Managing a contractor

A number of businesses use contractors and subcontractors to carry out short-term work or to supply specialist skills on specific projects.

Outsourcing work like this can be cost-effective and can make use of particular knowledge, experience and skills that may not exist in-house.

A contractor provides a business with services for a specific period and a determined fee according to an agreed contract. Contractors can be paid on a time basis - hourly, daily, weekly - or on completion of certain objectives.

A contractor may sometimes outsource work to a subcontractor in order to fulfil a contract. Although subcontractors may carry out specialist work essential to the completion of the project, the contractor retains responsibility for the whole project, including the contribution of the subcontractor.

Choosing a contractor

Before taking on a contractor, a business should check their references, qualifications, experience, membership of any professional organisations, health and safety policies, technical capabilities, environmental policies and the criteria for selecting any subcontractors.

Make sure that you are entirely satisfied they are up to the task and the standards you expect of them before entering into any agreement. Make sure also that they fit your business ethos and outlook (their work will be counted as yours) and that they look like they will gel with your own employees.


When drawing up a contract with a contractor, there are a number of issues that you may want to have detailed as part of the agreement. These include health and safety standards; quality of work standards; penalties for failure to meet delivery timetables; payment schedules; a timetable for completing the work or project; details of the contractor's responsibilities; a procedure for solving any disputes; non-disclosure agreements; and protection of any intellectual property rights.

Briefing and managing

Always provide contractors with a clear, detailed brief for the work they will be carrying out. Brief your own employees, too, so that they are happy and confident that the contractor can meet their needs. And make the effort to integrate the contractors with any in-house teams they may be working with or alongside so that everyone feels on the same side.

Worker rights

Contractors, subcontractors and agency workers have many of the same rights as employees. These include the rules on the National Minimum Wage, on working time, on paid leave and on anti-discrimination in the workplace.


A business does not normally pay tax or National Insurance contributions for contractors. If a contractor is self-employed, you need to make sure that HM Revenue and Customs would also regard the contractor as self-employed and not an employee of your business.

Self-employed contractors and subcontractors in the building industry have special tax rules under the Construction Industry Scheme which was introduced in April 2007.

The tax regime for contractors can be complicated, so you may want to take our advice first.

Health and safety

On any given project, both you and the contractor will have health and safety responsibilities.

Among other duties, you will need to assess any risks involved in the work; decide on what health and safety information needs to be provided and whether any training is required; evaluate the health and safety procedures of the contractor; check on the capabilities and competence of the contractor; inform the contractor of your own health and safety policies; have supervisory management measures in place to make sure that the contractor (and any subcontractor) are safe in their work; and conduct a review of the way the work is being carried out.


You should confirm that its insurance covers any contractors and subcontractors working on your premises.

Since the majority of contractors and subcontractors are not covered by employers' liability insurance, you may also need public liability insurance. The public liability insurance should be sufficient to cover contractors who are working away from your site, unless the contractor has public liability cover of the same scope.

It is important, therefore, to check in advance on the level of insurance cover that any contractor has.

Businesses are generally advised to seek professional guidance if they are about to engage a contractor.

Call Back Request

Enter the characters shown in the image.

Speak to a
friendly expert
01442 275789

Monday to Thursday (8am to 8pm)

Friday (8am to 7pm)

Saturday (10am to 4pm)

SJD Accountancy

SJD Accountancy are the UK's largest specialist provider of fixed fee, Limited company accountancy services to contractors; we've been acting for contractors across the UK since 1992 and have more than 15,000 clients.

We are the only national specialist firm of contractor accountants with offices nationwide. SJD Accountancy has more qualified staff than any other firm in our market with qualifications from the following major tax and accountancy bodies - ATT, AAT, CTA, ACCA, CA, ACA and FCCA.

  • Unlimited face to face meetings. This is a unique service only SJD Accountancy offers - unlimited face to face meetings across the UK - tax is complicated and sometimes only a meeting will do.
  • UK's largest contractor accountants with more qualified staff. No call centres, no outsourcing, no automated call handling. Simply telephone, email or meet your own dedicated accountant face to face.
  • Our Customer Promise. Respond to any question sent to your accountant or any dedicated department within 24 hours.  If we need more time, we will update you as soon as we can and we promise to keep you informed of the progress we are making in answering your question.
  • Outstanding reputation. We have won more awards for customer service and accountancy excellence than any other firm in our market, including: Best Accountant for Contractors, Accountant of the Year and Best Professional Service Team to name just a few.
  • All inclusive low cost fixed fee accountancy package which includes completion of accounts*, payroll bureau, dividends and corporation tax computations, personal taxation, free bookkeeping software, your own dedicated accountant* and all company returns for a fixed fee starting from £120 plus VAT per month. Check our packages for more detail.

If you have any questions about contracting or would like any further advice please call our new business team on 01442 275789 or email: Our new business team is open Monday to Thursday (8am to 8pm), Friday (8am to 7pm) and Saturday (10am to 4pm)

Appoint SJD Accountancy and never worry about your tax or accountancy affairs again.

Form your own limited company with SJD - our same day online company formation service includes company bank account set up, VAT/PAYE registration and advice on optimum share structure. 

You may also find the following pages, guides and case studies useful:

*If you would like us to complete your company year end accounts we simply ask that you have been a client of SJD for one year or have made 12 monthly payments. All accountants are part or fully qualified.