A Contractor’s Guide To Getting The Most Out Of Recruitment Agencies

When securing new work, contractors have the choice of applying to businesses directly, or utilising recruitment agencies in their search. With 59% of UK businesses using recruitment agencies to help them secure top staff, it’s clear that contract specialist recruiters have access to some fantastic contract options for contractors.

Whether they are in IT, tech, engineering or another sector, contractors can get the most out of recruitment agencies by using their established networks, resources, knowledge of regulations, and experience to maximise their opportunities.

In order to explore how contractors can use recruitment agencies efficiently, this guide will define and answer the following:

• What is contracting?
• How do professionals become contractors?
• How can recruitment agencies help contractors?
• What regulations and compliance do contractors need to be aware of and follow?
• Do contractors need insurance?
• How do contractors choose the right recruiter?

What is contracting?

Contracting refers to a working arrangement where individuals are engaged to provide services for a specified period, typically through a Personal Service Company (PSC) or umbrella company, on a “time & materials”, or outcome-based model, with the individual remaining self-employed, or as a worker, rather than a direct employee.

Contractors are typically engaged to provide their skills and services to a business for a set period, often through an intermediary such as a Personal Service Company (PSC) or umbrella company. Once the contract ends, contractors may have the option to renegotiate or extend their contract, but they remain self-employed rather than directly employed by the business. Contract work is common in industries such as technology, engineering, and construction, where businesses require agile, specialist workers for specific projects or defined periods of time. This flexibility allows businesses to meet project-based demands while the contractors focus on delivering specific outcomes.

Working as a contractor has a number of benefits such as:

• Increased flexibility
• Higher earning potential
• Greater control and choice over work
• Opportunities for more varied and interesting work

However, contract work is also risky. It can be unreliable with no guarantee of future work. There is also a lot more administration and compliancy to contend with, due to the nature of running a business as a PSC or Limited Company.

However, many of the drawbacks of contracting can be lessened with the support of a specialist contract recruitment professional. Contractors just have to learn how to use recruitment agencies effectively.

How do professionals become contractors?

For professionals new to the world of contract opportunities, becoming a contractor can be daunting. By taking up contract work, IT professionals essentially become their own boss, which can have major advantages but will also create some challenges.

Before becoming contractors, professionals should:

• Get in touch with and talk to other contractors to get core insights into their industry. After all, contracting is completely different to permanent work. They should look to understand current average day rates and which skills are in demand by employers, as well as top tips for securing contracts.
• Understand regulations around contracting by asking for advice from recruitment, legal and accountancy professionals on how to work compliantly within the law and navigate the paperwork, whether they’re registering as a sole trader or setting up their own company.
• Ensure that their LinkedIn profile is attractive to recruiters and hiring managers alike, regularly update their LinkedIn and make sure that they are easily searchable to increase opportunities.

Why do contractors need recruitment agencies?

Many contractors prefer to work with recruitment agencies to source their new contracts, rather than applying for work directly or using their connections, for a multitude of reasons.

Contractors can get the most out of recruitment agencies by using the consultant’s knowledge and experience in areas such as:

• Insights into the process – contractors going through recruitment agencies for opportunities can highly benefit by gaining key insights that can help them make sensible decisions. The interview process can be very fast-paced, especially if the organisation needs a contractor for an urgent reason. In order for contractors to get the most out of recruitment agencies they are working with, there are many good questions to ask the recruiters involved including key insights into the business, the projects and the process. This understanding will help the contractors make informed decisions.
• Access to networks – specialist recruiters, in particular, will have worked with organisations in the contractors’ sector for years. This means they will have valuable contacts. Some companies only recruit through agencies, particularly for contract roles, so engaging with recruiters is key to contractors ensuring they have full access and oversights of contract opportunities.
• Contract negotiation experience – for seasoned contractors, they may be well adept at contract negotiations, and some may even enjoy this aspect of securing a contract. However, for new contractors and many others, they may not feel confident in their negotiation abilities and may just want to get on with doing their job well. This is where contractors can get the most out of recruitment agencies, as they are very used to negotiating contracts and ensuring all parties are happy with the end result.

What regulations and compliance do contractors need to be aware of and follow?

There are a number of regulations and laws that affect a contractor’s end take home, their liabilities and their responsibilities. The relevance to each contractor will depend on whether they are working through their own company, or through an umbrella agency. It is vital that contractor compliance is adhered to, as not following the right regulations can have serious financial and legal consequences for contractors.

Key pieces of legislation and regulations for contractors

IR35 – A major piece of legislation that requires end clients to make a Status Determination Statement (SDS) as to whether a contractor can be considered ‘Inside’ or ‘Outside IR35’ according to their contract. This will affect whether a contractor should be taxed via PAYE or not.

Companies Act 2006 – For contractors that are providing services ‘outside IR35’ through their PSC, the Companies Act is piece of legislation that defines each contractor’s responsibilities and liabilities as a business owner, shareholder, and a director.

Agency Worker Regulations (AWR) – Contractors who are working ‘Inside IR35’ and being paid PAYE via an umbrella agency are expected to also receive certain benefits, such as equal pay, holiday pay, rest breaks etc.

Recruitment Agency/ End Client Responsibilities – New regulations introduced in the Autumn 2024 Budget place a responsibility on recruitment agencies, or end clients if no agency is involved, to ensure contractors are paying the correct amount of tax when engaged through an umbrella company. These changes aim to tackle tax non-compliance within the umbrella company market, addressing concerns raised about certain non-compliant practices, while ensuring greater oversight and accountability.

Key Information Document (KID) – A required document that states payment terms, payment frequency, and a list of deductions, which should be transparent and clear and understood by each contractor in full before contracts are accepted.

Do contractors need insurance?

Contractors need adequate insurance to protect themselves from risk. In fact, the level of coverage is sometimes stipulated by end clients within contracts.

Professional Indemnity Insurance (PI) – This insurance is most routinely required in contracts and covers claims arising from professional errors and omissions.

Public Liability Insurance (PL) – PL is another common insurance that covers compensation due to accidental injury or property damage.

Less common insurances to take out include Income Protection and IR35 Insurance. The level of cover each contractor wants will depend on how much risk they are willing to take on. Whilst insurance is not a legal requirement, PI will often be required by contracts.

How to choose the right recruiter

Not all recruiters are alike. Thus, there are a number of things contractors should look out for when trying to find the right recruiter for their job search. By understanding how recruitment agencies work, contractors can get the most out of recruitment agencies.

For example, contractors should ask recruiters questions around the following topics:

• Does the recruiter specialise in the same field as the contractor’s niche?
• What is the recruiter’s focus? Contract or permanent or both?
• Does the recruiter bring up compliancy and instil confidence?

Contractors will come into contact with a variety of different recruiters with titles such as ‘Account Manager’, ‘Recruitment Consultant’ and ‘Delivery Consultant’. It is important for contractors to establish what each consultant they talk to does and the array of clients they have access to as that’ll help each contractor understand whether they’re speaking to the right recruiter for them.

Certain recruiters will only be in contact with specific sets of organisations that they will work on opportunities from, or they will only support professionals within their particular niche, whilst other recruiters will have access to a wider range of opportunities. Whichever recruiter is best suited will depend on the individual contractor. By being aware of such intricacies, contractors will ensure they’re getting the most out of recruitment agencies.

Get the most out of recruitment agencies and thrive!

Recruitment agencies possess extensive specialist knowledge and expertise of the ins and outs of contracting, which can make them a fantastic resource for contractors. From having access to a wide array of fantastic jobs to support with contracts and compliance, agencies have a lot to offer contractors. Contractors just need to know how to make the most of recruitment agencies to maximise opportunities and thrive.

VIQU is an award-winning IT recruitment agency, winning “Best Contractor Recruitment Agency” at the Contracting Awards in 2024. If you are a contractor looking for new opportunities, please send in your CV here or check out our latest contracts here.