Been offered a contract position but don’t know whether it’s a good idea to take it? Deciding what the best career move for you is always tricky, but with a new type of position it can make the decision even more complicated. We’ll do a little deep dive into your options.
What is a permanent position?
A permanent role is an indefinite position which also offers company benefits, such as sick pay, maternity leave, holiday pay and pension contributions.
You’ll often have a probation period when you start you job, which gives the company the ability to let you go in short notice if they don’t think that you fit with the company, the role, or are capable of doing the work as stated in the job description.
If you want to leave the position, you’ll have to work a notice period (i.e. you can’t leave immediately on handing in your notice but will have to work at the organisation say, for a further month). The length of this will depend on the company and how long you’ve worked there.
What is a contract position?
A contract position is one in which you are employed for a set number of months. Depending on the nature of the contract, you’ll could be employed in the same way as above by the company and continue to be PAYE, but without many of the same benefits.
Alternatively, you could be paid as a private limited company. Depending on the nature of the work, you may be eligible to reclaim certain expenses applicable to your contract that will reduce your tax obligation, for example equipment, software, travel and accommodation.
As a contractor, it’s likely that you’ll receive a higher salary, however you’ll have fewer perks on the job, for example you’ll be responsible for your pension and you won’t be paid if you are sick.
What is your current position in your role?
If you were headhunted for the new position rather than looked for it? If so you might want to ask yourself the following questions about your current role:
- Are you irreplaceable?
- Have you got a good relationship with your colleagues and/or managers?
- Have you got some interesting projects in the pipeline?
- Can you see yourself progressing within the position and company?
If you are saying yes to two or more of these, it’s likely that you are better off staying in your current position as you’ve a number of long term options in which to renegotiate your salary and benefits and a number of ways in which you could advance your skills and career.
However also remember that in the current climate, nothing is permanent. You might need that week or two off work for illness, which in a permanent contract, is a great perk, however there’s every chance you’ll be let go. Companies are currently trying to refocus their efforts, build new customer bases, make cuts and develop their brand in new and exciting ways. Their chances might work well in your favour, but equally they might not, so knowing that you will be able to find work if you are let go is a good feeling regardless.
Still unsure? Here are our pros and cons of taking on a contract role:
- The length of the contract - if you are offered a long-term contract you’ll not have to worry about finding a new job straight away and might gain some of the employees benefits that full-time staff receive.
- Higher salary - many of the contracts are offered outside Ir35 so you can still pay yourself an even higher salary through dividends if you wish to do so.
- Are you interested in that company specifically? - Working a contract with a company that you’d love to work for is a great way of getting your foot in the door. The decision could pay off in the long-term - one third of employees are offered permanent positions after their contract runs out.
- You’ll get the chance to learn something new - unlike permanent jobs, contract jobs often are less specific in their criteria so you have more chance of getting one. They are a great way to work on something that you haven’t had the opportunity to do previously, which can increase your skillset, help you pivot into a new career, or try out something you’ve always wanted to but never had the chance to.
- How is it going to be viewed by future employers? - this will depend on your industry, however in general more organisations are employing people via contract and freelance positions so there’s far less stigma surrounding them nowadays.
- Can your contract be cut short by the employer? If you’ve been employed to work on a specific project, there’s every chance the project finish ahead of schedule.
- If you contract is short, it might be that you never have the chance to relax in your position, and will continuously be having to look for future work, write CVs and attend interviews.
- Time spent on the business outside the workplace - as a contractor you’ll be responsible for filing your own taxes and getting your finances in order, for example putting money into your pension. All this takes time and effort on top of your day job.