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Contractor vs. permanent staff – the pros and cons

The number of temporary agency contractors has risen sharply in recent years, with over a quarter of a million contractors now working in the UK; the majority of whom work in the private sector. Businesses may stand to gain from using contractors to carry out short term work, or when specialist skills on specific projects are required, however, it’s important to weigh up your options before taking on a contractor.


  • Flexibility – you can hire a contractor as and when your business needs fluctuate
  • Specialist skills – one off jobs which require specific expertise can be solved through contracting
  • Fast turnaround – contractors can start at short notice and work for short periods of time, even if larger numbers are required
  • Less admin – you normally have no PAYE or national insurance requirements for contractors. Temporary – easy to obtain temporary cover for staff who are away.


  • Cost – it could cost your business more to hire a short term contractor than recruit a new employee.
  • In house skills – outsourcing doesn’t let your own in house staff learn or acquire new skills
  • Existing employee resentment – permanent staff may begrudge contractors being paid more for doing similar work.
  • Work ethic – some contractors may not appreciate your personal business culture, lack motivation or commitment.
  • Tax implications – contractors or subcontractors have different tax implications and it’s important to know your responsibilities. It is important to discuss this with us.

We can help with management and tax responsibility regarding contractors. Please contact us to find out more.