Deciding on your next career move is rarely just about the job title or the salary…
It is also about the lifestyle you want to lead. Do you crave the security of knowing exactly when your next pay cheque is landing, or does the idea of being tied to one desk for the next five years make you want to run for the hills? This is usually where the debate between contract jobs and permanent jobs begins.
If you are stuck at a crossroads, don’t worry. We’re here to break down the differences, the pros, the cons, and the details to help you decide which route is right for you:
What is a permanent job?
A permanent job is an indefinite contract where you are employed by a company until you resign or are made redundant. It is the traditional route, and for many, it is still the most appealing.
Here is a closer look at why you might choose the permanent path – and why you might not.
The benefits of permanent roles
- Financial stability: You know exactly how much money is hitting your bank account at the end of every month. This makes life admin – like getting a mortgage, planning a holiday, or just paying the bills – significantly less stressful.
- Comprehensive benefits package: Permanent employees generally get perks such as paid annual leave, sick pay, company pension schemes, health insurance, and maternity or paternity pay.
- Career progression: When you are a permanent member of staff, companies are more likely to invest in your development. You are part of their long-term plan, which means access to training budgets, mentorship schemes, and a clear path up the internal ladder.
- A sense of belonging: You have the chance to build deeper relationships with colleagues, get involved in the company culture, and actually feel like you belong to a team. If you are the type of person who loves the office Christmas party and wants to see projects through from start to finish, permanent is the way to go.
The downsides of permanent roles
- Limited flexibility: While hybrid working is becoming more common, you’re generally tied to specific hours and a specific location. If you want to take three months off to backpack across South America, you’ll probably have to quit.
- Possible stagnation: Staying in one place for too long can sometimes mean your skills plateau. Plus, salary increases in permanent roles tend to be incremental (think 2-5% a year), whereas contractors can often jump their rates significantly with each new project.
- Office politics: When you’re permanent, it’s much harder to avoid the drama.
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What is a contract job?
Contract work involves working for an employer for a set period of time or for a specific project. Once the contract is up, you move on to the next one. It is a way of working that rewards those who are adaptable, skilled, and willing to embrace a bit of uncertainty.
There isn’t just one type of contract job. Here is a quick breakdown of the variations you might see on Reed.co.uk:
Fixed-term contracts
These are employed roles that have a strict end date. It might be a six-month contract to cover maternity leave or a year-long contract to help launch a new product. In most cases, you are on the company payroll and get similar rights to permanent staff (like holiday pay), just with an expiration date.
Agency contracts
This is where a recruitment agency employs you but sends you to work for a client. The agency pays your wages and handles your National Insurance. These can be short-term or roll on for years, but the agency is technically your employer.
Freelance and contractor roles
This is for the self-employed. You might operate as a sole trader or through your own limited company. You set your day rate, handle your own taxes, and invoice the client for your time. This is common in IT, creative industries, and project management.
The benefits of contracting
- Higher earning potential: Contractors often earn more than their permanent counterparts. Because you’re taking on the risk of not having guaranteed work – and because the employer doesn’t have to pay for your benefits or National Insurance (if you’re B2B) – daily rates can be very attractive.
- Variety and experience: If you get bored easily, contracting is perfect. You might work for a bank for six months, then switch to a fashion startup, then move to a charity. You’re constantly meeting new people, learning new systems, and facing new challenges. It’s a fantastic way to fast-track your experience and enhance your CV.
- Control and flexibility: You choose when you work and who you work for. Want to take August off? If you’ve budgeted for it, you can. You really are the boss of your own career trajectory.
The downsides of contracting
- Uncertainty: You don’t get paid if you don’t work. This means no money when you’re sick, on holiday, or between contracts. You’ll need to be disciplined with your finances to get through the dry spells.
- Feeling like an outsider: You’re there to do a job, not necessarily to become part of the ‘family’. You might miss out on team away days or company updates, which can be isolating for some.
- Admin overload: If you’re self-employed, you’re responsible for handling your own tax returns, invoices, and expenses. It’s not rocket science, but it’s extra homework that permanent employees don’t have to worry about.
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How to choose between permanent and contract work
Still on the fence? There is no right or wrong answer, only what is right for you at this specific moment in your life.
Ask yourself these three questions:
- What is my financial situation? If you have high outgoings and no savings buffer, the instability of contracting might keep you awake at night. If you can float yourself for a month or two, the higher earning potential of contracting could help you reach your savings goals faster.
- What motivates me? Do you love building long-term strategies and mentoring a team? Go permanent. Do you love coming in, fixing a specific problem, and leaving before the politics start? Go contract.
- What stage of my career am I at? Early in your career, permanent roles offer great training. Mid-career, contracting can broaden your experience rapidly. Later on, you might want the stability of permanent – or the semi-retirement flexibility of consulting.
Making the switch
The beauty of the modern job market is that you aren’t locked into one path forever.
Plenty of people start as permanent employees to learn the ropes, switch to contracting in their 30s to maximise their income and travel, and return to permanent leadership roles in their 40s.
If you are currently permanent but tempted by contracting, why not try a fixed-term contract? It gives you a taste of the deadline-driven life without the full administrative burden of self-employment.
Conversely, if you have been contracting for years and crave a paid holiday, hiring managers value the diverse experience contractors bring to permanent teams. You just need to frame your CV to show you are ready to settle down and build something lasting.
Frequently asked questions
Can a contract job become permanent?
Yes, it happens all the time. This is often called ‘temp-to-perm’. It is a great way for both you and the employer to ‘try before you buy’. If you impress during your contract and a headcount opens up, you will be first in line. However, never assume a contract will go permanent – always keep your options open until you have a signed offer.
Do contractors get notice periods?
Yes, but they are usually much shorter than permanent roles. While a permanent employee might have a one to three-month notice period, a contractor might only have one week (or even zero days, depending on the contract). This cuts both ways – the employer can end your contract just as quickly.
Is it bad to have too many contract jobs on my CV?
Not at all, as long as it is clear they were contracts. If it looks like you just quit every job after three months, that is a red flag. But if you clearly label them as ‘Contract’ or ‘Project role’ on your CV, it shows you are adaptable, experienced, and trusted by multiple employers to hit the ground running.
What is IR35?
If you are looking at contracting in the UK, you will hear about IR35. It is tax legislation designed to stop contractors from working like permanent employees (disguised employment) while paying less tax. If your role falls ‘inside IR35’, you will be taxed similarly to a permanent employee. It is worth reading up on this if you plan to work as a limited company contractor.
Ready to make your move?
Whether you decide to chase the security of a permanent position or the freedom of a contract role, the most important thing is that you’re making an informed choice.
Check out the thousands of contract and permanent listings on Reed.co.uk today and find a job you’ll love.
