There are many different types of contracts available for employees and for self-employed people. One that crosses this boundary and is used by both is the retainer contract. Many freelance and self-employed people are on retainers for a business. But employees can also be placed on a retainer. So if you have retainer employees, how do you process payfor them?
What is a retainer?
In the most basic form, a retainer is an agreement where one party (the company) retain access to the skills and time of another party (the employee or freelancer) on an ongoing basis. Lots of industries work on a retainer business – legal professionals, for example, will be kept on a retainer which means they will work for the company as needed.
A retainer contract is where employees are hired on a retainershipbasis. This means that they have no fixed office hours – they aren’t required to work the fix 30-40 hours a week that many employees will be asked to work. With some retainer contracts, there is also no need to provide certain standard benefits such as bonuses while statutory benefits like holidays and sick pay may not apply either.
Why a retainer might work
There are lots of situations where a retainer contract might work better for your business than employing someone full time. The solicitor is the perfect example – you don’t need their assistance all of the time. But you do want to know that when you need them, they are ready to work for you.
Retainer contracts can also save money versus standard employment contracts. Perhaps you have services that are required once a month, once a week or a different frequency. You can set up a retainer for these services on this specific schedule and therefore not have to someone a consistent wage when you don’t need their services.
How to organise and pay retainers
It is important to pay out all the terms, set the boundaries and ensure both parties understand what the retainer will mean. Often an employee may have a number of retainers and be self-employed in order to make up a full-timewage, so this means they are working for various people at one time. That’s why it is important to make it clear when you need them, the terms of the agreement and any conditions it includes such as not working for your competition.
Paying the retainer is also a little different frompaying a normal employee. You will need to organise a way for them to log their hours or what pay they need and then have the payroll department make this payment. An outsourced payroll provider will be able to organise this for you to ensure you are paying the retainer on time, accurately.
The retainer contract is a practical model for many types of employee that you don’t need all of the time. Rather than having to hire a freelancer who may or may not be available, you can be certain that the person will be there when you need them without having to pay a full-timewage.
For more advice on paying your staff and running payroll, speak to the experts at Trace Payroll. Our managed payroll services take away the headache of organising retainers and usual contract pay. Speak to us today by using our contact form, or you can call 0845 873 5619.