Addressing Retention Challenges With Better Contract Terms
For many businesses across the UK, contractor retention is now one of the most pressing challenges they face. The contractor market is fiercely competitive and the demand for specialist skills has never been higher. However, securing the right people is only half the story. Contractors often have multiple offers to choose from and, in many cases, it’s the structure and fairness of the contract terms themselves, rather than the day rate, that will determine whether they accept an offer and remain engaged or decide to leave early.
At Employment Solutions, we know from experience that contract design directly impacts retention. Contracts that offer flexibility, clarity and fairness and are aligned with the realities of modern contracting (and life) send a powerful message – that employers value their contractors and understand their working realities. In a competitive landscape, this can make all the difference.
Critical contract conditions
Fundamentally, employers must understand that contractors are not permanent employees, and that their priorities reflect this. However, too often, contracts are written with terms that don’t meet these needs. This can contribute to early exits and assignment rejections, which cost businesses both time and money.
The most common sticking points include:
Pay frequency – many clients still default to monthly payments. Contractors, however, often prefer weekly or fortnightly pay to keep their cash flow stable, particularly in the current cost-of-living crisis
Notice periods – some contracts insist on long notices, which can deter contractors who value agility. A one-week notice clause is becoming the standard in many industries
Length of contract – too many short-term, stop-start assignments can make contractors reluctant to commit. Six-month rolling contracts are now the preferred option for many
Flexibility – ambiguities around hybrid working, overtime or working hours often create tension between contractors and their clients
IR35 compliance – despite recent reforms, many clients are still unsure how to draft contracts that protect them without restricting contractors’ freedoms.
It’s clear, then, that contract terms are no longer an administrative detail. They’re often the reason why contractors decide to stay or leave. Organisations that recognise this can achieve greater continuity, while those that don’t risk losing out to those that offer clearer, more contractor-friendly terms.
Where retention pressure is highest
Certain sectors, where skills are scarce and demand is high, are feeling the retention challenge more acutely than others. Technology (especially software development, where hybrid working has become the norm), manufacturing (where high workloads and long hours often clash with rigid, outdated contract structures) and construction (where unclear overtime and travel allowances create friction) all face acute challenges due to a combination of high demand, evolving working practices and the intensity of project delivery.
For organisations within these sectors, where contractors have the freedom to choose, the importance of contracts that not only secure talent but also keep it engaged has become a deciding factor. The businesses that recognise and adapt to contractor expectations are best placed to maintain continuity and reduce the disruption that comes from high or repeated turnover.
Balancing retention with budget constraints
It’s a popular misconception among many organisations that higher retention requires higher pay. And while a competitive rate remains important, in most cases, contractors are influenced more by contract terms than by take-home pay alone. The key to improved retention often lies in designing contracts that align more with contractor priorities while still safeguarding client interests. Small adjustments, such as moving from monthly to weekly pay, shortening notice periods or modifying working hours, can significantly improve satisfaction without adding to overall spend.
When budgets are tight, as they are in the current economic climate, non-monetary benefits come to the fore. Offering hybrid work, flexible hours or paid professional development can differentiate a contract without adding cost and carry significant weight in a contractor’s decision-making process, making them more likely to remain committed to a project.
Contracts that are structured with retention in mind signal to contractors that their needs are understood and respected and demonstrate a commitment to creating a positive working relationship.
Final thoughts
Retention in the contractor market is no longer about offering the highest day rate. It’s about recognising what matters most to contractors and reflecting those realities in the terms and conditions. Contracts have now become strategic attraction and retention strategies for employers and, by offering terms that reflect what contractors really want, clients can dramatically reduce churn, strengthen engagement and protect delivery and budgets.
How we can help
At Employment Solutions, we work closely with clients to review, refine and modernise their contractor agreements to bridge the gap between their attraction and retention needs and the expectations of contractors. We ensure that contracts are competitive, compliant, practical and appealing to today’s workforce. By analysing market trends and advising on contract design, we help clients deal with everything, from payment cycles to IR35 and from flexibility requests to notice period adjustment, so that contractors feel listened to, fairly treated and motivated to stay and they can retain the talent they need to deliver.
Smarter, fairer and more flexible agreements are central to any retention strategy. With the right terms in place, businesses can reduce churn, protect project delivery and build stronger partnerships with their contractors. At Employment Solutions we help clients get this balance right. Because retention isn’t about locking contractors in – it’s about making them want to stay.
If you’d like more information about redefining your contracts to increase retention, get in touch via the form below.
