Advantages

Financial Reward

  • Contractors are often paid more per hour/day than full-time employees due to the nature of the work and the need to be flexible
  • There is more flexibility to negotiate you pay package and conditions
  • Contractors more typically receive high overtime rates
  • Working through a limited company enables you to take home more net pay than an employee.
  • Contractors can offset business expenses against their income reducing their tax bill further still

Variety and Interest

  • Contract employment gives you the freedom to choose the clients you work with and the projects you work on
  • You have the opportunity to work in various industries or specialise in certain ones
  • Moving from contract to contract allows you gain a huge amount of experience and knowledge resulting in an impressive CV

Skills and Knowledge

  • Working in different businesses is a great way to develop and broaden you skill-set
  • You are able to choose the skills to develop and the way in which you do it
  • You can gain greater satisfaction and return on financial investment when you are in control of your skills development
  • You can advance your career in your own way. You aren't restricted by an employer's processes or procedures

Work / Life Balance

  • Contract employment can lead to more opportunities. Changing contracts can be easier than changing jobs and contract roles can become permanent
  • There is the opportunity to take as much or as little time off as you like between contracts
  • You are your own boss. You don't have to strive for a promotion, pay rise or time off. You can change contracts and negotiate the employment packages to suit you.
  • You have control of your career path and many contractors have greater job and personal satisfaction because of it.
  • A number of contractors often cite an improved work life balance as the thing they like most about their employment

Disadvantages

Earnings

  • If you are on an hourly rate there is no guarantee of steady, consistent working hours and your income may fluctuate as a result
  • Being paid a set fee over the duration of your contract guarantees payment but you need to carefully calculate your hourly / day rate
  • This will ensure you aren't working longer hours for less pay than previously thought
  • Unless you've negotiated it into your contract, there will be no severance pay if your contract is terminated

Job Security

  • Job security and stability isn't the same as with other employees
  • Contracts can be terminated at any time which can lead to financial instability - if you're not working, you're not getting paid
  • There are no guarantees of getting another contract as soon as your contract ends and no way of telling how much time you will spend between contracts. Again, this can increase the level of financial worry
  • You no longer have access to pay if you are ill, and without an employer other benefits such as a pension, life and medical insurance. You will have to manage these aspects yourself

Administration and Legislation

  • Whether you are running a limited company or using an umbrella company, you will spend a degree of your time on administration
  • This can be difficult and understanding the best option for you is critical
  • Falling foul of IR35 and other legislation can remove a number of the financial benefits contract employment offers

Personal

  • Having to remarket yourself each time your contract comes to an end can be time consuming and stressful if you lack the confidence and know-how
  • Marketability is linked to your skill-set and you need to be up to speed with changing trends and industry standards
  • If you struggle to network and get your name out there it can be difficult to build up your referral base potentially making you search for your next contract more difficult

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​Find out more about the advantages and disadvantages of contract employment by contacting our team.

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