Should I quit my perm role for a contract?

In today’s fast-evolving job market, the traditional notion of “job security” in permanent roles is constantly being questioned. As you consider whether to transition from a permanent position to a contract-based role, there are several factors to weigh. Let’s explore the financial benefits, market trends, and varied company approaches to handling contractors to help you make an informed decision.

Understanding Job Security

Historically, permanent roles have been synonymous with stability and security. These positions often come with benefits like health insurance, paid leave, long service leave, and superannuation incentives, which are enticing. However, the nature of work is changing. Economic fluctuations, industry disruptions, and organisational restructuring have shown that permanent roles are not always as secure as they once seemed, and redundancy is a new norm.

On the other hand, contract roles, traditionally viewed as less secure, offer unique advantages in the modern workforce. They provide flexibility, the opportunity to work on diverse projects, and often, a higher rate of pay to compensate for the lack of traditional benefits and job security.

Financial Considerations

Contract roles can be financially lucrative, especially in industries like IT, consulting, and engineering, where specialised skills are in high demand. Contractors can often negotiate higher hourly rates than their permanent counterparts due to the short-term nature of their roles and the need for specialised expertise. Additionally, working as a contractor might allow you to deduct certain work-related expenses that permanent employees cannot.

However, the trade-off is the lack of paid leave, benefits, and the need to manage your taxes and retirement savings. It’s crucial to calculate whether the increased income will cover these additional responsibilities and still come out as a financial gain.

Practical Considerations Before Switching to Contracting

One crucial factor to consider before transitioning to contract work is your current financial commitments. For instance, if you’re planning to enter into significant financial arrangements like a mortgage, the predictability of a permanent role might be more suitable. Contracting can often pose challenges in proving a steady income to lenders, which can complicate such financial commitments.

However, if you’re primarily focused on increasing your income to pay down debts or build savings more rapidly, contracting could be a highly effective approach. Contract roles typically offer higher hourly rates, which can substantially increase your earnings, providing you with the extra cash to achieve your financial goals sooner.

Tip from Sense Recruitment: When stepping into the world of contracting, always save a little for a rainy day. This ensures you have a financial cushion during gaps between contracts or unexpected downtimes.

Market Trends

The gig economy is booming, and many industries are increasingly reliant on contract workers. This shift is driven by organisations’ desire for agility—being able to ramp up or scale down their workforce based on current needs without the long-term commitment of permanent employees.

Understanding market trends in your specific industry can give you insight into the demand for contract roles versus permanent positions. In some fields, contract opportunities might offer more potential for professional growth and exposure to innovative projects.

Company Policies on Contractors

Every company treats its contractors differently. Some provide a supportive environment with access to resources, integration into team activities, and fair treatment that parallels permanent employees. Others may keep a more distinct separation between permanent staff and contractors, potentially impacting your work experience and professional growth.

Before making a switch, research how prospective companies treat their contractors. Speak with current and past contractors if possible, and use platforms like LinkedIn to get a sense of the company culture and contractor satisfaction.

Before you Quit. Weigh up your Options

Quitting a permanent job for a contract role is a significant decision that should be based on your career goals, financial stability, and personal circumstances. Consider the following steps:

• Assess Your Financial Buffer: Ensure you have enough savings to cover gaps between contracts.
• Evaluate Your Benefits Needs: Understand what you are giving up in terms of benefits and how you can compensate for these losses.
• Research Market Demand: Investigate the demand for your skills as a contractor in your industry.
• Consider Long-Term Career Goals: Reflect on whether contract work will help you advance in your career path or if a permanent role offers more opportunities for growth.

Ultimately, the decision to move from a permanent role to contracting is deeply personal and varies by individual circumstances. While contracting offers flexibility and potentially higher pay, it comes with its set of risks and uncertainties. Thoroughly evaluating your current situation and long-term career objectives will guide you to the right choice.

A crucial Tip from Sense: Before deciding on the type of entity you use for contracting, seek financial advice from a tax agent. This will help ensure that you choose the best structure for your financial and professional circumstances.  Contracting as a sole trader is not what it used to be.  More information from ATO is also available here.

How Sense Recruitment Can Enhance Your Contracting Career

At Sense Recruitment, we value the unique contributions of each contractor. We’re committed to providing tailored support that includes personalized career guidance, contract negotiation, and continuous opportunities. By partnering with Sense Recruitment, you gain not just a recruiter but a career ally who is dedicated to supporting you throughout your contracting journey. Whether you’re new to contracting or looking to optimize your current contracting career, we’re here to help you achieve your professional goals.

Need personalised advice or assistance with contracting?

Contact us at [email protected] or call +61 8 9481 8111.

Happy Contracting,

The Sense Recruitment Team