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Contracting Blog

Employment Benefits for Contractors

31/12/2015

International contracting can have a variety of advantages, but it is not without its disadvantages.  Whilst a regular employee enjoys a certain amount of security there is always the worry about losing their job, but this isn’t so much of a worry as a certainty for contractors who normally negotiate a fixed term of employment before entering into a job. The interesting lifestyle and high hourly rates are usually enough of a draw so that contractors do not engage in significant time worrying about the eventuality of being out of work, but there are a number of considerations that should be taken into account when getting the right structure to help for those difficult periods should they arise.  Contractors at the beginning of their career are more at risk as they have not developed contacts in the industry that would be able to help minimise the period of time between contracts.
The consequences of elongated periods without a contract vary depending on your regular domicile as some domiciles treat self-employed persons very differently from employed and therefore the payroll structure needs to be looked at very carefully beforehand to determine whether you are self-employed or employed and therefore negate some of the possible effects that might arise should a contractor find themselves without a job for a period of time.
Below are a list of considerations when looking to apply for unemployment benefits in the UK:-

  • Proof will be required that you are not unemployed due to your own doing, i.e. if you have turned down an extension this could result in automatic refusal
  • Evidence will need to be given that you are actively seeking new contracts
  • Refusing a contract or any other type of work could result in loss of benefits
  • You may be expected to participate in remedial training intended for drop-outs
  • If you were trading through a limited company and were therefore self-employed business accounts may be required, there will also be serious concerns over matters like business expenses.

The simple fact is that the benefits system is targeted for long term unemployed, who are not necessarily able to help themselves and is not used to dealing with the highly intelligent and motivated persons that the contracting industry attracts and therefore the benefits are not normally worth the hassle of applying.  A more sensible method would always be to develop a nest egg for those rainy days, but if you are concerned about the possibility of having to apply for employment benefits in the future it would be sensible to speak to one of our advisors regarding your structure in order to identify possible hurdles to be avoided.




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