Advantages and Disadvantages of Contracting

Advantages and Disadvantages of Contracting



Contracting can be an attractive option when job seeking as it offers workers a whole range of potential benefits such as increased pay, higher job satisfaction and improved flexibility. However there are also numerous potential challenges that come with contracting, which may mean it won’t be suited to everyone.

Our breakdown of the advantages and disadvantages of contracting is designed to show the complete picture of what to expect and help you decide if it’s right for you.

The Advantages

Increased pay

You could find that you potentially benefit from increased earnings in two ways when contracting. Often contractors are paid more per hour/day, and your tax status may enable you to take home more net pay than an equivalent permanent role.

Wider variety and interest

A lot of contractors consider the widened variety of work provided by contracting as their number one advantage. Contractors select each assignment and client therefore they can choose to only select the projects that interest them the most and provide the most diversity.

Improved flexibility

Most full time employees are usually given set hours to work, five days a week along with limited time off entitlements for the year. In contrast, contractors can choose exactly when and where they would like to work granting them huge amounts of flexibility.

More holidays

When between contracts, contractors can choose to take as much or as little time off as they want. As they often earn more, contractors may be able to work fewer hours to take home the same wages as an employee equivalent. This means that taking time off could be considered less of a financial sacrifice.

Training development

As a contractor you will be more in control of choosing which skills you develop and what training you take. Contractors often find they gain much greater job satisfaction and return on the investments they make into their own progress, when they’re in charge of their own skills development.


Contractors are independent from their clients. This means that they don’t need to rely on bosses or colleagues for promotions, pay rises or flexitime etc. Contractors are their own boss which means the pressure to put in extra, excessive hours is taken away as you get paid for the hours you work. Working weekends (unless paid) isn’t necessary and wage increases depend solely on the contract chosen to pursue (if you want more money, you can look for a better paid contract).

Improved work/life balance

People are generally happier when they have a good work/life balance. Contracting gives workers full control over working hours and time off among other things, which allow them to easily create the right balance geared to their needs.

However, contracting clearly won’t suit everyone. You must obtain a certain level of expertise, to ensure that you are consistently employable, earn the highest rates, keep your skills up to date and run your contracting business compliantly as well as efficiently. Here is a rundown of some of the main disadvantages to contracting.

The Disadvantages

Maintaining a stream of contracts

Contractors need to find and secure a stream of ongoing contracts to keep wages consistent. This may require contractors to interact with recruitment agencies and learn which skills they specifically require. Alternatively, they may need to invest in marketing themselves directly to clients which they want to enter contracts with. The pressure to keep wages consistent is significant and requires strong organisational, sales and marketing skills.

Developing skills

As a contractor, you no longer have access to a dedicated HR department or talent management team. Therefore there isn’t a resource on hand to ensure you are appropriately trained and qualified to deliver the roles you are filling. Some contractors feel as though this is a benefit as they have the freedom to manage themselves, others find this process difficult and so consider it a strong drawback.

Lack of Security

Contractors do not have a consistent employer who will pay things like sick pay, maternity or paternity leave, life insurance and give them employment rights. However, this is where an Umbrella company like FPS Group can help. An Umbrella company can act as your employer and provide these benefits as well as insurances. Giving the flexibility of contracting but with the advantages of employment.

Holiday Pressures

Paid holidays which are a statutory requirement in permanent employment, aren’t usually provided to contractors. Put simply, if a contractor doesn’t work they don’t earn. This is another aspect that an Umbrella company like FPS Group can help with. We pay our contractors their holiday pay each week and simply advise an amount to set aside for when they do want to take time off, which they can either follow or ignore.

Administration time

There are two main models of contracting: running a limited company or using an umbrella company. An Umbrella company, like FPS Group, would significantly reduce your admin time compared to running your own limited company which can be very time demanding.


The IR35 legislation must be taken seriously as if not followed properly, can remove many of the financial benefits of contracting altogether. But, by adopting IR35 best practice, you should be able to avoid falling short of this legislation. For more information on IR35 please refer to our guide which you can find here.

In order to help you decide if contracting is for you, and whether our umbrella solution could help you along the way, we offer a free consultation. This ensures that you fully understand the service and are able to make an informed choice. Call us today on 0800 634 4848, or email us

0800 634 4848

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