Using contractors for your IT needs can be a good idea as it allows you to concentrate your company’s resources on your business.
- You also don’t have to administer holiday and sick pay and collect tax for contractors, and employing a person as a contractor can be up to 30% cheaper than taking them on as a full-time employee.But if you’re going down this route you need to understand exactly what a contractor is. Contractors are engaged to perform specific tasks or to produce certain results, and are usually paid on the completion of the tasks that they’ve been engaged for. They usually
Run their own businesses.
- Provide their own equipment or work from their own base of operations.
- Determine for themselves how their duties are performed.
- Are able to subcontract work.However you need to be careful in employing contractors. Sometimes the law regards them as actual employees. For example, the High Court of Australia said that bike couriers were employees, despite the existence of a contract saying they were independent contractors. The court said that because the employer provided uniforms and had control over their movements, they were actually employees. In contrast, the NSW Supreme Court held that a car courier was in fact a contractor because he had provided his own car, which was considered to be a significant investment in the ownership of the tools of the trade.
The majority of contractors are supplied by specialist vendors or temporary staff agencies. They have experience in the drawing up of contracts and can manage administration such as induction, timesheets, agreed timelines for completing projects, compliance with EEO, privacy and OH & S policies, and security clearances.
A senior person should liaise regularly with the vendor on the performance of the contractors and the progress of the projects. They should have a good understanding of the contracts, so that they will know how a contractor can be terminated for unsatisfactory performance. Fostering a free flow of two-way communication is the best way to build a positive relationship with the vendor.
You need to get the right contract for the job, so you should take an active role in the writing of the contract. Remember it is a legally biding document. It’s vital that the contract clearly defines the responsibilities of the vendor, the contractor and the client, and that nothing is left open to interpretation. The contract should cover the length of contract, performance expectations and appraisals, terms and conditions, confidentially agreements, pay rates, adherence to company policies and procedures, and insurance and taxation responsibilities to termination procedures.
Of course if you contract someone privately you will need to liaise very closely with them, but it may work out cheaper than through a vendor. On the other hand, it may result in more administrative work for HR.
As a manager of contractors you have various legal issues to consider. These include complying with relevant state and federal laws in relation to OH & S, workers compensation, public liability insurance, and equal opportunity laws. For example, you will need to know what action to take if a contractor sexually harasses one of your employees, or vice versa. If unsure, you should always seek legal advice.