Contractors, should you move (back) to permanent employment?

Life as a contractor isn’t easy so it’s only natural that from time to time many will consider permanent employment, writes IT contractor Matt Searle, an IPSE director.

As a contractor, you don’t know where your next contract is coming from, you have no employee benefits, you have to run and administer your own business, there are overheads such as accountancy bills and insurance, and you have to pay your own tax.

Of course, there are also many positives though. You have the autonomy of being your own boss, you can choose exactly when you work and what projects you take on, plus the ability to fit work commitments around your personal life, rather than vice-versa, is hugely appealing. 

Since the new public sector IR35 rules were introduced in April, thousands of contractors have been converted from businesses to employees; they’ve been effectively forced to ‘join the dark side.’ Under the legislation public sector engagers are required to deduct tax at source, as they do for their employees, but their employment status remains independent -- no holiday pay, no sick pay, and no pension entitlements. Under these circumstances it is little wonder that contractors might think, ‘maybe I’d be better off as an employee’ -- again, because they were a ‘permie’ once before, or for the first time.

It’s important to realise that there are contractors in the public sector who are compliantly operating outside the recent legislation, and there are thousands more doing so in the private sector where it doesn’t apply at all. Nevertheless, the mood music has changed and it’s become more, well moody, so no one would blame a contractor for being tempted by a permanent role.

For some, the contract market ‘disappears’ and they have to move into employment through necessity rather than choice. From my understanding this is particularly true in oil and gas industries. I’m aware of one IPSE member who has taken a permanent position in Qatar because, after 18 months searching unsuccessfully, there just wasn’t anything available in the UK contract market. He seems happy with his choice given the burdens recent UK governments have imposed on contractors.

It’s not unusual for a contractor to receive an offer from a client that is simply too good to turn down. Indeed, the stream leader for my current project did that and left contracting to take a permanent position with the client. But permanent doesn’t have to mean forever and the contractors I’ve mentioned here may well return to contracting before too long.

For me, and many people like me, contracting has always been about the freedom to choose what I do, when I do it, and where, rather than an additional increase in my take-home pay. Which is why I’d struggle with a move like that -- I work for myself so that I can take breaks and spend time with my family, which is always a consideration whenever I look at what permanent jobs might be available to me.

A few years ago, I had an interview for a permanent position because the contract market just wasn’t playing ball with my circumstances. Thankfully, almost immediately after the interview I was offered a great contract role. But it was desperation that made me consider leaving freelancing, not anything else.

Ultimately the real losers of contractors ceasing to trade will be the companies that have come to rely on their expertise and flexibility. When starved of this invaluable resource, the performance of these companies will suffer and this will have a hugely detrimental impact on the UK economy. Another reason for any contractor feeling the itch to look carefully before they leap.

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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