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Knowledge Base

The benefits of contracting

06 August, 2008

Contract work is an attractive option to many because of the lucrative nature of contract assignments. The contractor has the potential to earn considerably more than the permanently salaried person. For example, the average IT contract rate is approximately £30 per hour as compared to the average IT salary of approximately £25,000 per year.

Contract assignment can run anywhere from around 1 month to 12 months in length, thereby allowing the contractor to change jobs frequently and gain valuable experience in working on new projects and for different companies. However, contracting does come with the responsibility of constantly finding new contracts, negotiating contracts, managing finances as well as tax and national insurance payments. Depending on the tax laws, you may well find tax benefits if you are self-employed and have the ability to write off business expenses.

It should also be remembered that contract workers are only paid for the actual hours worked and therefore have no benefits or holiday pay. However, contract staff do get paid overtime.

The negative aspects worth consideration:

     
  • Employers can be turned off considering you for a fulltime job if you have a track record of working on contracts, as merely from a monetary point you may not be content with a set salary. And a hiring manager may need some serious convincing that you will stay long term if your history is made up of contract work.
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  • Periods of unemployment during slow times.
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  • Adminstration and accounting, though this becomes a lot easier with the advent of umbrella companies and limited company solutions provided by accountancy firms.

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