The pros and cons of employing freelancers

19 Aug 2016 (provided by Local Transport Today)

The pros and cons of employing freelancers

From an employer’ perspective, there are both benefits and drawbacks in using freelance travel planners, says Peter Blair, head of transport UK at consultants WYG.

WYG employs two principal types of freelancers, says Blair. Firstly, there are consultants who may be niche experts, sometimes almost national experts in a particular field. Then there are what are commonly known as ‘contract staff,’ whose skill set is typically akin to that of their permanent staff, but who choose to offer their services as freelance consultants rather than take up a permanent staff role. 

Blair values the specialist expertise that freelancers bring. “The chief advantage is that they provide an available resource that can be called upon at relatively short notice to help meet peak work demands for resources or skills,” he says. “Equally, they can be let go when workload dips or permanent staff numbers grow.

“A further advantage is that niche freelance consultants can provide specific expertise on projects where the need for such expert input is so infrequent, or of such small scale, that it would not justify a full-time permanent staff role. Niche freelance consultants are most useful when we have a specific requirement to deliver highly specific expertise, typically to deliver one element of a multi-skilled project. 

“The more typical freelance contract staff are most useful when working in a team of permanent staff to process a significant quantum of workload, under the direction of a senior member of permanent staff.”

But there can be distinct drawbacks of using freelancers, says Blair. “The disadvantages are that they are generally more expensive than permanent staff, and they can and do choose to leave at short notice. The employing company must therefore manage projects in such a way as to mitigate the impacts of losing project knowledge and resource when the freelancer leaves. Typical reasons for leaving include moving for better rates, or to secure a longer term position elsewhere. 

“The latter reason is particularly prevalent when the project they are working on is a few weeks from ending, and therefore at a time when the impact of their departure can be greatest. For these reasons, in practice, less responsibility and accountability is placed on contract staff. This all combines into a further disadvantage, which is that the lesser degree of accountability, coupled with their apparently better rates of pay, can foster strained working relationships with permanent staff.” 

Blair believes that freelance consultants can be a financially efficient solution for any company if used to address peak workloads, but they will become a more expensive solution if they remain employed for an extended period. He also notes that another significant set of financial implications arise around the subjects of employee benefits and tax. HMRC have strict criteria around the differences between freelance and permanent employment. 

If a freelance consultant stays long enough with the same employer, to the extent that HMRC regard it as a permanent employment position, then the employing company can be liable to provide the employment benefits and tax payments commensurate with permanent staff, and the freelance consultant can be liable to pay higher levels of income tax.  

Peter Blair: The chief advantage of using freelance travel planners is that they provide an available resource that can be called upon at relatively short notice to help meet peak work demands.

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