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Fixed-term permanent contracts – the future of recruitment cost

Posted: 27 October 2010

Pro’s  

  • Generally longer term contracts providing security for the candidate- 12 months usually
  • Slightly higher earnings than a typical permanent role
  • Huge savings for the client
  • Can give a ‘taste’ of contracting life for the candidate
  • Could lead to a ‘regular’ permanent role in the future
  • Paid holiday and other permanent employee benefits
  • Good option to cover staff on maternity or long-term sick leave

Con’s

  • Not as lucrative as a contract day-rate
  • No guarantee of quick-starts for clients
  • Not as attractive as a contract or ‘regular’ permanent role for candidates

Cost and cuts have been the buzzwords throughout the recession and whilst recruitment budgets are now more buoyant than 2009 cost is still a major issue.

Fixed-term permanent contracts have always been around and in some industries are commonplace. But with some teams and departments on skeleton staff, since people were not readily replaced last year, having a key member of staff going on maternity or sick leave can create huge issues stretching your remaining staff, which could ultimately push them into leaving.

Contract has always been the solution but the costs can be scary for your average SME or ‘fiscally aware’ blue-chip.

For example

Contract Risk Analyst –                  £450 per day (including agency costs but excluding VAT)

6 months cost –                               £54,000

Permanent Risk Analyst –             £40,000 per annum (excluding agency costs @ 20% and VAT)

6 months cost –                               £30,000

It doesn’t take a Financial Director to see a £24,000 saving here. ..

The fixed term permanent contract is about planning though. A contract vacancy on a Thursday morning can usually end up with a contract on-site on the Monday. Fixed-term takes longer. The recruitment process could take between two to three weeks to find the right candidate, interview and offer followed by a notice period.

So the future…

If you know you are going to be short of staff in two months then it’s definitely worth investigating the fixed-term option as soon as possible. If it’s at the last minute or a short-term then contract is still by far the best solution.

Think of it like airport parking, plan and book a few months in advanced and you’ll get a great deal, turn-up on the day and expect some hefty costs.