Outsourcing 101

If you've never used contractors before you might find the following FAQ's helpful...

How quickly can I get a contractor in?

Once you know what you need and have given the go-ahead to a managed service provider or agency, you will be able to get a contractor in post very quickly. Once Penpole has been given the go ahead we present a shortlist within 60 hours. Meetings can then be set up quickly for you to meet contractors and once one has been selected, we can get them in post within a matter of days.

If I’m getting a contractor in so quickly, how do I know the right checks take place?

We qualify all contractors over the phone before representing them to a client. We also ask that they have the right to work in the UK. Once an offer has been made, we get copies of all the contractor’s right to work and identity documentation and speak to two professional references.

Can I stipulate working hours?

Working hours is one of the criteria that HMRC use to assess IR35 status. If the assignment has been deemed outside IR35, stipulating working hours may cause issues.

Do I have to provide sick or holiday pay?

No, a contractor is operating through their own personal services company or through an umbrella company and therefore is not your employee.

Can I claim back VAT?

Within the NHS, CapEx spending could be utilised on certain Contracted Out Services (COS) used for non-business activity, under this scheme the NHS body could claim back the VAT spent on this service.

What if things don’t work out?

Contractors have no rights under employment law and therefore can be let go very quickly. The contract between Penpole and our contractors states that during the first month, one month’s notice will be given, and after this, two weeks. In certain cases, if the services being delivered do not meet the required level, a contractor can be let go immediately.

Why are contractors paid more than permanent staff?

Contractors take on more risk than permanent employees as they have none of the securities, such as sick pay, pension, holiday pay etc. They also need to look for new contracts once their current one has finished, and often spend several months of the year without a contract. Their limited companies also have certain overheads, such as professional indemnity insurance.

Can a contractor have more than one client at a time?

There is nothing to stop a contractor from having two client contracts at the same time. In fact, this is preferable from an IR35 perspective. However, we always encourage contractors to be open and upfront with all clients concerned.