Whether to work as a permanent employee or take the leap and start a career as a contractor is an age-old debate.
The generations of workers that faced economic hardships - including the Silent Generation, Baby Boomers, and, at times, Generation X - shaped the way we look at work, income, and life balance. For many, stability and security are still vital goals to pursue.
However, the younger generations are reshaping the landscape, and the pandemic has sped-up already existing trends. Now, millions of people are undertaking a career change, organizations are preparing for a revolutionary hybrid work mode, and younger workers are struggling to regain trust in the pension system. So, it does not come as a surprise that over 40% of the US workforce is made up of contingent workers - freelancers, contractors, and self-employed individuals.
Ultimately, there is no “one-size-fits-all” formula, and the decision will need to make sense in the cultural, political, economic, and personal environment you operate in. Here are some of the benefits of the two choices to help you choose.
Contracting, also referred to as contract work or freelancing, is an alternative way to use your skills and knowledge. When contracting, you will be setting your own hourly or fixed rates, and your job with a certain company can be project-based or time-sensitive.
As a contractor, and depending on the type of services you offer, you might be a sole trader or operate through a limited company. Here are some of the benefits of this choice:
When speaking about contracting, the keyword is always flexibility. While over 80% of contractors do work from home, as many report living the lifestyle they want and without geographical constraints.
Aside from the work-life balance and freedom contractors are able to achieve, they also have the chance to work anywhere and for whoever they prefer. While such continuous changes could seem demanding, over 90% of professionals who have taken the leap and converted to a contracting report a quality of life increase.
One of the most appealing aspects of becoming a contractor is the ability to set your own rates. Of course, this happens in accordance with industry standards, competition, and your own experience. However, this means that, in the UK, contractors earn on average £5 thousand more than permanent employees.
But also, salary grade is not the only factor contributing to motivation and job satisfaction. What does count is the unlimited growth potential and the opportunity to become a Subject Matter Expert in your specific field.
One of the main disadvantages of being a freelancer or contractor is that you will need to handle all of your paperwork, tax filing, and contributions. However, you can also leverage the various tax relief programs and incentives that are available in your field. This can help you reduce the taxes you pay.
If you are striving towards becoming a sought-after talent in your field, you will need to have a rich CV and build the right connections. After all, no business - even if it's composed by a single contractor - is an island. Contracting allows you to expand your network, take on progressive and exclusive projects, and create the best professional image. The variety can also prevent boredom and burn-outs!
A full-time employee (FTE) or permanent employee is a professional that is hired by a company and receives a fixed salary for the professional services offered. If you are a company’s permanent employer, your organization will be handling salary payouts, tax and National Insurance filing, benefits, and pension contributions. For companies, there are extremely strict rules to terminate a full-time employment contract.
If you are a company’s permanent employee, the organization is responsible for providing holiday pay, benefits, and insurance. In turn, falling ill or going on holiday will not affect your finances, and you can avoid the stress that surrounds this aspect.
Working as a full-time employee means that your income will be lower than the one perceived by a contractor. However, a study reports that almost 40% of professionals would trade in over 10% of their salary in exchange for stability, security, and convenience.
If you are in this group of professionals, being a permanent employee means that you won't have to worry about paying taxes (because they are already deducted from your salary) or deal with uneven income.
Remaining within a company for several months or years is the best way to achieve higher positions and, in turn, better job titles and work experiences. By doing so, you can then aspire towards better pay and job positions in other companies - or continue to climb the ladder. After all, promotions do appeal to a person’s sense of ambition and self-actualization - where is better to achieve your dream job position if not within the company you know, trust, and respect?
No, no company is a family - and rightly so. However, long-term permanent workers can enjoy a unique but maybe less obvious benefit of their choice: a sense of belonging and community. These are extremely important social imports that can weigh on how productive a professional is and what their outlook on their career is.
Working as a permanent employee does still have its benefits, especially if you seek stability and growth within the same company. And, for many professionals, this is a choice that makes sense. But make sure that you are not making this choice just because you are after job security.
As per what 2020 taught us, being an employee does not always equal job security, and contractors can have a beneficial notice period outlined within their contract for each job they do. Ultimately, before making a choice, review your lifestyle and career goals, but don’t let old biases and misconceptions choose for you.
If in doubt, don’t hesitate to get in touch with the recruitment experts at Biotech Rec and find expert advice.
