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Mitigating co-employment risk: Are the risks you’re allowing worth the reward?

The last few years have shown the importance of running a tight ship. With insights across Enterprise Solutions, we explore the key risk factors you need to consider when engaging with contingent expertise.
Co-employment risk is inherently part of any working relationship where a non-employee worker is engaged and performing work for a manager or organisation. The need to mitigate risk is higher than ever with today’s rapidly changing workforce and unpredictable economic environment.
Whether it’s a managed programme, with a technology or without, or if it’s the “Wild West”, we’ve found that there are several crucial areas overlooked when it comes to risk and compliance.
Below, we break down risk and compliance into three categories: Financial, Reputational and Contractual.
There are multiple components to each, and they’re closely related. A breach of contract often results in a financial and reputational impact, and a reputational impact often has a major impact on the finances of a business.
Whether you’ve chosen to self-manage your contingent programme or are searching for the support of a workforce solutions partner, it’s crucial that you understand the scope and size of each risk category.

Financial Risk

This category of risk often rears its head in unapproved spend, initially. This can range from a hiring manager going outside of a defined process and engaging suppliers with a budget or headcount they don’t have approval for.
However, it’s more common that the manager did gain initial approval of a contractor for a specific time period or budget, but that has since lapsed without approval to extend. Suddenly, a contractor has been on assignment for an extra six months and you’re $40k over budget.
The onboarding process, or lack thereof, can generate additional forms of financial risk. Is there a comprehensive process in place to capture onboarding documentation?
For example, when engaging Independent Contractors, do you have agreements in place for Intellectual Property protection and proper insurance? Do you track what equipment is provided at the time of onboarding for all contractors?

Reputational Risk

While reputational risk can be difficult to quantify, it is quite easy to identify. Consider what types of press would be good and bad for your organisation to receive from an employment and business standpoint.
  • Do you have a defined process in place that tracks what systems contractors have access to?
  • How do you monitor that activity in systems with confidential or sensitive information?
  • Do you have a process to shut down system access when it’s no longer required, or a project has ended?
Similar considerations must be made for physical access granted to contractors. Typically, when a contractor is onboarded and begins work, they’re given a key card to the office. Is the key card for the specific floor or department they need, or is it for the entire campus?
What happens if the project or requirements change for the contractor, and they now need to have access to a different floor or department? Will their old access be shut down? Do you have a process in place for how equipment is returned when someone leaves or is terminated?
Taking this a step further in the face of a sudden disaster or emergency, do you have a way to quickly and accurately identify all of your non-employee workforce? Which workers are active, which suppliers deployed them, what projects and departments do they work with? How can you effectively communicate with them about abrupt and hugely important changes?

Contractual Risk

This category of risk becomes critically important as you begin looking at the type of work that your contractors are performing. Are they working on anything that would affect client contracts or regulations like GDPR (General Data Protection Regulation) or PII (Personal Identification Information)?
If so, it’s imperative that any agreements and regulations that you need to maintain are also maintained by your contractors.
This category also includes how you’re classifying contractors. If you’re engaging Independent Contractors or Self-Employed workers, it’s vital that you have a process in place to validate the work and worker, to ensure they are properly classified. Are you building audit defence files, updating them, and keeping them for the appropriate amount of time?

The value added by a partner

Organisations need access to the right people , at the right time and place, for a fair price. However, without a capable and experienced partner to help guide the way, companies can come to the painful realisation that what got them to the point where they are, will not necessarily propel them towards successful future.
It is not uncommon, for example, to see an organisation’s HR and/or Procurement team completely overwhelmed in the details and lack of processes for engaging with contingent workers.
We’ll help you gain clarity. Contact the team at Hays today to explore how we can manage risk, together.


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