If you are also confused about whether to choose contracting or become a permanent employee, then you are not alone. People face dilemmas in both of the job types. Many factors affect this decision, like - your lifestyle, financial needs, job security, etc.
There are multiple pros and cons between both types of job and it is necessary to consider all of them before making any sort of choice.
But before moving further, let’s discuss the basic difference between an employee and a contractor.
Who is a permanent employee?
A permanent employee is a person who works under a contract of service (employer-employee relationship) for a business. They usually receive a monthly salary and work either as a part-time or full-time employee. They sign a contract of employment provided by the company agreeing with the terms and conditions of their employment.
Who is a contractor?
An independent contractor is a person who works for a business on a daily or hourly rate. A recruiting firm hires a contractor for a specific amount of time. A contractor earns more than a permanent employee but doesn’t get additional benefits like - provident funds, job security, etc.
What are the advantages of being a permanent employee?
- Permanent employees have the job security and stability of their careers. They continue to earn on a monthly basis.
- This type of employment guarantees a certain amount of salary and perks every month.
- Employers here pay you even for you the certification and training they provide to the employees.
- You can take paid sick or casual leaves, holiday reimbursements, and sometimes even private health care.
- You also get bonuses and retirement pension too.
- The company will pay into your pension pot and taxes.
What are the disadvantages of being a permanent employee?
- Often paid less than a contractual worker.
- The take home pay is usually lower as they have to pay income and employee national insurance contributions.
- You cannot negotiate your own pay or increase your earnings by working longer hours
- More foundation by the employers.
- You won’t have full control over your projects.
What are the advantages of being a contractor?
- Earn more money than a permanent employee.
- Sometimes, you can work from anywhere in the world.
- More flexibility in working hours.
- You will have more control over your projects.
- You will not have to listen to the constant bittering or tantrums of employees.
- When you work on your own, you learn more.
What are the disadvantages of being a contractor?
- You don’t enjoy the stability and job security.
- You can’t earn extra money from bonuses.
- You will not get holiday pay, health care facilities, and reimbursements for office-related expenses.
- Companies can request you anytime to visit their office.
- You will have to pay your own taxes like - corporation tax, payroll tax, and income tax, etc.
- You will not get credit for your work, even if you have handled the whole project by yourself.
Both of these job types have their own pros and cons, it is up to you to decide whether you want to be a permanent employee or a contractual worker. You will have to think about your future and the goals you have to achieve.
Many people still believe that permanent employment is far better than contracts, as they have job security and more control over their life.