Contract vs Salary, what’s the best option for you?
The workforce is shifting fast: in the last decade, the rise of the digital age has given way to a growth spurt in the number of freelancers and contract-workers across the globe. In the UK alone, the number of self-employed people has increased to 2 million - a figure which shows no signs of slowing down. In fact, by 2020, PeoplePerHour predict that freelancers will account for 50% of the UK workforce.
If you’re seeking a new challenge, there’s a chance you’ve considered contracting: after all, the lure of complete flexibility, control over workload and earning potential are hard to ignore. However, while freelancing may be appealing, it’s certainly not for everyone: without security or a clear career path, you might soon find the grass is greener on the other side.
Before you dive into any decision, take some time to weigh up the options:
Most contractors start their career in permanent employment, where they benefit from the heavy-duty safety net of a fixed salary. Further to this, most employers offer their staff certain perks on top of their remuneration package: holiday and sick pay, pension schemes, private healthcare, car allowances, travel expenses and paid-for staff trips or events.
However, the draw of permanent employment goes beyond benefits and bonuses.
If you’re eager to learn and develop your skills further, joining an established company as a permanent member of staff will give you the opportunity to climb your way up the career ladder without taking any risks. More often than not, training is included in permanent roles, since the company sees you as an investment.
Usually, you’ll have a manager on hand to help you meet key promotional criteria, and help you achieve your personal goals.
There’s nothing like a bit of team spirit to get you through the working day. As a permanent employee, you’re more likely to be ingrained within the business, and to be absorbed in the culture of the environment you work in. It’s this sense of belonging that only comes through working for a company in this way.
Naturally, there are certain drawbacks: permanent employees often cite a lack of flexibility, lower remuneration and less job variation as the limitations of a permanent position.
Life as a contractor
Instead of being part of a company, contractors act as independent associates that provide their service to the business. In taking temporary freelance contracts, they may work with a number of different firms every year on a range of different projects. This variation can be appealing to those seeking more from their current jobs, as there is little room for you to become uninterested or unenthusiastic about your work.
Complete control of your workload and the companies you work for is certainly one of the main factors attracting a vast number of permanent employees to the idea of contracting. Ultimately, you are your own boss: you can fit your contracts around yourself and your lifestyle.
The draw of a higher remuneration is no myth, either. As a contractor, you would typically receive a higher sum for your services than your permanent counterpart. Of course, your holidays won’t be covered, so you’ll have to either double your workload or just accept that it’s unpaid leave.
A successful contractor further needs to nurture an extensive network of prospective clients, so as to not put all their eggs in one basket: this in itself can be a challenge as effectively, you must market yourself to secure new contracts. If that wasn’t enough, contractors must also familiarise themselves with tax legislation, and submit their own returns - for some, this is a walk in the park.
For others, however, it can cause a real financial headache.
Making your mind up
Ultimately, your choice will depend on your long-term ambitions and the point you have reached in your career.
No one but you can say which is the right option, but it’s essential to understand the risks and responsibilities associated with contracting before making the leap. Permanent employment may not have the appeal of flexibility, but it creates complete security, allowing you to focus on self-improvement and career development without financial worry.
If you’ve weighed up the pros and cons on either side and are still uncertain, stick to employment until you’re 100%: you can always change your mind later down the line.