Contract vs perm: what’s right for you?

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At any one time, thousands of us are thinking about changing our job; eager for a new challenge or even a brand new career. Whereas previously, most people would be happy to go from employer to employer, there’s been a recent surge in popularity for ‘going contract’. The flexibility, the lure of being your own boss and commanding a far more attractive contractor salary is understandably hard to ignore.

Yet, there are a great many factors to take into consideration before handing your resignation letter in. As “should I go contract?” is one of the questions we get asked a lot, we thought we’d take a look at the pros and cons of both to help you decide which is better for you.

Contract jobs

The McKinsey Global Institute report on independent work reveals that 49 million people across Europe and the United States fall under the category of ‘free agents: those who actively choose independent work and derive their primary income from it’. These people reported far greater professional satisfaction than those who were contracting out of necessity or who were employed, demonstrating that the non-financial perks are just as valuable as the financial ones. Getting straight to work, avoiding politics and having freedom when it comes to time management, are just a handful of these.   

You’ll need to determine the route you’re taking, too. Contractors have two options: to set up as a limited company or to work through an umbrella company (we’ll examine these in more detail in a subsequent blog). The specifics of your new employment status will differ depending on the option you choose, as will your IR35 tax position, but your recruitment consultant can talk you through this.

On the flip side, finding work can sometimes prove tricky, especially when you’re new to contracting, though (again) your recruitment agency will be able to assist – at least until your reputation precedes you. There are additionally challenges with regard to job protection, benefits and the admin associated with going contract, but research suggests most contractors don’t want these benefits anyway. It’s a balance, though, which many feel is worth making.

Here are some typical pros and cons:


  • Bigger salary
  • Work for self
  • Flexibility, both during and between contracts
  • Variety of work
  • Can climb career ladder
  • No involvement with office politics
  • Be your own boss
  • No long term commitments
  • Quick and easy to hire
  • Reduced tax
  • Greater professional satisfaction
  • Work-life balance
  • Reputation can carry you
  • Your skills will be appreciated
  • Tax breaks
  • Have a transactional relationship with the employer.


  • Job security not guaranteed
  • Isolating
  • Won’t see the long term effects of work
  • No benefits or buffers, i.e. sick pay, enhanced pension
  • Responsible for tax affairs
  • Administrative hassle – rules, paperwork, etc
  • Need contractor insurance
  • Limited to short-term objectives
  • Urgency of solving immediate issues
  • Relies on supply and demand
  • Need marketable ‘contracting skills’
  • Proactive attitude towards job hunting
  • Have a transactional relationship with the employer.

A factor that is key to success is whether you have marketable contracting skills which businesses want. Is there a demand for resource in your specialism? Are companies crying out for your experience? If your core skills fall within IT and engineering, then you’re probably fine, but it always pays to do a little research and to talk to some experts.

Want to know what sort of opportunities are out there? Check out our contract jobs. 

Permanent employment

The REC’s latest JobsOutlook survey found that 48 per cent of employers believe they’ll see a shortage of ‘suitable candidates to fill vacancies in 2017’ – which means those searching for permanent roles, particularly engineering or IT jobs, can have the pick of the bunch. It’s a candidate’s market. Just under a quarter of the employers surveyed said they expected to take on more staff in Q1 2017, across all sectors.

The most significant differences between contracting and perm are the level of pay and the freedom regarding time that the former group enjoys. While contractors may earn more money, this is largely in lieu of the many benefits that permanent employees receive, encompassing private medical cover, life insurance, pension, training, etc. Then there’s pay rises, bonuses and any ad hoc reward schemes that a company may run.

Another difference revolves around progression, which can be slower when a perm employee, even if there is a career path in place. Internal opportunities aren’t always shared or competition can be high. However, training and development can be more freely given – and paid for. One of the biggest issues contractors face is that lack of security. This was mentioned in our interview with ARM candidate, David Smith (who went from perm to contract). He said his awareness of being without that ‘safety blanket’ was something he considered when making his decision. Perm staff are afforded all the protection that falls under employment law, plus the reassurance of holiday, sick and maternity pay, etc. For the risk averse, this can understandably be a deal breaker.

Let’s weigh up the pros and cons:


  • Job security
  • Employment protection
  • Flexible benefits
  • Pay rises and bonus
  • Defined career path
  • Teamwork, friendship and socialising
  • Internal promotions
  • Long term impact in a company
  • Candidate’s market
  • Training and development
  • Routine certainty regarding activities
  • Gain reputation as an in-house expert
  • Can demonstrate abilities, gaining respect and trust
  • Lenders prefer steady incomes
  • Have a more emotional relationship with your employer.


  • Employed by another entity
  • Office politics
  • Harder to climb ladder
  • Salary typically lower
  • Skills not always used effectively
  • Restricted amount of holiday
  • Too comfortable = stuck in a rut
  • Lack of challenge and variety
  • Personality clashes
  • Hard to change poor culture
  • Having to ‘do as you’re told’
  • Risk of micro-management
  • Lack of autonomy
  • Red tape
  • Have a more emotional relationship with your employer.

Looking for your next permanent move? Browse our job vacancies.

Naturally, all of these pros and cons cross over between contract and perm, not all will apply to every role and not every individual will view these factors in the same way.

Our advice

Many people who turn to contracting love it and wouldn’t work any other way, while plenty have returned to permanent employment as it suits them better. When it comes to whether or not you should go contract, we would recommend you weigh up all of your options, compare the pros and the cons, think honestly about your skills and talk to those who are a) closest to you and b) know what they’re talking about.

The one thing we do know is that you need to determine what’s most important to you, then you can make up your mind.

If you would like to talk to us about your career, contract or permanent, please get in touch.