As a digital recruitment agency we’ve seen first-hand at Salt how the gig economy has revolutionised the workplace, opening up contracting opportunities for workers to find the right role with the right level of flexibility for their needs.
If you want to work for yourself and have more control over when and what you work on, contracting may be an ideal option for you. But, before handing in your notice and becoming your own boss, we recommend you consider the pros and cons of being a contractor we’ve listed, to help you prepare to take the next step!
Everyone is different, and what may be a con for some people might be less of an obstacle to someone else. This list isn’t definitive but should help you sort through your feelings about different aspects of freelance before making your decision.
What does it mean to be a contractor?
A contractor is a person or company that works on a contractual basis with a variety of clients. Unlike full-time employees, contractors don’t carry out regular work for one single employer. Instead, they are able to work for a number of different clients for periods of time they negotiate directly, depending on the project.
Contractor v Employee: How is a contractor different from an employee?
Employees and contractors have different employment statuses and are not entitled to the same rights in the workplace. For example, contractors are not entitled to sick pay or holiday pay. We’ve listed the main differences below so you can compare and contrast.
|Work agreement||Work temporarily – with a contract for a period of time||Permanent or fixed-term contract – without a set end date.|
|Employment rights||Contractors aren’t entitled to employment rights like sick pay or paid annual leave or pension contributions.||Employees are entitled to employment rights such as statutory leave, pension contributions and paid annual leave.|
|Wages||Contractors negotiate and charge on a project by project basis with their clients.||Companies are liable to pay employees a salary over the minimum wage as set out in their employment contract.|
|Commitment||Contractors have the freedom to decide to work with more than one client at a time.||Employees work the hours set in their contract and often have non-compete clauses to consider – any work for another company would legally have to happen outside of their hours.|
|Tax||The contractor is responsible for paying their own taxes.||The company is responsible for paying taxes for their employees.|
What are the main advantages of being a contractor?
1. PRO: Contractors have the potential to earn more money
Contractors can earn more than they did as a full-time employee, as they negotiate and charge their own rates directly with their clients for each project they take on.
Some contractors, like many of the digital specialists we work with, have a high level of skill in a particular area of expertise, and are regarded as industry experts within their fields. Their clients are paying for their skill, expertise, and experience, often as they lack that skill or specialism in house, and are paying for a period of time with an expert as a result.
Contract workers known to deliver quality projects on time are highly sought after and can progressively charge higher fees to their clients as their network, reputation and demand increases.
Employers benefit from hiring contractors too, as they are not required to pay holiday pay, sick pay or pension contributions to contract workers, standard benefits provided to employees.
Check out whatismydayrate.com for a few helpful tips on determining your rates.
2. PRO: Contractors have the freedom to set their own schedule
Work flexibility is something many are actively seeking in today’s job market. As a contractor, you can set your own work hours and won’t be restricted to a 9-5pm schedule on weekdays.
One of the main advantages of being a contractor is that you have the freedom to dictate your work schedule without being compelled to work 9-5. You’re able to take as much or as little time off as you like between contracts.
Especially after you’ve been contracting for a while, you are able to charge higher and be more selective about your projects, taking breaks to travel, train, volunteer or pursue other projects.
If having this level of flexibility appeals to you perhaps it’s time to consider being an independent contractor. Salt can help you get started: email our team of specialists with your CV at email@example.com.
3. PRO: Flexibility and variety in work and benefits
As a contractor you can claim your own expense deductions when submitting your tax, which gives you more control and input into your taxes.
Unlike full-time workers, independent contractors are responsible for paying their own local tax and can claim for both personal and business expenses as a result.
You also get more variety and the benefit of a wider skill set by working in a number of roles throughout your career. The opportunity to have a varied working environment, different projects, and control over what you work on when and the freedom to work with a variety of different clients and projects giving you a stronger CV set of skills if you do look to move to a permanent role in the future.
What are the main disadvantages of being a contractor?
4. CON: Contractors sometimes experience inconsistent income
One of the biggest cons of working as a contractor is the financial uncertainty, with many experiencing busy periods and quiet periods.
There is unfortunately no guarantee that you will have your contract renewed once a project has been completed or that your income is guaranteed every month, as it is when you’re paid an employee’s salary.
Another important factor to consider is that there’s a possibility that the project you were hired to work on can be unexpectedly cancelled or cut short.
This is a key reason why many contractors choose to work with recruitment agencies like Salt. We have a global network of thousands of clients always in need of work – so we’re able to help the contractors we work with secure new projects quickly.
5. CON: Contractors aren’t entitled to employee benefits
As a contract worker, you are not entitled to the same benefits from your clients as employees are from their employers: this includes benefits like paid annual leave, paid sick leave, and pension contributions.
You will also become responsible for paying for your own retirement fund and won’t be entitled to the same benefits as a permanent employer.
Health and liability insurance rates are often more expensive for contractors as opposed to permanent employers who can benefit from group rates thanks to their employees.
There is also no such thing as a “paid vacation” and contractors will have to decline taking on certain projects in order to take some time off and will have to forgo income as a result.
6. CON: You have to market yourself
As a contractor, you are your brand. On top of the skillset you offer, you have to market yourself to win new business, nurture your network and stand out from the competition.
That means your social media, website and LinkedIn profile will be your main assets when looking to secure your next project. This can be a lot of pressure, especially for those starting out. We have lots of advice about how to stand out as a freelancer or contractor, and build your personal brand on our website, and in-house should you be ready to work with a specialist contract recruiter.
Recruitment agencies like Salt who have a dedicated contracting service are also able to support both with connecting you to interested clients and as consultants, experts in your area of work, to help you build a brand that stands out for the right reasons. To learn more, email our team at firstname.lastname@example.org.
Thinking of contracting in 2023? Salt can help
Thinking about a change in your career path? Ready to take the plunge into the wonderful world of contracting? Our award-winning digital recruitment agency is perfectly positioned to help you find your dream role. To shape your future as a contractor with Salt, send your CV to email@example.com.
Simply visit our jobs page on our Salt Recruitment website where you can browse through a variety of contract positions from all around the world. We have a range of exciting opportunities across Consulting, Creative, HR, Marketing, Sales, and Technology sectors.