You want your workforce to remain flexible enough to respond to the needs of your business. HR expert Sally Jackson explains the best ways to take on people to achieve that.

It’s important for small companies that want to be competitive to have a workforce that is flexible enough that it can respond effectively to the ebb and flow in their business. They need to expand when there are big projects to be completed, but then contract again when those have been completed.

So what are your options for building a workforce that remains nimble without becoming bloated?

Put them on your payroll, rather than hire a contractor

If you’ve just won a new contract that requires you to take on someone new then my advice would be to hire them as a new employee on a fixed-term contract, which ends either on a specific date or when the project is completed.

I can imagine that line of thought may provoke a response from small business owners, worried this means they will have to pay National Insurance, holiday pay, sick pay, perhaps even a pension. But try to think of it another way.

That person will enjoy the full rights of an employee, it’s true, but you won’t be paying them at contractor rates, which tend to be much higher than employee rates of pay – precisely because they don’t have the rights and perks of being a salaried staff member.

It’s easy to increase the length of the contract, or roll it on for an extra period, without considering how you’re continuing to spend excessive amounts on contractor fees. As an employee, albeit on a fixed contract, you’d treat them the same as you treat everyone else in your business – which means that you’re much less likely to fall foul of any employment laws.

Furthermore, it’s a good idea for you to do this to help build your reputation as a good employer. Why is that important?

Well, small businesses sometimes find it difficult to compete with their bigger rivals for new talent, so if word spreads that your company is a good place to work because you treat everyone consistently and fairly (even if they’re only with you for a short time), you should find it easier to attract high-calibre recruits when the time comes that you need to hire.

Taking on new people as fully-fledged employees makes good sense from both an HR perspective as well as for your bottom line. The important thing is to remember that the fixed-term contract has an end point, and to plan for that, so everyone knows whether the contract will continue or end as originally agreed.

Hiring a temp

You might choose to hire a temp from an agency instead of a new member of staff, perhaps because you need an extra pair of hands to help you meet a tight deadline, or if one of your regular members of staff is absent. But in that case you should keep a close eye on their work status.

That’s because not only are they costing you more than an employee, but also because an agency temp will be entitled to the same pay and benefits as a comparable permanent member of your staff if they work continuously for you for 12 weeks or more.

This could end up costing you even more in the longer term, as these benefits include bonuses, access to staff facilities, childcare vouchers, and anything else that you might offer your permanent employees.

So, if you end up paying over the odds then what’s the point of using a temp? If you like that person so much that you don’t want them to leave, then it’s much better to offer them a permanent job than to agree to roll over their contract. Or, use temps as they should be used – for short, one-off pieces of work, never lasting more than 12 weeks.

‘Bank’ workers

Some businesses choose to build a team of casual workers, who work regularly for them but come in only when they are needed. That is often ideal for firms whose business can be very unpredictable.

These workers have fewer rights than a full-time employee, but they are entitled to a range of benefits, including:

  • Paid holiday
  • Limited maternity rights
  • Protection under Working Time Regulations, such as for rest breaks, a limit on working hours, and limits on night work,
  • Entitlement to receive the minimum wage,
  • Statutory sick pay,
  • Protection from unauthorised deductions from pay
  • Protection against being treated less favourably for being part time;
  • Protection from unfair discrimination under the Equality Act (on the grounds of sex, race, sexual orientation, age, religion or belief, marital status, disability);
  • Protection under health & safety legislation,
  • Protection under the Public Interest Disclosure Act on whistleblowing
  • Protection against discrimination on the grounds of being a trade union member

However, because bank workers work only “as and when required”, they can offer you a fully flexible solution for your business.

A word on interns

Over the past couple of years there has been a surge in the popularity of internships. I know businesses in the creative sector in particular are inundated with requests for work experience from students desperate to get on the first rung of the career ladder, but outside of work experience required as part of their degree course, interns should not be regarded as free labour.

It’s fine if they are simply shadowing members of your team to get an understanding of their jobs, but if you ask them to carry out work for you, including giving them a specific project to complete or requiring them to work certain hours, then the law clearly states that they must be paid. This must be at least the minimum wage rate.

It’s no defence for you to say that the student is willing to work for you for free, albeit in return for valuable experience. Similarly, just because another firm you know is doing this, it doesn’t mean that this is legal.

So, think about how and why you want to use an intern, and remember: by treating them properly you could potentially reap long-term benefits, with bright, enthusiastic young people keen to become full-time employees of your business.

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