The small business guide to hiring freelancers

Amid ongoing economic disruption, SMEs throughout the UK are increasingly turning to freelancers as they look to benefit from the flexibility, skills and improved business performance that self-employed workers can deliver.

A study last year conducted by Iwoca found that 65 per cent of UK SMEs would use freelancers to support their businesses, with SME owners polled in the survey saying that hiring freelancers enabled them to minimise disruption during times when the team or company was undergoing change or had an elevated workload and that having self-employed workers meant staff could delegate tasks requiring less oversight and focus on their own work.

In a more recent study, Sonovate found that 75 per cent of SMEs based in London had reported an increase in hiring freelance and contract workers, with 73 per cent saying that hiring freelancers had contributed to a positive work culture, 67 per cent saying it had helped them to attract and retain talent and 29 per cent saying they were now more cautious about hiring permanent staff.

These results for London-based firms significantly outstripped the national average in every instance, prompting Sonovate’s co-CEO Richard Prime to say: “London’s business community has a proud history of innovation and firms across the capital are demonstrating this once again as they overhaul their traditional working structures to attract and retain talent as well as boost competitiveness. Businesses in other regions should consider following London’s lead otherwise they risk getting left behind."

So, as more SMEs look to tap into the numerous benefits that can be gained by hiring freelancers, it’s important to consider the best way to go about it, in order to ensure that businesses can attract the best talent and fully reap the rewards that a flexible workforce can deliver.

How to find freelancers
In the current marketplace, there are a significant number of avenues that a business can go down when looking to hire freelancers. Numerous recruitment agencies deal largely or exclusively with freelance workers and, with a detailed brief of what kind of profile and services a company is looking for, are likely to be able to compile a list of several suitable candidates.

For business owners who want to take things into their own hands, there are now a wide array of freelancer marketplaces, which enable hirers to search for freelancers with the specialities and experience that they require. Platforms like Fiverr, Upwork and PeoplePerHour also enable business owners to search by freelancer rates, in order to find the right balance between experience and value for money.

Social media is also an increasingly legitimate means of sourcing freelance talent. Obviously, LinkedIn is the go-to site for finding professional talent and this extends to the freelance marketplace. For more creative freelancers however, such as illustrators or designers, platforms like Instagram can be just as useful, especially when it comes to seeing a ready-made portfolio of a freelancer’s work.

Finally, the old-fashioned method of word of mouth remains valuable. Professional contacts, such as fellow business owners and former partners or employees, are worth contacting to see if they know of and can recommend any freelance talent. This way, a business owner has reassurance that the freelancer they are hiring comes with a trusted recommendation.

Selecting the right candidates
Once a shortlist of candidates has been compiled, owners will need to ensure that the interview process is structured in such a way as to find the candidate most suited for both the role in question and the company itself.

Each role and each business will require different questions, but there are some general things that it will be vital to gauge before hiring a freelancer. Crucially, the interview stage is when an owner should really dig into a freelancer’s experience and see how suited they are to the role, potentially by asking what their approach would be to the project or by posing some hypothetical scenarios and asking what they would do.

Beyond gauging their suitability to the project/company itself, there are also practical details that will be important to discuss. Basic questions such as a discussion of rates, when they can start working, their availability and preferred methods and times of communication will need to be established. For overseas freelancers, it will also be important to know what time zone they will be working in.

Enquiring about these issues, as well as those more specific to the project and business, should help owners to whittle down their list to one or two truly outstanding candidates and it may then be possible for a chosen candidate to be offered the role.

Should they accept, it’s just a question of working out the time frame of the project, briefing them on what’s required, ensuring that both parties are aware of any things that the other might need in order to complete the work, setting up payment and establishing good channels of communication.

Things to be aware of
There are of course legal issues associated with hiring freelancers, as with hiring any other kind of employee. Freelancers may have access to or be exposed to confidential company information, so it’s important that their contract makes clear what information is confidential so that they do not disclose it elsewhere.

Intellectual property considerations are also different for freelancers. Where the work of full-time employees belongs to the business, a business will need to explicitly insert right of ownership into their contract with a freelancer, should they want it.

A written contract is highly advisable when working with freelancers, as this can help to protect against issues or disputes. The contract will lay out information regarding the working relationship between the freelancer and the business and, as mentioned above, considerations such as intellectual property and confidential information.

Finally, one of the main issues that prevents businesses in the UK from hiring freelancers is concern over exposure to IR35 legislation. The good news for SME owners is that small businesses are exempt from the rules, providing they meet certain criteria.

In order to qualify for the exemption, a business must satisfy at least two of the following: annual turnover not exceeding £10.2m; balance sheet total of not more than £5.1m; an average of no more than 50 employees during the company’s financial year.

These requirements will exempt most SMEs from having to be concerned about IR35. However, owners at fast-growing SMEs should remain wary as, if they do not meet two of the criteria, then they will become liable for determining the IR35 status of any freelancers they engage.