It’s the age of choice with job opportunities coming at you from every direction, be it from a friend who has a vacancy at their workplace, being headhunted on LinkedIn or by actively seeking out a role yourself.

One of the questions you may have is about contracting, temp and permanent which one should you choose?

Each have their own benefits and while the pro’s vary from role to role there are some negatives that will lead you to select one type over the others.

Permanent, temporary and contract work: what’s the difference?

If you are looking at a new job and have the option between contract, permanent and temporary but aren’t sure which route you should go down, remember you are in a strong position. 

For those who aren’t sure, temporary and contract work can often be the same thing but sometimes different language is used to describe the length of the employment. 

The main difference between a contract role and a permanent job is your own work ‘employment status’ with the employer. 

When contracting this means you are working for an organisation for a fixed period of time on their payroll or work through an agency like Randstad where we pay directly to you and you will be subject to National Insurance and income tax.

Benefits of a temporary job.

Working in a temporary position could range from a few hours to as long as a few years with one employer. One aspect you can be certain of is that there will be end date for the period of employment. 

Here are some of the the advantages of temporary work:

  • if you have got other commitments and need to manage your schedule in your own way, the temporary working lifestyle could give you that flexibility
  • there may be better work-life balance as you tend to have more control over the hours you work
  • you can try different roles in different settings without having to commit to one. This is particularly useful if you are unsure of which career path you want to go down or are looking to build your experience through working in a variety of settings
  • get to sample life at various organisations and meet a wide range of new people. Making contacts can also help get your next job.

Benefits of a permanent job.

A typical permanent contract is a full-time, salaried position with a contract whereby you would be required to work a minimum of 36 hours weekly.

Some of the advantages of working as a permanent worker:

  • financial stability with a steady income and the ability to budget more accurately. Some permanent positions also pay bonuses, which some temporary ones aren't entitled to
  • there may be greater job satisfaction as you build long-term relationships with your colleagues and see progress and results of the work you put in
  • you may have better access to company benefits such as training and continuous professional development (CPD) opportunities. This could open up more opportunities to progress to a senior role.

Increasingly, the lines between permanent and temporary work are blurring to make way for roles that may have the benefits of both, for example, employers are increasingly aware of workers' desire to have flexible working conditions. 

Don’t forget, if you are looking for a permanent role but just can’t find the right opportunity just now, a temp job could be the perfect route for you into a permanent position in the long-term. Many of the temps we place go on to join the company as a permanent members of staff. 

Benefits of contracting.

Contracting is when a worker is hired for a fixed amount of time (usually between three months and a year) and is usually added to the company payroll. 

As a contractor you'd be either self-employed or an employee that works for a client and are employed by an agency. Contracts mostly arise when companies have projects or during especially busy times.

While you would be under contract by a client you would not be considered a permanent member of staff and the chances are you wouldn't be eligible for company benefits. But that's not to say there aren't other pro's of contracting jobs:

  • pay for a contractor can be up to three times as high as a permanent employee due to their flexibility and there are tax benefits too
  • like temporary jobs, you'll be able to sample many employers, roles, teams and individuals
  • you'll also be able to shape your future career by selecting assignments relevant to your intentions
  • you can plan commitments around your job and once the contract comes to an end it's usually easy to start another quickly 

Salary comparisons.

Contracting can offer attractive daily rates but in many ways that greater earning potential is down to your flexibility and can come at the cost of job security. 

Working this way means you’ll need to invest time and energy to preserve a steady workflow, update your skills and build reputation. 

Permanent jobs may offer a less when it comes to annual salary but you will have a range of benefits that aren’t offered to the contractor such as holiday and sick pay, company cars and more. 

One positive for permanent positions is job security - hopefully you won't be looking for a new job every six months! Permanent roles provide more stability and allow you to think about your long-term goals outside of work as well as professionally. 

Salary expectations: permanent vs contract. 

Using a Software engineering in IT sector as an example, it’s not unusual for a software developer to earn around £500 a day compared to the same full-time position paying £80,000 per year. 

Both are well paid but...

A permanent employee could expect: £80,000 annual salary incl bonus, 20+ days holidays and allowing one week sickness.
Take home after tax = £4,517.97 a month

Contractor example – £500 per day, seven weeks off (that’s two weeks off between contracts, 20+ days holiday, one week off sick), 5% pension, £1,200 accountancy fees p.a.
Take home after tax = £5,766.35 a month