In the UK today there is an underlying shortfall in the number of experienced IT staff on the market. This is sometimes referred to as a experience rather than skills shortage. Rapidly advancing technology in hardware and software and the impact of networking and communications are enhancing IT career opportunities. Contract IT professionals can be compared to Consultants in other professional fields; they are available to offer experience at short notice on a specific task, within a fixed period of time. As a contractor, you are an independent "small businessman/woman" governed only by the specific provisions of any contract you enter into (a contract for services). If you work as a contractor on Client site there are two contracts involved, one between you and the agency and one between the agency and the Client. There is no direct contractual relationship therefore between the contractor and the Client (unless entered into a direct contract as explained further).
The job of the agency (in this case Reflex) is to supply contractors to meet Clients needs, we try to match skills with requirements, arrange interviews as well as negotiate the terms of contract and rates. Once the contract has started, the agency is responsible for;

• Regular contact with the contractors to check on progress and any issues causing concern
• Paying the contractor on a regular basis
• Handling possible renewals, additional resources and new contracts.

It is in the interest of the contractor to leave agencies to deal with finding work, negotiating terms and conditions, drawing up contracts and other aspects of administration, leaving the contractor to spend their time more profitably working on their contracts and not worrying about regular payment if a Client is reluctant to pay on time. This is one of the reasons why our stability and profitability is of crucial importance to you. At the end of your contract with Reflex you are independent of the services that Reflex provide on your behalf.

The Contract market today

With the world economy in turmoil the contracting market flattened out in the 4th quarter of 2008, and there are signs that this will at best continue through the 1st quarter of 2009. However there is strill a strong contract market and with the right approach you should still be able to enter this profession with confidence.

The main growth areas, which are resulting in a solid demand for IT professional contractors, are in the area of the Internet and more importantly e-commerce.

The question of contractor rates is often a vexed one. This is because there are so many factors, which affect them. They include the nature and type of assignment as well as the skills and experience sought. The resulting rates tend to vary from £10-£16 an hour for junior roles for example junior PC Support roles, through to £28-£46 an hour for experienced Analyst Programmers and £49-£110 an hour for Project Managers and Interim Management.

The Government have changed the regulations of Limited Companies as from April 2000 and introduced IR35. Further information is available from the Inland Revenue web site www.inlandrevenue.gov.uk/ir35. As these regulations affect most contractors and the contract market in general. We recommend that you seek the advice of a qualified accountant who can give you the best advice as to how to organise your affairs.

The Government introduced in 2004 a number of new regulations, of which we highlight, which we feel will currently will cause the most affect on candidates, contractors and employers.

The S8 Asylum and Immigration Act came into force, which creates new obligations for employers in that they must now check proof of identification for all their new employees. This means that candidates and contractors need to have photo ID to hand, together with any visas where appropriate, which the employer will check at the appropriate time and take a copy for their records. The Home Office has issued guidance as to the documents, which must be checked.

The Conduct of Employment Agencies and Employment Businesses Regulations (known as the EAA Regulations) came into force and replaced old legislation on the regulation of the recruitment sector. Full details of The Employment Agency Act can be found at: http://www.legislation.hmso.gov.uk/si/si2003/20033319.htm
The EAA Regulations were introduced to tidy up old legislation affecting candidates, contractors and employers and to provide greater protection for all, however they also produce further obligations for all parties to ensure compliance to the new regulations. If you would like further information on how this may affect you, The DTI has published a advice guidance document:http://www.dti.gov.uk/er/agency/conduct.pdf.

The new regulation have resulted, amongst other things, that we all have increased responsibilities regarding the flow of information prior to and during the recruitment process. We have incorporated the relevant changes into our Terms and Conditions and into our standard Contracts for Services. We act as an Employment Business for the arrangement of temporary contract assignments and as an Employment Agency for the arrangement of permanent job placements. Specific details of each contract assignment or permanent placement, such as rates of pay, nature of the work, notice periods etc. will be discussed with the candidate prior to us forwarding their details to the Client.

Further Government legislation in the 2007 Budget changed the way in which Managed Service Company's (MSC' s) and Personal Service Company's (PSC' s) operate, and will almost certainly affect the way in which contractors are treated by the Inland Revenue. The Chancellor of the Exchequer, Gordon Brown, has sounded the death knell for Composite or Managed Service Companies (MSC). In his speech to Parliament he said, “The Government is taking action to tackle Managed Service Company schemes, which are used to avoid paying employed levels of tax and NICs”, adding that contractors providing services through an MSC will, “Be subject to employed levels of tax and NICs”. As result Reflex advise all contractors that they must take full Tax advice from independent sources before deciding on which method of contracting is best for them.

Currently the most practical advice can be found from The Recruitment Industry standards and regulation body The Recruitment and Employment Confederation (The REC) website, http://www.rec.uk.com. Reflex Computer Recruitment are leading members of the REC and abide by its strict code of conduct. The REC has produced some specific guidance leaflets and the links can be found further down this page. The main new requirements are as follows:

1. For Candidates and Contractors
Any person registering with an employment agency must provide proof of identification. Ideally a copy of a form of photo ID, and they must also provide copies of any specific qualifications, which are required for a role they wish to apply for. The employment agency must have these documents before they can put someone forward for a role, whether this is permanent or contract. Click here for REC specific guidance leaflet for Candidates.

2. For Limited Company Contractors
The EAA regulations were partly introduced to ensure a greater level of protection for contractors, but they have also resulted in the requirement for the Contract to produce additional paperwork and follow new administrative procedures. Also under the Inland Revenue IR35 Taxation legislation, the EAA regulations could have an impact on the tax advantages of the limited company contractor. Fortunately all Contractors do have the chance to opt out of the regulations, but must sign a consent form for this. Reflex Computer Recruitment have an approved consent form for those contractors who wish to take advantage of this. Click here for REC information for Limited Company Contractors regarding opting out of the regulations.

Click here to download an Opt Out consent form.

Using Agencies

Always instruct the agencies that are representing you to consult you before contacting the Client so that you can avoid your CV being submitted to the same client twice. To avoid being contacted unnecessarily by an agency and to allow them to select the most appropriate opportunity, it is important that you provide as much information as possible on your technical skills and experience and also information such as rates sought, location, availability etc.

We, as leading member of the IT Division of REC, recommend you always look for the REC logo and if an agency is not a member ask them why not?

Contracting Versus Permanent Employment

The choice of continuing in a permanent position or joining the ranks of the independent contractor is a dilemma that will be faced by the majority of IT professionals at some time in their career. Before you decide to begin contracting you need to evaluate the advantages and disadvantages. One of the greatest concerns is monetary, we recommend that your contracting income should be at least 25-50% higher than your permanent rate to compensate your down times. Down time covers time between contracts and for days off for sickness, holiday and training. Contracting allows for variety within the workplace, however you do not automatically have any security within the workplace. You can make your own decisions yet you must be able to look after yourself and take responsibility for your own job description, as well as realizing that all your holidays will be unpaid, any time off sick will also count as unpaid leave. While contracting, generally your skill level is not reflected in a specific job title or seniority, there is no promotion as such. A new contractor must be able to consider themselves a technical expert (three years solid experience) in at least one discipline. Personality also plays a major part, you must be able to display complete confidence in your technical ability and a confident and assertive nature will always triumph over a wallflower in the most competitive of market places. You should also consider:

• Do you have the skills that are in demand?
• What are the long term prospects for contracts?
• Are you the type of person who could adapt to new surroundings more regularly than you would if you were in permanent employment?
• Would contracting effect your home/family routine, possible uncertainty being out of pocket between contracts, and the stress put on if you have to live away from home to obtain work.

It is important to note that some of the perceived disadvantages of contracting are currently minimized due to current market conditions. The current marketplace is such that the demand for experienced IT professionals exceeds supply.

Preparing For Your First Contract

If you are moving from the permanent market place, obtaining your first contract can be a trying time, as your current employer will probably hold you to your full notice period. Whereas the contract marketplace will not always wait for the 4 weeks it will take for you to be available, combined with the fact that you may be competing with more experienced and available contractors. The best advise is to wait until you have a suitable contract before giving notice on your permanent position unless you have budgeted for a period of possible unemployment. Many major projects run to plan, and if contracting support is required and a Client is impressed by your potential contribution to the project your notice will not be a problem.

All Clients require agencies to obtain references prior to an interview so it is best to prepare for this. It may be possible to offer references other than your current employer i.e. ex work colleagues or Clients.

Once you have obtained your first contract, remember not to leave your current employer too quickly, you never know when you may need to contact them for a reference. Just because you have a new position it doesn't mean you should undermine your profession by opting to leave sooner than the required notice period, unless your employer provides the opportunity.

Obtaining Your First Contract

There are numerous agencies in the current IT marketplace, consequently the level of service offered is varied. When choosing the agency to represent you it is worth remembering that smaller agencies often offer a more personalised service, payment could be slower however when compared to larger agencies, margins may be smaller and the level of service may not be as personable. Always try to use an agency that is a member of REC as you then have a guarantee that they abide by the REC Computer Division code of conduct ensuring a high standard of recruitment facilities.

To obtain the contract you need to complete the following;

• Prepare your CV checking that it is error free, including spelling. (Liaise is the most commonly mis-spelt word).
• There is provision in the Conduct Regulations 2003 for companies and those workers whose services they supply, to opt out of the Conduct Regulations 2003. If, you, the Contractor, and the Individual to be supplied to do the work wish to opt out, please read the opt outs form carefully, and if appropriate sign it and post it to Contract Dept, Reflex Computer Recruitment, Abbey House, 1-25 Claredon Road, Redhill, Surrey, RH1 1QZ. You are also recommended to take prior independent legal advice.
• Ascertain in advance the agencies you wish to deal with. A personalised mailshot often produces good results.
• Ensure lines of communication are clear; install an answerphone, have a daytime telephone number (this could be a mobile phone), consider using e-mail and brief family members to take accurate telephone messages. This is important as some contracts are filled within 24-48 hours of being notified to Reflex.
• Any professional agency offering contract opportunities needs to offer a high level of support during the contract, at Reflex this support includes;

A comprehensive service which comprises of a permanent recruitment division as well as a contract division.

Onsite support, including social events and the provision of an on site representative as and when required.

Regular formal and informal reviews.

CV Preparation

Your CV is your opportunity to influence the Client and maximise your chances of gaining a contract. Ideally your CV should include:

• Personal information i.e. contact telephone numbers, brief education history, qualifications. It is worth considering investing in a mobile phone and answerphone to enable you to be contactable at short notice as Clients often wish to make interview arrangements at short notice, especially for immediate contract opportunities.

• A brief summary pointing out your aspirations and strengths

• Your career history ideally in chronological order, (refer to the REC CV guide layout).

Reflex respect your judgment with regard to your CV, therefore we leave the text and the format unchanged from that which you sent us. Remember to put the emphasis more on your recent work and do not undersell or oversell your strengths and experience.

Interviews

First impressions are very important. The Client will be looking for confirmation that the contractor has;

• Sufficient skills
• Sufficient motivation and experience
• Personality and temperament to work with other permanent staff, managers etc
• Professional appearance (i.e. appropriately attired – normally business suits)

It is important that you use this opportunity to assess the environment you will be working in.

Make sure you know the name of the person conducting the interview. In all cases your agency should be able to furnish you with information about the company, the job requirement and interview format before the interview to increase the chances of you performing to your maximum potential. Reflex will always supply you with full interview details, directions to the Client site and interview guidelines before the interview.

As a contractor you are required to provide a service for a specified period. Contractors are usually employed because timescales are short, Clients like to see contractors working more or less to the same pattern as their permanent staff.

To complete your contract successfully we make the following recommendations;

• Follow the dress code conventions already on site
• Do not use Client equipment for anything except the work for which you have been contracted to do.
• Ensure that you have the appropriate security clearance required.
• Never bring your own diskettes into your workplace or remove diskettes for working from home without written authorisation.
• Don't get involved with office politics, permanent employees have the vote - you don't.

By following these guidelines you have also maximised the chances of being offered an extension to your contract.

Contract Options

There are 2 main options for carrying out your contract, namely working for the agency as an employee or carrying out the contract through your own limited company:-

a) Via the Agency
Because of the clearer tax liabilities, there is less risk involved for both the agency and you if you work as an employee of an agency. However recent Government Legislation has resulted in problems for recruitment agencies and most will now only consider this for up to 3 months.

When you are an employee of the agency, you work through the PAYE system in the UK. The agency will handle all your Tax and NI deductions. Your rate is lower to compensate the agency for administrative costs, but your own administration is simpler. On termination of such an arrangement the agency will provide you with a P45 certificate. Being in the PAYE system as an agency employee is a good vehicle if you are a first time contractor and are undecided if you wish to contract long term.

b) Limited Company
We advise that you use the services of a qualified accountant who specialises in dealing with companies operating in the contracting field. An accountant will advise on directors, secretary, share holdings and on a registered office, and complete the required forms. Working through a limited company means your tax and National Insurance are your own responsibility, the agency does not make any deductions from your payments, it is your responsibility to ensure that your Income Tax, VAT and National Insurance contributions are in order. We recommend limited companies for experienced contractors because of the financial protection given by the limited status and the greater Tax efficiency. The Government had changed the regulations of Limited Companies as from April 2000 and introduced IR35. Further information is available from the Inland Revenue web site www.inlandrevenue.gov.uk/ir35 . Therefore it is important to obtain advice from a qualified accountant who specialises in dealing with companies operating in the contracting field.

Invoicing and Accounting

Most agencies will pay you monthly, if you are not on our payroll, you must send in the timesheets for the month, signed by the authorised signatory with a correctly filled in invoice for the total amount. An agency cannot make any payments without an original invoice for their accounting records. The invoice must contain the following items to be legally correct.

• Company name or trading name and registration details
• Unique invoice number belonging to a recognisable sequence
• Date
• VAT registration number if appropriate
• Total amount of VAT (which is also the gross amount payable if VAT is not charged)
• VAT amount if appropriate
• Total gross amount payable

At Reflex we send out your payment (by BACS) 7 days from receipt of invoice. Again, we recommend that you should seek the advice of a qualified accountant who can give you the best advice as to how to organise your affairs.

Making up Permanent Benefits

By now you will see that giving up permanent work can be very profitable, however you should make allowances for benefits, often taken for granted that you will give up, such as Pension, Life Assurance and Training. The first two can be resolved by seeing a professional Financial Advisor.

Training is often not so straight forward. Clients will want your services if you can provide them with the skills they require. Often this can mean that you need to be constantly learning new versions of software and this may not be possible at a Client site and normally never at a Clients expense! There are ways around the problem. Some training companies provide Computer Based Training (CBT) while other run courses in the evenings or at weekends. However you need to budget for this when planning your finances. Some of Reflex's Clients do offer special arrangements where they pay the cost of training in return for you not charging while you are on the course.

Completing your first Contract

Contracts can run for any period of time, although on the whole they tend to run for 3-6 months. Reflex will speak to you approx. 6 weeks before the end of the contract to discuss possible extensions or your next contract. When you leave a Client site, it is important to ensure that the project status is fully documented and all relevant files and documents are accessible.

Whenever a contract is entered into it must be honoured, contractors are often approached by other agencies offering more lucrative work while they are in the middle of a contract and while not illegal it is very bad practice. In such a situation the experienced contractor will notify the agency that they are contracting at present and will not be available for the duration of the contracted period. Contractors who habitually break contracts before the end of the contracted period can eventually find work hard to come by. Agencies affected by this behaviour are reluctant to enter into further contracts with individuals they feel will let them down again. Professionalism must never be compromised, irrespective of the financial inducement on offer.

Conclusion

We hope that this guide has given you an indication of the opportunities available through contracting. We have aimed to provide you with some general information but if you require more detailed information we will be happy to answer further queries.

Finally we would like to thank you for taking the time to read our "First Timers Guide To Contracting" we hope that you have found it useful.

Please remember that you must be prepared to accept each contract as it comes, and you must realise that the market can fluctuate, when times are not as fluent you must be prepared to take the rough with the smooth. Your rate will vary, in line with assignments and at times you may find you have to work away from home.

Nothing in life is plain sailing and a career as a contractor is no exception; you need to prepare yourself financially and psychologically for the good times as well as the not so good times. The contracting market is still strong and this should be maintained through the 1st quarter of 2009. With the right approach you should be able to enter this profession with confidence.

Reflex Computer Recruitment Ltd
Abbey House, 25 Clarendon Road, Redhill, Surrey, RH1 1QZ
Telephone: +44 (0)1737 852220 Fax: +44 (0) 845 2808950

email: contracts@reflexgroup.co.uk

"The Power to Recruit"