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Introduction to the interim market

In corporate governance, as in many areas of the UK economy, there is a growing market for interim staff for both short and long-term assignments, in line with an increasing move throughout the EU towards more flexible working practices.

In response to both a need for more flexible human resource solutions and chronic skill shortages, UK employers are becoming increasingly reliant on flexible labour solutions and the interim workforce is now an essential part of the working community, especially within finance.

There is demand across all areas of corporate governance, including audit, risk, compliance and security, with demand particularly high where companies are finding it difficult to recruit permanent staff or have new regulations to comply with.

Benefits of working as an interim

From an employee’s point of view there are a number of significant benefits of interim employment, including:

  • Enhanced remuneration compared to permanent employment
  • Flexibility - you decide when and for how long you are going to work, though having started an assignment you will be expected to fulfil your contract or give reasonable notice
  • The opportunity to add new skills to your CV or to gain experience of different industries and organisations
  • The variety that is offered by working on a number of one-off projects for different companies
  • The option of working for a while and then taking time off to study and sit exams when studying for a professional examination
  • The chance to earn income after being made redundant while looking for a new permanent position

However, it is only fair to point out a few things to bear in mind, such as:

  • The risk of slack periods when a drop in demand for interim staff means you have little or no choice of what assignment you undertake
  • Having to commute long distances or to work away from home during the week to secure the right position
  • The need to keep yourself up to date with technical developments in your field, without support from an employer
  • Unpredictability - this will depend on the terms of your contract, but assignments can finish at short notice
  • The fact that the most interesting projects and parts of projects will often be given to permanent staff

Individuals particularly suited to interim work include:

  • Managers looking for a variety of different types of experience
  • People who thrive on the flexibility of interim employment
  • Overseas visitors who are not entitled to work permanently
  • Students studying professional qualifications who need short term work to finance their studies
  • People in between positions while they search for a permanent role
  • More mature individuals who find it difficult to secure another permanent position following redundancy or early retirement

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Different types of interim work

There are many different types of interim employment and it is difficult to draw clear boundaries between different types of roles, but it is worth drawing the distinction between both interim management and temporary / contract roles:

Interim management

As the title implies, interim management is all about management. It is about sourcing appropriately qualified individuals to operate at management level within companies.

Sometimes the requirement for an interim manager is created by the need to cover temporary managerial absences including maternity leave, long-term sick leave and secondments, but, more and more, interim managers are being used on a tactical basis to address specific strategic needs, such as ensuring compliance with changing regulatory requirements like MiFID and Sarbanes-Oxley or managing transition, crisis or change within a company, including MBOs and IPOs.

There are a number of reasons why the appointment of an interim manager can be a highly attractive option to a recruiting company:

  • Speed – the speed with which they can be in place can be crucial when time constraints are critical
  • Level of expertise – focusing on short to medium term objectives allows the selection of someone with highly specific rather than general levels of expertise
  • Breadth of experience – one of the disadvantages of working for the same company for a long period of time is a lack of exposure to new business problems and different ways of solving them. The breadth of experience an interim manager can bring can make a real difference
  • Objectivity – being new to a company with its particular business challenges and therefore unencumbered by any previous involvement in company processes or staff relationships allows interim managers to look at things objectively and to focus on what is best for the business
  • Accountability – a specific time frame lends itself to the definition of a specific set of deliverables and the appointment of an interim manager can be a good opportunity to redefine goals and expectations

Interim managers tend to be viewed very little differently to permanent members of staff. Their seniority and authority to make key decisions differentiates them from other interim staff who may be much more of a temporary solution to a resourcing problem. Experienced interim managers are also recognised as having made a very deliberate career choice and are respected for having done so.

In contract terms, interim managers are also, in many respects, treated as permanent staff, as, in addition to an enhanced rate of basic remuneration, a interim manager’s package can also include many elements normally associated with a permanent position, such as holiday entitlement, pension, car, bonus, etc.

Interim management is increasingly seen as a win win situation for employer and employee alike.

Temporary / contract

The distinction between temporary staff and contractors is purely a matter of the basis on which they are employed. As the title suggests, a contractor is employed on a fixed term contract, whereas a temp is employed on the basis of an hourly or daily rate. However, the fact that a temp is employed on an hourly or daily rate does not mean that their length of assignment will be any shorter than a contractor on a fixed term contract. Temps often continue in the same position for extended periods and some contracts are completed in a matter of weeks.

Although a contract may appear to be a more definite period of employment than temping, just as temps are kept on month after month, so too are many contracts extended, not once but several times. The distinction between a temporary role and a contract role is often not that great.

As discussed above, both types of role are benefiting from the additional employment rights being granted to interim workers and temporary and contract staff can now qualify for certain rights which previously were only applicable to permanent staff.

Of more importance than the existence or not of a contract, is the basis on which someone is employed. Whether you are a senior interim manager, a contractor or a temporary employee, there are 3 different options:


A number of interim staff, including many temps, are paid through the agency on an hourly or daily basis, according to a pre-agreed hourly or daily rate for the assignment, on receipt of weekly or monthly time sheets stating the amount of hours worked. The agency then calculates your pay and makes statutory deductions for PAYE (Pay As You Earn Income Tax) and NI (National Insurance). Included in your pay should be an amount to comply with the EU directive concerning holiday and sick pay.

The employing company may stipulate the working week, e.g. no more than 38 hours a week. Others will let you work more, assuming there is work to justify the extra hours. Few companies will now pay an enhanced overtime rate for hours worked over the standard working week.

If you are employed on a contract basis, you will be paid directly by the company on a pro-rata salaried basis for the months you will be with the company. You will benefit from greater security of tenure under the terms of your engagement contract, which may include such benefits as holiday pay and a fixed notice period. However, a potential disadvantage of contract assignments is that you may find yourself working long hours while being paid a flat monthly rate.

If you are employed on a PAYE basis and wish to work out how much you will get after tax and national insurance has been deducted, for an extremely rapid calculation, based purely on you inputting a single income figure, visit:

Tax and National Insurance calculator

Of the different options available to an interim employee, PAYE is arguably the least tax beneficial option, as you pay full tax and national insurance (NI) contributions on all your earnings, as well as not being able to claim valid business expenses that would help to reduce your tax and NI liabilities. For that reason many interim workers choose one of the other 2 options:

2. Umbrella companies

A large number of interim workers, particularly contractors, work through an umbrella company. An umbrella company provides a ready made invoicing vehicle whilst also removing the administrative duties normally associated with running your own personal service company.

The umbrella company normally issues invoices on the interim’s behalf, collects payments from clients / agencies, calculates tax and national insurance contributions and pays the interim worker their net pay direct to their personal bank account. Other benefits often included include the processing of business expenses, the preparation of annual tax returns and the provision of company benefits at discounted rates, such as personal pension schemes, health insurance, etc.

Umbrella companies are popular with those who are new to contract work, as it is the easiest and quickest method to start-up.

Traditionally, umbrella companies were a more expensive option to running a personal service company, mainly because their charges included all the administration overheads and they tended not to offer the same tax advantages.

With the introduction of IR35, the tax disadvantages of umbrella companies have been reduced and a new breed of internet based umbrella companies are offering a high level of service at very competitive prices. This also includes a facility which allows considerable tax savings on certain expenses without the provision of receipts!

There are many different types of umbrella companies, including managed companies and composite companies.

3. Personal Service Companies

If you decide to set up your own personal service company, it is very important that you get a good accountant to help you set it up and manage it on an ongoing basis. A good accountant will not be cheap but it is well worth investing in a good one. Make sure you get a clear estimate of costs up front and in writing

If you have found a accountant that you are happy with, many accountants will set you a company for free provided you agree to give them your business and this can be the best option.

Alternatively, setting up a company can cost under £100 and you can find plenty of companies who do this in the trade press or you can apply for a limited company direct from Companies House, but be aware that this route can take a long time.

Once your company is set up, you need to appoint a company secretary, who has a legal duty to record company meetings and perform administrative duties. In practice, this role takes very little time and is often done by a partner, friend or parent.

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The tax and NI benefits of an interim worker using a limited company have been brought into question by IR35. Introduced in the 2000 / 2001 tax year, IR35 is legislation relating to what the Inland Revenue will accept as the proper use of a limited company. If the Inland Revenue decides that a person working through a limited company is really an employee who should be paying standard PAYE and National Insurance, then the director(s) may face a claim for unpaid taxation. You should seek professional advice on this matter. For further information visit:

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