If you’re in the market for a new job, it’s very likely that you’ll run into jobs that are offering contract work and jobs that offer permanent employment.

While both of these employees show up every day at work and receive a paycheck, there are numerous differences between these two types of employment.

Before you even start to apply for jobs, it’s good for you to know the difference between the two types of employment because this can affect how you feel about your job after you’re employed.

To be sure, there are pros and cons to both types of work, and if you know what these pros and cons are, you’ll be able to make the right decision in the end.

Let’s take a look at each of these employment types and learn more about them.

Employees work for another person or company and are permanent employees.

They can work either full-time or part-time.

Employees usually receive a regular salary or an hourly wage.

They receive their payment on a continued basis in exchange for the work that they do.

A contractor or independent contractor provides services to an outside company.

Normally, they are hired for a specific amount of time at a specific daily or hourly rate.

Contractors work independently and therefore must have strong self-management skills.

Normally, they are hired for short-term projects and their “employment” is over once the project is completed.

Pros:

• You receive a regular paycheck
• You often receive paid time off, holiday time, etc.
• Your income taxes are automatically deducted from your paycheck
• You have to maintain set work hours/work schedule
• You sometimes receive bonuses and additional benefits
• The company expects continuous workloads from you

Cons:

• You have limited numbers of days off per year
• You might not be able to try different types of work
• You are usually provided with a limited scope of work
• You usually have a daily commute to the office
• You usually have little to no room to negotiate your pay rate
• You have less freedom when it comes to your schedule

Pros:

• Your salary is usually higher than that of a permanent employee
• You get flexible work hours and a flexible schedule
• You have a lot of control over the amount and type of work you complete
• You sometimes have the opportunity to work remotely and are able to negotiate this
• You are able to test out a company before you accept more work from them
• You usually have access to learning additional skills

Cons:

• Your work location can change drastically from one assignment to the next
• Your work is never guaranteed
• You may end up with a long commute to the office
• Depending on the length of your contract, you may not be able to take time off as a holiday

Once you review the pros and cons of these two types of employment, it should be a little clearer which path is right for you.

With the uncertainty of permanent employment and businesses looking for more temporary staffing solutions to help them rebuild through COVID-19, there has been quite a drastic surge in job availability for contractors.

Contracting work has risen to a 23-year high due to the coronavirus pandemic. There’s a good reason for why temporary contracts and flexible working are becoming more popular as well.

7.6 million jobs in the UK saw risks of redundancy, pay reductions, and long-term insecurity with the financial impact that the pandemic had on a number of sectors throughout the country.

This has prompted businesses to look at alternative methods of employment in order to maximise their profit and not have to commit to a longer-term, full-time, employee-style contract.

This is where contracting, especially in the IT industry, has become increasingly more lucrative on both sides of the working agreement.

Professionals offering their services on a contract basis can negotiate their rate of pay to a level that they may not have been able to achieve on a full-time contract, and the business looking to hire a contractor can liaise with an IT recruitment company to hire the amount of staff they need within a set budget.

Another aspect to consider is this: when you’re an independent contractor, you may have periods where you do not have any work coming in.

This means that you have to be able to afford those “breaks” from getting a paycheck.

There are ways to lessen the period of time in-between contracts, however. If you’re just starting out in the temporary contract industry, it would be extremely advisable to seek the help of an IT recruitment company.

An IT recruitment company that specialises in temporary contracts will be a major asset to your contracting journey.

Not only will they be able to offer specialist advice on your current situation and guide you in your decision-making process, but they will also have built up strong relationships with a number of companies to whom they can offer your service on your behalf.

Contract work also tends to pay better than regular employment does, which means that any breaks in employment may not be as difficult as you think.

At the end of the day, only you can determine which of these options is right for you.

But at least now you have an idea of what each employment type means for you and your workload.

If you’re an employer, deciding between permanent and contract employment is sometimes a little easier.

Most companies end up hiring permanent employees for the bulk of their work and contract workers for as-needed or temporary projects.

Regardless of the type, you choose, however, you still need to ascertain their skills so that you know who you’re hiring.

Even employment agencies and agencies that hire people for other companies will do this.

There are numerous things to consider when deciding which of these worker types to hire.

Benefits, for example, can add thousands of pounds to the salary you’re paying a permanent employee, whereas contract workers expect none of this.

And let’s face it; both permanent employees and contract workers can be interviewed before you hire them, giving you a good feel of their level of expertise and their personalities as well.

When it comes to taxes, it’s best if you consult with a tax lawyer or an accountant.

Whether you deduct taxes from their paycheck or not, you’ll have to know how this will affect your organisation’s taxes at the end of the year.

Of course, your decision to hire a certain individual should never be based on finances alone.

Still, your tax status does have something to do with your final decision.

Getting hired as an independent contractor versus a permanent employee both have pros and cons.

It’s up to you to decide which one is right for you.

You can base your decision on your financial needs, how important it is to work for yourself, and several other factors.

If you work as an independent contractor, you’ll also have to pay your own taxes at the end of the year because whatever you make on a particular project, that is the exact amount that you’ll get paid.

This can obviously be helped if you’re not too confident in managing your own taxes and finances.

Enlisting the help of an Umbrella Company that will be able to help you with filing your tax returns and take all of this potential stress off of your shoulders is extremely helpful regardless of if you’re just starting out or have been contracting for a number of years.

These are but a few of the many aspects to consider when looking at contract versus permanent employment, but it should be enough to decide which one will work best for you in the end.

Written by Lucid Support