What you need to know about contracting
You will go through an interview process and be hired as an international contractor if the company is not registered in your home country.
When you’re hired, you will need to sign a contract that highlights the services provided, confidentiality conditions, payment details, how intellectual property will be treated and termination clauses.
The contract is a legal document, so it’s essential to read it thoroughly. It’s also good practice to ask your legal representative to read through it too. Any concerns need to be brought to the company before you start.
Before we go through the pros and cons of contract jobs, let’s answer a few frequently asked questions about contracting.
Can you quit a contract job?
Yes, of course, but the conditions of your notice to leave the job will be included in the employment contract. You must ensure these details are included so no surprises occur when you want to go.
How long do contract jobs last?
Anything from a few months to a year or two. Make sure you ask how long the contract will be for during the interview process, especially if you are quitting a permanent job to go contracting.
From my experience, contracts have lasted from 6 months to 2 years.
Are contract jobs Bad?
Some companies can certainly take advantage of contract workers, which leads to a bad experience. Communication is critical during the interview process to understand what is expected from you, what hours they expect you to work, and the pay range if not discussed.
Let’s now get into the pros and cons of contract jobs.
Higher rate of pay
When negotiating your pay rate, it’s essential to realize the benefits for the company are hiring you as a contractor.
As we’ll cover in more detail in the next section, they do not have to pay you any benefits, including pension and healthcare.
This needs to be factored in, and you should do your research salaries for the job and industry you’re in.
The pay rate should be higher than what you would receive if you were an employee, which is a benefit for contractors.
No employment benefits
One of the biggest cons for a contractor is not having access to healthcare, a pension, and other employment benefits. When you live in a country where hospital treatment or dental care is expensive, this can be a huge issue and an area you need to cover yourself.
Companies that value their contractors will offer some paid vacation leave, which needs to be brought up in the interviews.
If they don’t offer time off with pay, then any vacations will be unpaid, which is another reason you need to factor this into your pay rate.
Most employer pension schemes include a contribution from the company alongside what you pay. As a contractor, you will have to ensure that you are covered for retirement. That’s your responsibility.
No sickness pay allowances
You will not get paid for this time off when you’re ill. It’s essential to keep yourself healthy because being sick will reduce income. If you’re unwell for just 24-48 hours, then you might be able to make up this time during the week, so you are not out of pocket.
Having to manage your own taxes
While we are going through the financial side of being a contractor, many people do not realize that because you are not classed as a permanent employee, you have to take care of your own taxes.
You are classed as self-employed and will, in most cases, invoice the company you are contracting for every month.
This can be advantageous because you will receive a regular income since most companies will process contractors salaries on the same day every month, like an employee. This is such a significant advantage of being a contractor over a freelancer.
The downside is you will have to manage your money better. Make sure you are saving to pay for taxes, healthcare, pension, and national insurance contributions if you live in the UK.
Your tax might be more complicated if you have to pay state and government taxes, so it’s vital to get financial advice from a professional.
Surprisingly there’s an advantage of being self-employed. You can claim back the equipment you use to do this contracting work. Items like laptops, utility bills since you’ll be working from home, and other expenses you need to speak with an accountant about.
More flexibility than being an employee
Based on what is included in your contract, you do have more freedom to work the hours you are being hired to perform.
Unless it specifically says you have to work a particular timezone, you can set when and how you work. What’s important is that the work you’re being hired to do is completed to a high standard, and on time.
Having a work routine is essential, but you can make it fit your lifestyle. When living in Asia, my routine will be to work in the evening local time, usually early in the UK/US, but other team members will be online.
During the day, I have time to explore the places I live in, resulting in an outstanding work-life balance. For me, this is a significant advantage. I am a firm believer that works, and life should be treated equally.
Insurance for legal liabilities
An area that is often overlooked is liability insurance. This will depend on the type of work you do and what is included in your contract. Let’s pretend you are contracting for an agency as an engineer, and you make a code change that results in the client website going offline.
That client could sue the agency and depend on what’s in your contract. This could result in you also being liable. Of course, laws are different in every country, but you want to make sure you are covered financially,
Some contractors set up a limited company, which would be liable and not you personally. You must include getting yourself legal representation and insurance for liabilities.
Always get professional advice from legal and accountancy companies before taking up contracting and keep yourself within the law.
Hopefully, this guide has answered the question: what are contracting jobs? The pros & cons of contract work covered in this guide will help you avoid stress, save you money and make sure you are ready before taking on any contracting jobs in the future.