IT contractors must, by their very nature, be treated differently to permanent employees. This two-tier workforce can seem impossible to manage on top of tightening deadlines, stretched budgets and stressed out staff.
There are many issues within this environment for an IT manager to resolve. A contractor may feel left out of the work culture – whereas a permanent staff member may envy the perceived freedom a contractor has, for example. How can you successfully manage such issues?
“To create productive and healthy relationships between contractors and employees you need openness, transparency and to play by the rules,” according to Victoria Kelly, Practice Manager at specialist contractor accountancy firm Nixon Williams.
This culture needs to begin before a single contractor is brought into an IT team. “The benefits of bringing in IT contractors need to be clear for permanent employees – explain it is a sign that the business is thriving and an opportunity to relieve staff of unmanageable workloads,” Kelly said.
One of the biggest bones of contention can be the high rates of pay contractors receive. Recent research from Nixon Williams found two-thirds of the 516 IT contractors they surveyed commanded rates of between £400 to £750 per day, which can seem a lot more than a day’s wages to a regular employee.
“It should also be made clear to employees that, although a contractor is on a high rate of pay, they do not gain the same benefits as a permanent employee. There is a lot of work behind the scenes when working as a contractor – make sure you educate your permanent staff members so they realise this and nip any jealousy in the bud,” Kelly adds.
Classify staff correctly
While treating employees and contractors differently can cause friction – even worse problems can occur if they are treated the same way, but compensated differently.
“It is important to ensure you are classifying contractors and permanent staff properly, not just from a team management perspective but from a legal mindset too”, Kelly adds. This boils down to a piece of legislation known as the IR35, which stop sun scrupulous contractors dodging tax payments but also stops IT managers from exerting a certain level of control over their contractor staff.
If you try to exert that control, contractors could demand all of those benefits their permanent peers are getting and they do not receive. And legally they could be in the right, which could cost your business in legal fees and back taxes.
“Make sure you understand the legislation and are meeting your requirements for contractors,” Kelly added, “It can be harder than you think so seek advice from a specialist if in any doubt.”
Contractually, the two sets of the contractor and permanent staff are very different – but it is also important to include IT contractors within the wider business community.
“The key to managing a team comprised of both contractors and permanent staff is to develop a culture of inclusiveness that doesn’t create an ‘us and them’environment,” according to Joe Osgood, contracts team leader at ReThink Recruitment.
“Firms should focus on treating contractors in the same way as full-time staff and that means things as simple as including them in staff meetings, social events and encouraging them to take annual leave if it’s written into their contract,” Osgood added.
Using contractor staff to aid your permanent employees brings many benefits, but if the issues between the two classifications of workers create too many headaches, you may question whether it’s worth the trouble.
As long as you engage with employees in the decision to hire contractors, educate permanent staff on the different privileges and benefits each group receives and treat everyone fairly according to their classification, conflict can be avoided. What’s more, you will manage a team with a diverse range of experience and skills that can educate and benefit one another, and make your project a success.
If you feel that now is the right time to make the move to contracting, you can call our New Business Team on 01253 362062 or email firstname.lastname@example.org