There has been an increased demand for day rate contractors in the market and this is now seen as a normal way to hire individuals for short term work. Companies can still hire some skills on a fixed purpose basis but generally only at a lower skill level i.e. graduates or juniors. Where companies need specialist skills they generally have two options - either hire a day rate contractor or use a consultancy firm.
A day rate contractor is an individual who works through their own Limited Company or through an umbrella company. Client organisations generally engage contractors through a recruitment partner who has the contacts to be able to source specialist skill demands. The individual is effectively an independent limited company so that neither the client nor the agency become liable for any employee related taxation issues. The individuals who are their own company are responsible for fulling their own taxation responsibilities. Those employed through an umbrella company leave it to the umbrella company to sort out for them and pay a small fee to the umbrella company to do so. In both cases individuals effectively become employees of their own companies and as company directors save on employers PRSI contribution etc. If setting up a Limited Company you will also have to open a business bank account. Depending on the contract you may also need to take out Professional Indemnity and Employers Liability insurance. Our own experience is that professional indemnity insurance can be difficult to source and is somewhat ineffective so you can end up having professional indemnity insurance that doesn't indemnify your work. It's an example of regulations for regulations sake in some cases.
Client organisations engage contractors on a rate per day. If the contractor doesn't work then the client organisation doesn't get charged. The other side of this is that contractors don't get paid holidays or sick pay. Rates are calculated based on the individual’s expertise level, the contractor length and generally the recruiter will negotiate on behalf of both the client organisation and the contractor and put in place appropriate contract paperwork. Contractors then work and have their weekly or monthly time sheet signed by the company to confirm that the work has been performed and that the client organisation are now ready to accept an invoice. This signed time sheet is sent to the recruitment partner together with the contractors invoice. Professional recruitment partners will pay the contractor within 5 working days. At Raretec generally we pay our contractors with 2 days of receiving contractor invoices. The recruitment partner then bills the client organisation and generally get paid within 1 - 3 months.
The main reason individuals take up day rate contracts is that it is an opportunity to earn more money. As well as the financial benefits, contracting is a great option for individuals who enjoy variety in their work and wish to gain broad experience. Many contractors also enjoy the flexibility of not having a set number of holiday days a year, for example they may wish to work for nine months of the year and travel for the other three. Some contractors also find that by being contractors they are not involved in office politics and simply get on with their work.
On the client side there are also many benefits to hiring a daily rate contractor including the flexibility of increasing and decreasing team numbers as required by the work without the worry of redundancies or getting head count sign off. Contracts are not included in head count numbers so effectively productivity per head increases when contractors are engaged. In addition you do not have to cover benefits and training and normally a contractor is skilled and ready to tackle whatever work they have been engaged to perform.
Demand for actuarial contractors has been on the rise in recent years, the main current driver being Solvency II led work. We also have seen an increased demand for pricing actuaries on a contract basis.
If you’re considering becoming a day rate contractor we would be happy to help. Just get in touch with Jacqui van Teutem on 01 5311400 or email firstname.lastname@example.org.