PrintEmail

ans Serif">Using a contractor is all about matching resources to result in the most flexible and cost effective result possible.

ans Serif">Employing a consultant or contractor is the smart way for businesses to utilize their financial resources. The benefits that contractors bring to an organisation are invaluable.

• ans Serif">Firstly - there is focus.
  Contractors offer a business total focus on the job including costs and an understanding of the skills and resources that contribute directly to results. Simultaneously they bring fresh ideas from other organisations and objectiveness.
• ans Serif">Secondly - contractors promote the timely and cost effective completion of projects.
  More timely completion means being more competitive in the marketplace. There are no ongoing employment or overhead costs - so you pay directly for what you get and you use resources and skills flexibly.
• ans Serif">Thirdly - there are ethics and confidentiality.
  A contractor is only as good as their last assignment.

ans Serif">Employing contractors is the future for smart organisations. It offers considerable opportunities for you to employ only the very best.

However there are some traps and pitfalls involved in employing contractors.

ans Serif">Work within the law
Firstly, deciding to employ someone as a consultant or contractor as a way of avoiding paying PAYE or other inherent "hassles" can run you foul of the law.

• ans Serif">If all or most of the following features are present in a work relationship, it is likely to be a contract for services involving a self-employed contractor:
• ans Serif">The intention of the parties to the contract is not to form an employment relationship, and the actual nature of the relationship reflects this.
• ans Serif">The contractor controls how and when the job is done.
• ans Serif">Payment is made in a lump sum at the end of a job, or in instalments as progress is made on the job.
• ans Serif">The contractor can choose who does the job and can hire other people without approval from the other party.
• ans Serif">The contractor pays any tax, ACC and insurance directly.
• ans Serif">The contractor can make a profit or suffer a loss directly.
• ans Serif">The contractor supplies equipment and materials.
• ans Serif">The contractor is free to accept similar work from a number of sources at the same time.

ans Serif">If not, then IRD may seek PAYE payments from you and you may find the person you thought was a contractor is entitled to paid annual leave, statutory holidays and now covered by the Employment Relations Act and a raft of other pieces of legislation.

ans Serif">Aim for clarity
Secondly, not being clear about what it is the consultant/contractor is there for and not having the terms and conditions in writing, can lead to disagreements and you paying for something that isn't delivered.