Pros and Cons of Choosing Contract Work

Updated June 24, 2022

Contract work may appeal to people who are trying to find their best career fit or who are looking to make fast cash from a variety of interesting opportunities. Those who work in writing, finance, information technology and other related fields may find benefits from engaging in contract work. In this article, we discuss what contract work is, the different types, give pros and cons for working by contract and tips for how to choose between contract work and full-time employment.

What is contract work?

Contract work is a type of employment that is based on a written labor agreement between an employer and a contractor. Contract jobs are usually temporary with a set start and end date, and may be short or long in duration. Companies may hire contractors seasonally, by project or in a needs-based situation. Contract positions may give you the opportunity to earn extra money from a side job or gain experience for your resume.

Related: What Is a Contract Employee?

Types of contract work

Some types of contract jobs may include:

Freelance jobs

People who do freelance work are often self-employed, either full-time or for side businesses. They find their own clients and offer their services on a project-by-project basis. Freelancers may set their own hours, prices and deadlines and can choose which clients and projects to accept.

Right to hire positions

The term "right to hire" means an employer may hire a contract worker full time at the end of their agreement, but is not obligated to do so. These types of positions may serve as a trial period for both the company and the candidate to see if a long-term business relationship is compatible. Right to hire jobs may also depend on the financial resources available at the end of a contract.

On-call work

Those who engage in on-call work may contract with a company to show up and perform duties on an as-needed basis. They may have other jobs or responsibilities but earn a waiting or bench fee to hold their position with the on-call company to return as necessary. In most cases, when on-call employees get their job orders, they're expected to report as soon as possible, no matter their other commitments.

Temporary work

Those looking for temporary work usually apply through a temp agency. These staffing services find interim, usually hourly wage positions based on company needs and your unique skills. Temp work is common in industries such as construction, administration and other similar fields.

Pros of choosing contract work

Some benefits of choosing to engage in contract work include:

Have freedom of choice

Those who choose to do contract work may have the freedom to pick what projects or contracts appeal to them. You may apply for contracts that use your current skills or ones that may help you develop new ones. You can also choose where and when you work, sometimes.

Create connections

Big name companies can hire contractors for specific projects or tasks. This may allow you to get experience with their business models and understand their company culture. Having work experience with prominent companies is also an asset to a resume and can make you more appealing to competitors or other notable businesses when looking for full-time work or other contracts.

Build skills

Contract positions can give you the opportunity to work on a variety of different projects, either consecutively or at the same time. Unlike in full-time positions where you spend most of your time using the same skills and performing the same tasks, in contract work you make get a more well-rounded experience. Doing different duties may allow you to gain more skills that you can use in other positions in the future.

Work with recruiters

Those who do contract work may work closely with recruiters to help get their first or the next jobs. Recruiters work either for companies or as consultants to help find the best talent for available positions. This may help you transition quickly from one contract to the next without doing a lot of independent research.

Avoid the office

Unlike full-time employees, contract employees may spend less time in the office or around their coworkers. They may work remotely or set their own schedules. Companies may not require contract employees to attend company meetings or outings, which could prevent early morning or evening hours at work. This may help you avoid conflicts or drama that can occur in the workplace.

Earn better pay

Contract employees may earn more money short-term per paycheck than full-time employees. This may be because of the temporary nature of the position or other factors. This can be convenient if you're looking to earn extra money in addition to another paycheck or if you have immediate financial needs.

Test out an industry

Contract work may allow you to experience different industries before deciding on a full-time position. For example, as a writer, you could take contract positions in entertainment, education, environmental studies and human resources and see what types of material you enjoy working with the most.

Find full-time employment

Sometimes contract jobs can lead to full-time positions within a company. Though not a guarantee, treating every contract position like it's a full-time job could help show potential employers that you'd be an asset to meeting their long-term goals. Even if a position doesn't lead to permanent employment, the same company may request your contract services again for other projects at a later date.

Cons of choosing contract work

Some negative aspects of choosing to complete contract work include:

Fewer tax options

In most cases, companies don't take income taxes, pension plan contributions or other deductions from a contract worker's paycheck. While this may put more money in your bank account in the short-term, you may need to do more work during tax season to ensure you're compliant with any fees.

Fewer benefits

Generally, contract employees may not have the option to buy into medical and insurance benefits through their company like full-time employees. They may also have to take unpaid vacations, sick time or holidays. This may not be the case with all organizations. If you have questions about these policies, talk to your potential employer before accepting a contract position.

Less job security

While no one in the workforce has true, unwavering job security, it's more apparent for contractors who know when their current positions and paychecks end. Those who finish one contact before securing another may need to take quick action to maintain a steady flow of income.

Fewer opportunities for advancement

Even contract employees in long-term agreements may not report to one specific manager or operate under a traditional supervisory structure. This may mean there are fewer people to advocate for a raise, promotion or other types of advancement on your behalf. Consider asking to report to one person or a group of managers to ensure someone is paying attention to your work quality and progress.

Fewer working relationships

Contract employees who spend less time in the office may feel isolated from their coworkers. They may not have as many opportunities to start relationships with others in the company. Consider contacting some of your coworkers to get to know them better or taking part in optional company events or team-building exercises to meet new people.

Contract work vs. full-time work

Both employers and employees can benefit from contract and full-time work. If you are trying to decide which path is right for you, examine your interests, lifestyle and skills. If you're interested in receiving traditional benefits and having a more stable sense of job security, consider searching for full-time employment. If you're looking to build skills, add variety to your job or have a better work-life balance, consider choosing contract work.