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First time contract in the UK
I've been testing for a few years now in various roles as a permanent member of a company. I've taken the leap to go contracting and I'm wondering what the main differences will be?
I have worked in the U.S. as both an employee and as a consultant for many years.
As an employee, the company and I pretended to have a long term goal of working together. They would promise and sometimes send me to training classes. I would have to write a report once or twice a year having to do with what my accomplishments were and what I want to do to improve myself. I always wondered why the companies don't do this on their side. I mean why don't they explain how they can improve from their side? I took is seriously at first until I was at companies that had budget cuts or some management change and a bunch of us would get laid off usually without notice. If I found a better offer and wanted to leave.. first there would be a "grand performance" by management about them not wanting me to leave. They would say that they don't like having turn-over of people leaving. And they would always say that they are in the middle of some project and couldn't afford to loose me. The full time jobs usually have more set work hours. The companies use a lot of wording to say that they give benefits such as 7 paid days a year, sick days, 2-3 weeks of vacation. The medical benefits at companies keep charging me a portion of the premiums so they are not totally free and I have to go with there choice of insurance.
On the contract side anything can happen. If they need someone right away, the project can pay very well. The rates for the same work seem to have almost no limits. The same work can pay $25 an hour up to $90 an hour plus benefits. It is all supply and demand. There are no benefits, but I find that there are Insurance groups with good deals on premiums. In New York City we have Freelancers Insurance. The health benefits sound expensive when the numbers are over $700 a month for a single person. They are a tax write off though.
I usually dress a tiny bit better than employees. I have to take classes and study on my own after hours if I want to stay current with the industry. My hours are more flexible. I can be let go without any notice. If I am being used to solve a specific task, I can be looked at with respect. However sometimes the projects consist of work that the employees do not want to do them self because they are boring or labor intensive. The person in charge of me has often treated me like a fax machine or microwave oven. I can be considered to be an appliance that has to create scripts at a certain rate of speed. Besides pay rate, anything can happen with work and how you are treated. As a consultant, we have tax write offs for anything having to do with business costs, so I find that I re-invest in myself more than when I'm an employee. If I see a class I want to take, I just go for it because of the tax break.
As a consultant, you have to keep looking for the next project. We don't get paid time off, but with a good rate I can take off hours from work and still make more money at the end of the year.
I prefer consulting more. If I cannot find a contract for a month or two I start getting nervous and wish that I could find stable employee work. But the feeling goes away once I'm working again.
Hope this is of use.
Specifically for the UK there are a couple of online resources relating to contracting in general (setting up, etc.) Contractor UK - for UK IT Contractors, IT Contracting and Computer Freelancers has some good first-timer guides. Home | PCG is for professional contractors and freelancers.
You'll need to consider your structure (generally via your own ltd company or under an unbrella company). Each has it's merits and problems. You'll also get to know the pluses and minuses of contract rates (hourly, daily, fixed term contract, etc)
Main differences? As Kevin mentions above, you're now responsible for your career and business. This means that all payroll, taxes, professional development, holidays, etc come out of your own pocket. You're a business now and not an employee. Additional bureaucracy in the form of tax returns, own NI, retaining expense invoices, etc. Knowing that time off for training or holidays is now no longer billable, you don't get paid to sit on a beach for two weeks a year. Contracting generally pays more up front with the offset that you're now paying for training, leave, etc and the fixed end of your contract with no guarantee of work.
On the plus side you might get lucky and get a three month contract in a great company that gets extended for years :-)