Contract or Permanent Employment? A Fresh Graduate’s Guide to Types of Work

Contract employment can offer a wide range of benefits for recent graduates looking for a flexible and rewarding career path. But whether you are just starting out in your career or a seasoned professional looking for a change, contract work can allow you to work on various projects, gain valuable experience, and build a diverse network of clients and colleagues.

In this age of the gig economy and remote work, contract work is becoming increasingly popular as individuals seek more control over their career and work-life balance.

Difference Between Contract, Temporary, and Permanent Employment

Contract Work

In contract work, an individual is hired by a company or organisation on a contract basis for a specific period, task, or project. Contract workers are often self-employed, and their employment is usually governed by a contract or agreement between the employer and the employee. They are generally paid higher wages but do not receive benefits such as health insurance, paid time off, or retirement plans.

Temporary Work

Temporary work is a type of employment in which an individual is hired by a company or staffing agency to work for a specific period, typically a few weeks or months. Temporary workers are considered employees of the staffing agency and may receive benefits such as health insurance, paid time off, or retirement plans from the agency. They are generally paid lower wages than permanent employees but have the opportunity to gain experience and may be hired permanently by the company.

Permanent Work

Permanent work is the most common type of employment, in which an individual is hired by a company or organisation to work for an indefinite period. Permanent employees are entitled to benefits, such as health insurance, paid time off, and retirement plans. They may be eligible for promotions and other career opportunities within the company. They are generally paid a lower hourly rate than contract workers or temporary workers, but they have job security and stability.

(Read more: Employee vs. Self-Employed: Is One Really Better Than the Other )

Kinds of Contract Work

Temporary Contract Work

Temporary contract work offers short-term employment for a specific project or time, such as filling in for an employee on leave or working on a seasonal project.

Freelance Work

Freelancing means working independently on a project-by-project basis, usually for multiple clients. Freelance work is common in fields such as writing, graphic design, and programming.

Consulting Work

Consultancy provides specialised expertise or advice to a company or organisation for a specific project or time.

Contract-to-Hire Work

This involves a temporary employment agreement with the possibility of being hired for a permanent position if the employer is satisfied with the worker's performance.

Independent Contracting

Independent contractors work as a self-employed individual and provide services to clients or companies on a project-by-project basis.

Seasonal Work

Seasonal work involves working for a company or organisation during peak seasons, such as the holidays or summer months.

Types of Jobs Usually Done by Contract Workers

IT and Software Development

Contract workers with expertise in programming, software development, and IT support are often in high demand.

Creative Services

Freelance work in fields such as graphic design, writing, and video production is common.

Customer Service

Those who are part of the customer service field perform a range of tasks such as call centre, email support, chat support, social media support, and quality assurance.

Education

Teachers and tutors, such as language teachers or curriculum developers, can provide valuable services to schools and educational institutions.

Marketing and Advertising

Marketing and advertising contract workers usually have expertise in fields such as social media, search engine optimisation, and content creation are often in high demand.

Pros of Contract Work

Contract work can provide opportunities for professional growth and skill development. It can also be a great fit for those who enjoy a fast-paced, ever-changing work environment. There are several potential benefits to contract work, including:

1. Flexibility

Contract work often offers greater flexibility than traditional employment, allowing individuals to work on a project-by-project basis or to set their own schedules. This can particularly attract those who want to balance work with other commitments or prefer to work independently.

2. Higher pay

Contract workers often earn higher pay rates than traditional employees, as they are typically paid for the specific project or task they are completing rather than receiving a regular salary.

3. Diverse work experience

Contract work can offer the opportunity to work on a variety of projects and with different clients, providing a diverse range of work experiences and skill-building opportunities.

4. Networking opportunities

Contract work can also provide the opportunity to network with other professionals in the same industry or field, potentially leading to future job opportunities or collaborations.

5. Ability to work remotely

Many contract jobs can be completed remotely, allowing individuals to work from home or from anywhere in the world with an internet connection. This can be particularly attractive to those who value location independence or have family or personal commitments that prevent them from working on-site.

Cons of Contract Work

While contract work can have many advantages, there are also potential downsides that individuals should be aware of before deciding to pursue this type of employment. Some of the cons of contract work include:

1. Lack of job security

Contract workers are typically hired for a specific project or period and may not have a guaranteed job beyond that. This lack of job security can be stressful and may make it difficult to plan for the future.

2. No benefits

Unlike permanent employees, contract workers are typically not eligible for benefits such as health insurance, paid time off, or retirement plans. This can make it challenging to manage finances and plan for the future.

3. Limited career growth

Contract workers may not have access to the same career development opportunities as permanent employees, such as training programmes or promotions. This can make advancing in a career or developing new skills more difficult.

4. Uncertainty of income

Contract work can be unpredictable, with periods of high demand followed by slow periods. This can make it difficult to predict income and plan for expenses.

5. Increased tax liability

Contract workers are typically responsible for paying their own taxes, which can be more complicated than for traditional employees who have taxes automatically deducted from their paychecks.

6. Potential for isolation

Contract workers may work remotely or on a project-by-project basis, which can lead to feelings of isolation or a lack of connection with colleagues.

Should Fresh Grads Consider Contract Work?

Contract work can be a beneficial option for fresh graduates who are looking to gain work experience, build skills, and explore different career paths. It's important to carefully consider the potential benefits and drawbacks of this type of employment and to ensure that it aligns with your long-term career goals.

By doing contract work, fresh graduates can:

1. Gain work experience

Acquire practical work experience in their field, which can be valuable when applying for future job opportunities. Many employers prefer to hire candidates with some work experience, and contract work can help fresh graduates to build up their resumes.

2. Build skills

Develop new skills and gain exposure to different industries and job functions. This can help them to identify areas of interest and build a diverse set of skills that can be valuable in future job searches.

3. Network with professionals

Get the opportunity to network with other professionals in their field, potentially leading to future job opportunities or collaborations.

4. Flexibility

Contract work can be a flexible option for fresh graduates who may not be sure about their long-term career goals or who have other commitments, such as continuing education or travel plans.

5. Potential for higher pay

Contract work can offer fresh graduates the opportunity to earn higher pay rates than traditional entry-level jobs, as they may be hired for specific projects or tasks.

6. Exposure to different industries

Contract work lets them explore different industries and job functions, giving them a better understanding of what they enjoy and where they may want to focus their careers in the future.

(Read more: Considering Freelance Work? Here Are Some Tips to Get Started )

How to Start as a Contract Worker

Starting as a contract worker requires a proactive approach to building your career. The first step is to identify your skills and areas of expertise, and determine what types of services you can offer as a contract worker. You'll also need to create a portfolio showcasing your skills and work experience.

Networking is a critical component of building your career as a contract worker, so you'll want to connect with professionals in your industry and join relevant online communities. Additionally, you'll need to market yourself effectively to potential clients. This can include developing a strong personal brand, creating a website, and using online job platforms to find contract work opportunities.

Once you've identified potential clients, you'll need to establish your business, including registering your business, setting up a business bank account, and determining your rates and payment terms. Finally, it's important to keep accurate records of your contracts, invoices, and expenses to ensure that you are paid fairly and on time.

With hard work and dedication, starting as a contract worker can be a rewarding and fulfilling career path.

#SEEKBetter jobs on JobStreet.

Create or update your profile today. For more tips on landing your dream job, visit the Career Resources page.