The Guide to Contracting

Who amongst us hasn’t sat down at their desk at work and thought to themselves ‘I could do this better on my own’? Or perhaps we might think ‘I hate my boss’. Then there is the realisation that ‘I am worth more than this’ or that ‘they don’t pay me enough here.’ Chances are that most people who work for someone else will think all of these thoughts at varying points in their career. Similarly, most of those same people will go on to think about what it would be like to go it alone, to break out of the rat race and work for themselves, doing the same job, using the same skills but for their own company and their own rewards.

If you’re browsing through this website then the likelihood is that you’ve been having a lot of these thoughts yourself of late. Or maybe you’re just starting to think about it, weighing it all up and wondering what it would be like. You realize that becoming a contractor could be the change that you’ve been looking for in your life and want to investigate it more thoroughly before making the leap. Perhaps you’ve heard about all the advantages – the freedom it can bring, the better pay, the greater personal and professional satisfaction – and you want to see if it really is that good and whether it might be right for you?

The good news is that all of these advantages you’ve heard about are true. If you make a success of contracting you can achieve rates that are often twice that of regular employment and you can do it working on jobs you choose (because you enjoy them) and a schedule that best fits around your life. However, as with all things in life, this is not guaranteed and these opportunities and advantages need to be balanced with a number of significant disadvantages too. Someone who does the same work as you whilst working for a large company might also get the same high pay packet plus a range of benefits a contractor would see – health care, pension schemes etc And you might also find that the contracting life – from administering your own business to dealing with clients – is not for you.

Pros and Cons

Making the decision to become a contractor is all about weighing up the pros and cons of your current employment as against the pros and cons of working for yourself. Workers who think about making the leap will typically focus on all the advantages of contracting such as flexibility and higher pay whilst ignoring all the potential pitfalls. This page will outline the advantages and disadvantages:

Advantages of Contracting


This is the number one reason that most contractors cite when asked why they left their old jobs. It is also the number one reason that people give when they say they are thinking about becoming a contractor. We all want to live our lives according to a schedule that we choose and set a weekly timetable that best suits our own personal working style. Contracting does indeed allow you to do exactly that. As a contractor you will be free to decide the length of the contracts you want to take on, the terms of the those contracts and the type of contract. You will be free to choose the clients you work with and the precise type of work that you do and specialize in doing. When you work for someone else it is often the case that you get stuck working on projects that are uninspiring, unchallenging and which do not utilize your specific skill set. As a contractor you have the opportunity to set the direction of your specialization and of your career as a whole. You are also not tied down to a place or even to a country.


The flexibility of working hours mentioned above applies on a far larger scale too. Being a contractor means you can pick and choose which contracts you take, how long they last and the length of time you want to take in between each one. This in turn means you can choose just how much holiday time you want tot take and the best time to take it. Thus if you live for skiing in winter you can work contracts all year and take a few weeks off in winter to hit the slopes. Conversely if you want to take the summer off…
Even better still, if you are not tied to one place or have a job contracting online you will probably find you can head off and work anywhere in the world…

Better Renumeration

Of course all that flexibility depends on one important factor – higher wages. Better pay is the second most often quoted reason for switching from paid employment and there is no doubt that contracting does offer higher rewards. Part of this is down to the fact that as a contractor you are the sole person working on a project and therefore you are the sole person reaping the rewards of that project. But it is also because even if (as is the norm) your contracting rate is a great deal higher than that of a permanent employee, the company hiring you will be making great savings. It is cheaper for them to hire a more expensive contractor temporarily than to pay a full time member of staff for a particular project or job. Indeed often you will be paid as a contractor not only to do a job but also to train their staff how to do it once you are finished.

It goes without saying of course but the better rates of pay and the work you receive will depend on how skilled you are as a contractor and how in-demand your particular skills are.

Training and Skills Development

As mentioned above, if you are highly skilled you will get more work. And if you are a specialist in one particular area you will also find you can charge a lot more money. One of the reasons contractors are able to do this and earn so much money is that they are able to specialize and get highly trained in specific skills. Companies often employ contractors for those specific jobs and hope (or request) that they pass some of these skills on to their employees.

The reason that contractors are highly skilled in the first place is because contracting as a career choice offers much greater potential for training and career development. There are two reasons for this. The first goes back to flexibility. If you are able to decide for yourself which projects you take on then you are also able to choose projects that both challenge you and are to do with the niche and skill set that most interests you. You can either take on a number of different projects that allow you to build a broad and wide-ranging knowledge of your particular industry or you cab concentrate on specific areas and become an absolute master of one; or indeed combine the two, building a broad portfolio when starting and then specialising as you get more experienced.

Secondly, the reason that contractors have better opportunities for training and career development is that being self-employed allows time and space for training. Indeed, it positively encourages it – the combination of flexibility, control and most importantly tax deductible training makes for an atmosphere in which training is very cheap (if not free) and essential to your progress. Didn’t know it was tax deductible? As a freelancer, depending on your tax setup, you can claim back any money spent on training and education provided it can be shown to be career related. So it is well worth your time to sign up to any and all career related training courses and certifications, building as many skills as possible.

Better Work / Life Balance

This must surely be the most important reason of all. If you manage to achieve all the factors mentioned above – flexibility, higher pay, more holiday, more control over your career and the projects you take on – it is inevitable that you will be making a really significant change to your working life and also, to your personal life. Becoming a contractor, when it all falls into place, can help you to achieve a balance and completeness in your life that working for someone else may not ever allow you to achieve.

The Disadvantages of Contracting

And so to the downsides. And there are some, despite the fact that you never hear about them. All of the advantages that we saw in the previous section – flexibility, being your own boss, getting to choose your own contacts and clients, a less regimented way of life – could all end up being negatives if your personality is not suited to the contracting lifestyle. And make no mistake, there will be people who find themselves free to work on their own terms and then don’t like it or don’t know what to do. So here are some important disadvantages to consider:


What is clearly a blessing and an advantage to those workers who know how to handle it can also be a curse to people who don’t have the personality for this much freedom. Many people don’t realize it but they actually need the rigidity and inflexibility of office life.Set them free and they flounder. Contractors need to ask themselves the following questions:

The Need for Discipline

As a contractor there will be numerous occasions where you have a job to finish by a certain date and no energy to do it. With no co-workers to let down, will you have the discipline to knuckle down and work into the wee hours and until you have the willpower to turn down friends or family when they want your attention? This will apply twofold if you sometimes (or all the time) have to work from home. Working from home offers endless distractions and it takes an iron discipline to ignore them and get on with the job at hand.

Having to Chase Contracts

Flexibility of working hours and the potential for long holidays are all very well but what happens if you finish one contract and can’t find another? Make no mistake, there will be long periods (particularly when starting out) where you cannot find any work at all Do you know what it takes to survive these periods and to get out there and chase down work? Are you prepared to get out there and sell yourself, to advertise your skills and to do that thing which sends many freelancers into a cold sweat – networking.


It is important to realise that contracting is far more popular now than ever before. A number of factors from the state of the global economy to the end of jobs-for-life (and associated perks) to the number of global freelancing sites online have meant that the contracting world is no longer quite as exclusive as it used to be. All those factors that make it appealing to you have also dawned on tens of thousands of other people too and a great many of them will inevitably have already made the jump and will be better qualified than you. Ask yourself – have I got what it takes to survive and thrive in such an environment?

The Buck Stops With You

Sure, its great being the boss and getting all the rewards, having no one tell you what to do, but it’s also you who has to make sure that the project is delivered on time, you who has to deal with the client constantly changing their mind or making unreasonable demands or phoning you all the time; you who has to deal with the clients who are unhappy and claiming that you did a lousy job and they want to get their money back. That’s if they pay you at all. As boss you also need to be chasing people for unpaid invoices and taking them to court when they don’t pay. And as mentioned above its you who needs to get out there and arrange the next contract and the next and the next. In other words it is you who will constantly be under pressure if things aren’t going well.


Not everyone actually wants to spend all their free time training and developing their skills but if you want to compete you’re going to have to do it. And though it is tax deductible you’re still going to need to find the money to pay up front – and training can be expensive. When you’re employed by a firm they take care of all that for you. And once again the ‘d’ word comes into it. After a full day working on a contract or in your breaks between contracts are you really going to have the discipline to knuckle down and train some more? Companies train you on their time, not yours.


Being self-employed and a contractor has one disadvantage above all others – paperwork. Contracting, like running any business, eventually gets bogged down in admin. You will have a myriad of forms to fill in as well as new rules to learn and worst of all you’ll need to spend an awful lot of time doing your taxes. There are ways around this of course (which are discussed elsewhere on this site) but whichever way you go you’re going to have to deal with more and more paperwork. And that’s before you even start to try and understand IR35 regulations!

Less Security

Apart from the insecurity of not having a regular paycheck, contracting also carries the insecurity of not having an employer providing you with benefits. Being out there on your own means no one pays you if you get sick, no one offers you medical insurance and no one is going to provide you with a pension. You can of course take care of these things yourself but it will be expensive.

Contracting in Your Sector

If you’ve weighed up the pros and cons of contracting and are still determined to press ahead, the next thing to think about is whether there is much call for contractors and freelancers in your sector. Whilst contracting is on the rise as a whole and most industries will have their share of contractors there are clearly some areas (such as IT) which will have more call for contractors than others.

Recent LFS (Labour Force Survey) data estimates that there are more than 1.6 million freelance workers in the UK. Of that 1.6 million, 1.4 million are contracting or freelancing full time whilst 200,000 are freelancing as a second job. Freelancers are always working across most industries though they are most commonly found working in ‘Professional, scientific and technical activities’, ‘Education and the arts’ and ‘Information and Communication.’ These industries combined employ more than 50% of UK freelance and contracting workers.

It’s clear then that there are contractors in all industries but also that they are concentrated in particular markets. To break it down further, the markets in which contracting is most concentrated are IT, Telecoms, Engineering, Construction, Oil and Energy, Management, Marketing, Arts and Media:

Telecoms and IT

This market is the largest employer of contractors for one very good reason – almost every business in the UK will have an IT department these days. Add to that the fact that the UK has for a long time suffered from a lack of skilled IT and Telecoms workers and it is clear why there is such a demand. This shortage is set to continue for some time yet. Recent studies by e-skills UK and the British Computer Society have shown that the numbers of both university graduates and school leavers going into IT industries are nowhere near enough to keep up with demand. It is for this reason that there is so much offshoring of IT departments to Asia (apart from doing it to save money) but IT departments are still crying out for well-trained, highly skilled UK IT contractors and will be, it is estimated, for another 10 years.


Like IT, there is a good reason why engineering industries employ so many contractors. In a nutshell it is because engineering projects nearly always involve a one-off project that has distinct phases of development (using distinct and very different skill sets) before the project is over and the contractors move onto a new challenge. Each engineering project will be unique, involving different challenges and requiring different skill sets, consequently it is less likely to employ people all the way through the project for those different jobs.

Another similarity with IT and Telecoms is the fact that engineers are massively in demand in the UK (and worldwide) so it is a very lucrative and very fulfilling industry for contractors. Those with the correct skills (and the correct professional certification is essential) will find themselves able to pick and choose well-paid work both here and in the UK and, should they wish, all over the world.

Oil & Energy

Another area that can be incredibly lucrative for contracting is oil, gas and energy exploration. That is because the UK is a world leader in the sector and therefore both employs a great many people in the UK and exports a large number around the world. That may seem strange as the fields of oil in the North Sea run down and we import a great percentage of our gas, but the exploration of the North Sea has led to a vast body of contractors experienced in deep water exploration and other very distinct and unique skills. These skills are constantly in demand all over the world and contractors from the UK command the highest rates in the world.

It is not just in oil exploration either – a similar situation applies to UK contractors in the fields of geology, geophysics and to our marine & offshore engineers as well as experts in renewable energy and nuclear energy. Additionally, contractors from other spheres (such as IT, risk management experts, scientists and many other support contractors) are frequently employed in these sectors.


Construction is an industry built on contracting. Find any construction project and there will be contractors employed there, whether in the large scale construction of offices and skyscrapers or whether it be railway lines, shops or housing developments.

Contractors who work in construction need to be aware of all the various conditions and legislation that is specific to their sector. Construction has strict rules of operation and even has its own court for any cases relating to construction.

Lastly, it is worth noting that unlike IT, Telecoms and Oil Exploration, construction is an industry that is uniquely dependent on the vagaries of the UK economy.

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