Introduction
Most contractors were permanent employees before becoming a contractor. This
article explains the common reasons for going contracting.
Reasons for going contracting
Monetary / Financial
Contracting pays more than the permanent market, particularly for the premium
skills in demand.
Contractors can earn over £100k a year in non management roles. Similar salary
levels are unlikely in the permanent market without rising through the
management ranks. Some contractors consistently earn six figure incomes by
continually learning and surfing the wave of the highest in demand skills.
Contracting pays more than the permanent market
ContractorCalculator.co.uk
Contracting is extremely attractive to permanent employees who want more income
but have no desire to climb the corporate management ladder. It is the most
common reason for entering the contract market.
Contracting is extremely attractive to permanent employees who want more income
but have no desire to climb the corporate management ladder
ContractorCalculator.co.uk
Regarding permanent employee benefits, you will need to make provision for
health care and insurances, but these are more than covered for by your
increase in net income. Pension contributions can be made using pre-taxed
company income. You can significantly reduce the IR35 pain with a contractor
pension and get tax relief up to 48%.
To find out the contract rate required to earn the same as a permanent salary
use the Permanent to Contracting Calculator.
Failed bonus promises, promotions and unpaid overtime
Some permanent employers pay annual bonuses based on company performance.
Another way management motivate staff is the promise of favourable appraisals
perhaps resulting in pay rises or promotions. Sometimes when managers require
employees to do overtime they play the ‘Team Player’, or ‘Company Loyalty’
card.
Sometimes bonuses, pay rises, or promotions fail to materialise or are out of
step with employee’s expectations. Employees then start questioning their
loyalty and consider the contracting option.
There are no promises of bonuses, pay rises, or promotions in contracting.
Everything is signed off each week or month you get paid. There is no
possibility of working for nothing.
Lack of job satisfaction
Often permanent employees would rather be working on something else but fail to
get the chance in their current organisation.
One option is to move to another permanent position at another company. The
other option is to go contracting.
Contracting provides the complete freedom to choose where to work and what area
to work in.
Contracting provides the complete freedom to choose where to work and what area
to work in.
ContractorCalculator.co.uk
Lack of training / career progression
Unfortunately there are few companies who still invest heavily in training
their staff. People get bored if they stay in the same role for too long.
Without training and career progression work can become very dull with job
satisfaction and morale plummeting.
One option is to move to another company who provides better chances of
training and career progression. The other option is to go contracting.
When you go contracting you are in complete control of your own professional
destiny. You choose where to work and what to work on. You can send yourself on
training courses and buy any training material you choose.
Dislike of corporate politics
Everyone working in large corporations gets involved in politics whilst middle
managers use staff as pawns in their empire building games as they rise up the
corporate ladder.
Avoiding politics can be a motivating factor for going contracting.
As a contractor you no longer need to 'rise up the corporate ladder'. You can
be more frank with management since your interest is focused on the project
succeeding, rather than trying to get a promotion.
Flexible working – more holidays
Whilst some contractors take long holidays it is rare for contractors to get
part time contracts. Most contractors work the same amount as permanent
employees.
Contracting does provide the freedom to take long holidays between contracts.
Just make sure you save enough money each month rather than factoring in the
‘cost of not working’ when pricing up a holiday!
Conclusion
The main reason permanent employees go contracting is an increase in money
without having to climb the political corporate ladder. This is often triggered
by a lack of job satisfaction and bleak future in a current position.
Contracting can provide a higher income, guaranteed pay, less politics, full
control over training, and more freedom for taking time off.
Published: Saturday, March 29, 2008
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