Communicate any changes to contractors and provide guidance as needed.
- Regular Communication:
- Foster open communication with contractors.
- Address any concerns or issues promptly to maintain a positive working relationship.
- Training and Development:
- Provide necessary training to contractors to ensure they are aware of relevant policies and procedures.
- Encourage ongoing professional development.
- Audit and Monitoring:
- Conduct regular audits to ensure compliance with contractual terms and legal obligations.
- Monitor performance and address any issues promptly.
- Legal Advice:
- Seek legal advice when needed, especially when drafting contracts or dealing with complex employment issues.
One last tip to manage your independent contractors more effectively: save time with AssessNET Contractor Management and Permit-to-Work modules.
Good contractor management is key to ensuring compliance with HSE law and keeping your contractors safe, but it requires time and energy – and that’s where we come in. We have recently enhanced our Contractor Management and Permit-to-Work modules to help you streamline contractor management processes and ensure that the right people are carrying out the right jobs at the right time. Request a free trial today!
