Are you tossing up between a contract engagement and a permanent job? The reality is that there are pros and cons to both options. So, if you are wondering if the grass is greener on the other side, we’re here to tell you it’s a matter of perspective. What may look fluoro-green and wonderful to you may be viewed unfavourably by someone else. So, how do you determine which option is better for you?
Clicks IT Recruitment has extensive experience supporting thousands of job seekers to determine which option is best for them. Whether you’re a Developer or Project Director, we can help you gain clarity. Ultimately, the answer is, as with many things, it depends. Your preferences, career and life goals, and many other factors we’ve listed below will help you decide which option is better.
Here’s a quick guide to the main differences between permanent and contract work.
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Risky business
What is your risk tolerance?
A permanent role generally offers more job security than a contract one. That’s not to say your permanent position couldn’t be made redundant. However, if a project gets cancelled, you still have a job – this is a less likely scenario if you’re contracting. If you choose to contract, you must accept a degree of risk when it comes to job security.
Minimise your risk
Knowing you can secure work whenever you require it will reduce the uncertainty of contracting. Take the time to develop strong working relationships and a track record for delivering the required outcomes. Being well-regarded in the industry will enable you to find work quickly and easily when your contract ends.
Goals and lifestyle
What are your career goals?
Contract work offers greater flexibility and freedom. For example, you can choose your contract assignment based on the work you’re interested in, not your manager. You can also select projects based on whom you get to work with, when you’re ready to start, and how long the assignment lasts. However, the project-based nature of contract work often means you don’t have access to the same long-term career development and progression opportunities as permanent staff. Additionally, many organisations prefer to promote from within and will prioritise permanent employees.
Do you want to develop breadth and depth of experience?
Contractors have specific deliverables with each contract assignment they undertake. They are expected to already have the required skills and experience to deliver. The projects they undertake therefore deepen their expertise. On the other hand, permanent staff are offered a broader range of deliverables which expands their skills and experience. If there are gaps in skills or knowledge, the companies they work for will invest in their learning and development, adding further breadth to their skillset.
What are your life goals?
If you are looking to buy a house or start a family, having an ongoing source of income will make things easier. For example, permanent employees have a better chance of securing larger loans. They also have access to paid leave. Knowing you have paid parental leave can help you plan, and sick leave provides peace of mind if any unexpected illness arises. On the other hand, contracting could be the way to go if you want greater flexibility. For example, you could undertake contract assignments that allow you to take breaks to focus on a side hustle, family life, or go on a holiday every six months. As a contractor, you have the freedom and flexibility to decide.
Market conditions
Assess the current employment market?
When the employment market is strong or stable, contracting is less risky. A greater appetite for investment means projects are less likely to be terminated prematurely. It’s also easier to secure work as plenty of jobs are available.
Are your skills and experience in demand?
It’s also essential to understand how much demand there is for your skillset. Consider the market now and in the future, if you want to contract long-term. IT Development, Data, IT Security, and Project Services are some of the most in-demand skills in the tech industry. Look at Clicks’ Recruitment & Retention report for insights and the latest recruitment trends.
Money, money, money
How much more will you earn contracting?
Contracting can be financially rewarding as its riskier and market-driven nature generally attracts higher pay rates and tax benefits. Our salary search has annual salary data and daily contract rates for over 200 IT roles. When comparing the differences in earning potential, it’s essential to factor in set-up costs such as establishing a company and obtaining relevant insurance. You will also need to consider the time and cost of managing your pay, tax, and superannuation or engaging a professional to do so. Finally, don’t forget to factor in the value of the paid leave entitlement and other benefits you won’t have access to when contracting.
Can you afford breaks from unemployment?
As outlined, contracting can allow you to take extended breaks. But what if time off between contract assignments was unintended? When choosing a contract or permanent role, it’s also essential to assess if you can meet your financial obligations and goals. A common practice in contracting is to put away a third of your earnings to protect yourself from any unexpectedly long periods without income.
Other considerations
Administration
If you pursue contract work, decide if you’ll manage the administration associated with remitting your tax and superannuation, or whether you will outsource the work, e.g., to a contractor management organisation. Clicks’ dedicated Contractor Care program offers $20M Public Indemnity & Public Liability insurance, weekly pay, monthly superannuation contributions for our contractor, and access to additional benefits to its PAYG contractors.
Office politics
It is often said that contract work allows you to focus on the job and limits involvement in any office politics.
Teamwork
On the flip side, you can feel like an “outsider” as a contractor. Permanent employees tend to be more involved in the culture and shaping an organisation’s direction. As a contractor, there may be limits to the amount of company knowledge you can access or the strategic, long-term impact you can have.
Interviewing
Contract assignments typically end more frequently than permanent employment. As a result, contractors generally attend more interviews and complete more assessments than their permanent counterparts. We have job seeker advice and resources to help you secure your next role if you are interviewing or are in the job market looking for work.
Summary of pros and cons of contract versus permanent work
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| Cons | Cons |
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If you are in the market for your next IT opportunity, review our job board to see all of our current vacancies.
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Clicks is an award-winning IT recruitment specialist. Our team averages 12 years of industry experience, and we’re on over 80 Preferred Supplier Agreements. As Australia’s favourite IT recruiter, we help candidates find great opportunities and companies find great people each day!
