What contractors should consider when working via a recruitment agency

A recent study by the Association of Independent Professionals and the Self-employed (IPSE) revealed that over 50% of all contractors choose to work via a recruitment agency rather than sourcing work directly from the client. Agencies offer the contractor a number of benefits that should be carefully considered, depending on your experience, the industry you work in and whether the contract is with a public or private sector client. Here at Umbrella Exchange, we work closely with recruitment agencies as well as with contractors from all walks of life. From our comprehensive industry knowledge, we’ve put together the following pointers for contractors to consider when working via agency.

1. In order to maximise the benefits of working with a recruitment agency, do some research to identify agencies with a good track record in your industry. Contractor forums are a good starting point to ask other contractors working in your sector about their agency experiences.
2. Most clients prefer to outsource the recruitment of contractors to agencies who can handle initial screening and interview processes, leaving the client with the best talent pool to choose from. This means that agencies will usually have a much wider network of clients who the contractor wouldn’t otherwise have access to.
3. Many agencies have an established supply chain, sometimes referred to as a preferred service list (PSL). A controlled supply chain can reduce risk for the contractor as agencies will often establish trusted partnerships with specialist accountants and umbrella companies based on consistent levels of service and compliance.
4. A recruitment agency will deal with all contract-related issues (between you and them, and the agency and client). This can also help with negotiating the risk on issues such as IR35, as an agency should maintain contractual consistency and an open dialogue between all parties. Owing to recent changes in IR35 legislation, it’s still worth seeking specialist IR35 advice before signing anything.
5. Recruitment agencies provide contractors with effective credit control. They will deal with invoicing clients and chasing any overdue payments on the contractor’s behalf, saving them considerable time and paperwork. Some agencies offer a PAYE option to the contractor and will also guarantee a minimum wage payment if the client defaults, providing the contractor with a safety net.
6. Agencies usually have access to higher value clients and considerable expertise in negotiating the best rates. This can be especially useful for contractors who are relatively new to the industry, or those with little negotiating experience.