Here at Greybridge Search & Selection, we place professionals in both contract placements and permanent positions. On the Change Management and Digital Transformation side, it’s probably 50:50 contract versus permanent. However, over on the Strategy & Consultancy Life Sciences desk, permanent positions far outweigh any contract opportunities. In our latest blog, we explore contracting versus permanent working, to help you decide which one you might suit you better.
We find that some candidates religiously stick to one or the other. However, we do work with professionals who begin contemplating the contracting route after many years of being permanent and vice versa. One of the questions we get asked is what are the benefits and drawbacks of both? How does contracting and permanent employment differ and what am I better off doing?
We also mustn’t forget (how could we) the forthcoming changes to IR35 in the private sector. This could mean for some, at least in the interim, that contracting is no longer a viable option. Following the recent General Election results, the Government has just announced that it will be adhering to its pre-election promise and reviewing the proposed tax reform. A positive step admittedly but at this late stage, a repeal of the law seems unlikely. So putting IR35 aside, what are the pros and cons of being a contractor?
Pros and Cons of Contracting:
1. Flexibility vs Security
Contracting means that the work placement is usually fixed for a limited period of time. Usually anywhere between 6 months to a year but contracts can be extended beyond this time. However, although it does allow flexibility, job security might not be something you always feel you are getting as a contractor. If a company is making cuts, contractors could be the first to go ahead of permanent employees. On the positive side, we find for many skilled professionals, hired because of their expertise in a specific field, finding a new placement isn’t a problem. This is of course where we can help as well…
2. Variation of Work vs Frequent Job Hunting
It can be a good way of trying out a number of roles across a range of industries due to the interim nature of contracting. Similar job hopping between permanent roles can obviously cause a red flag to wave in front of hiring managers. Conversely, the need to job hunt more frequently, in order to have the next contract lined up, could become tiresome.
3. Autonomy vs Being One of The Team
As a contractor, you are there to complete a specific job or project, brought in as the expert. Due to this, you will often be given more flexibility and autonomy to get on with it. This could translate to more opportunities to work from home or tat least be responsible for the number of hours you work. You may also be able to avoid workplace politics, being slightly removed from the day to day workings of the organisation. On the flipside, you might feel that you are missing out from office life or not included as much when it comes to information sharing or the social side of the company.
4. Set Contract vs Promotion Opportunities
When you are contracting and being paid a daily rate, you are expected to show you’re worth day in day out, something that isn’t necessarily the case for a permanent employee. A promotion or pay increase is also unlikely to happen within a set contract. However, as you gain more experience and skills, you will be in a better position to negotiate a higher daily rate next time round or apply for more senior contract roles.
5. Higher Daily Rate vs Other Company Benefits
The remuneration rate for a contractor, usually calculated as a daily rate, is typically higher compared to a permanent employee working at a similar level. There are also certain tax breaks you are currently entitled to. However, contractors need to be mindful that you will not be eligible to other company benefits including sick pay, paid holidays, health insurance or pension contributions made by an employer.
Whether you are suited for contracting will very much depend on your personality and motivations. Are you someone who needs job surety or can you cope with occasionally having a break between contracts? Do you crave the company of others and feel the need to be part of a team or can you work fairly autonomously? Do you want a company pension or are you comfortable securing savings and health benefits schemes yourself? And don’t forget those all-important annual tax returns, which could require the services of an Accountant. Contracting may just mean looking after yourself that little bit more, which might not be everyone’s cup of tea. However, if you want more variation in life, prefer to change companies frequently and come in to a role as the ‘expert’ and earn a higher daily rate, contracting could be for you.
Whatever you decide, you need to think carefully through your options. If you’re still undecided, take that leap of faith and try something new. Who knows, you might never look back.
We are experts in placing both contract and permanent professionals within Strategy, Change Management and Digital Transformation roles. Our approach is different and we don’t encourage endless CVs to be sent to us. Instead, we prefer to receive a mandate from a client and then search and select from our extensive network. From this, we compile a short list of excellent candidates for our clients. If you think we can help you complete a team or find your next dream job, please get in touch.