The UK IT Contracting Market Place

Contracting in the UK is unique and on the increase particularly in London because of the Credit Crunch and recent recession has reduced the need for permanent employment. This means more contracts less perm and a greater number of unadvertised contracts or hidden jobs .

Only the best contract in the UK. If you’ve got the skills you should be earning the better rates. Contract jobs on average pay 30% more then their equivalent permanent jobs. With the right CV and the right approach to the UK market you can be part of the “Crem del la crème” – as a professional UK contractor.

Market Info

Current Contracting Market Size

50% of the job market is contracting! Its normally around 30%, but due to the current economic environment there are more contract jobs available in place of permanent jobs.

Average Earnings of a Contractor

30% higher rates then the equivalent permanent positions

Most sought after IT contractors

Key Legislation effecting contractors

2007: Managed Service Company
This law introduced in April 2007 made it illegal for contractors to operate through a limited company that was “managed” by a third party. Contractor can only legally work via an Umbrella Company or their own limited company, knows as a Personal Service Company. Read more.

2000: IR35
Legislation introduced in 2000 that’s used by the Inland Revenue to determine whether or not a contractor meets the definition of being self employed or a freelancer. Contractors who do not fall under this category are said to be caught by IR35 or said to be inside of IR35 legislation and are therefore liable to pay full tax and national insurance. You want to make sure you’re operating outside of IR35 (safe from the legislation). If you’re on a visa there may be further implications for you. Request an appointment to discuss your individual circumstances with BITE.

April 2011 AWR

Effective On the 1st October 2011 the UK implemented the EU legislation for agency workers i.e. PAYE Workers through an agency or umbrella company. This means in practise two key stages;

Day one right for workers and equal treatment after 12 weeks. Some examples of day one rights include the staff canteen, car parking and child care facilities and it is the end client who has the responsibility for ensuring agency workers are provided access to these facilities. This includes access and information to job vacancies that permanent staff would also have access to. In the event of a dispute there is no liability on the recruitment company.

After 12 weeks the agency worker acquires additional equal treatment rights provided they remain in the same job role. This includes pay and bonuses, duration of working time and annual leave. The requirement is simply to treat the worker as if he or she had been recruited directly to do the same job. In the event of a dispute it is the recruitment agency that is initially held responsible but will have a defence if they requested the info and failed to receive it from the client/hirer. End clients can include indemnity clauses in their contracts to pass liability to the recruitment company .Equally recruitment companies supplying contractors through another organisation will need to request the required information just as they would do in dealing with the end client directly and checks will need making on the contract.

This can have a big impact on the agency or clients attitude to a temporary PAYE Contractor.

Finding Contracts and jobs

From Agencies

Most contractors will find their contracting positions through a recruitment agency. There are 1000′s of agencies in the UK . Some specialise in only IT contracts and others are more general, covering all sectors of employment. Agencies are not only for contractors, most agencies will have jobs for: permanent, contract, temporary and part-time employment. The contracting market in the UK makes up 50% of the total IT job market, substantially more then in most other countries. The agency will put you in touch with the client but to get paid you need to have a limited company – either an Umbrella Company or your own limited company of your own. Is the agency you are going through credit worthy? If they cannot pay you how will you recover your earnings?

Market share

No recruitment agency or software house in the UK has more then 3% market share. It’s therefore important to work with several agencies. The size of the recruitment agency is not important, often a smaller one will work in a specialised sector within IT and will have clients that other agencies do not. But with so many agencies its vital to ensure they are credit checked before contracting with them. If working through BITE, we’ll gaurantee you are paid even if the agency is late or unable to pay.

From clients directly

Not all contract jobs are advertised through agencies, although the majority are. In some cases the company will advertise positions themselves and will employ you directly. You will still need to have a limited company (Umbrella Company or your own limited company) to operate through, the client cannot pay you directly, if they are then its not contracting.