Types of UK Employment
What is contracting, permanent and temporary employment?
You work for an employer through an agency, for a set period of time. i.e. a monthly or three month contract, although most contracts are generally 3-6 months. Contracts are typically extended at least once. Rates can be offered per hour or per day.
There are many great benefits to contracting, particularly if you are coming over on a working holiday as you can usually earn good money then take time out between contracts for trips around Europe.
If you choose to contract you either need to set up your own Limited Company, or source an umbrella company to employee you under their PAYE system. With Limited Company set up, you will be responsible for sorting out your own invoicing and tax, but in many cases you can earn more by reducing your tax responsibilities. With an umbrella company, you still need to complete timesheets, but don’t need to worry about sorting out your tax payments, however these contributions will be higher. You will also receive holiday pay, although many choose to add this on to their contracting rates.
As a contractor, you need to be aware of the IR35 tax legislation. Essentially this determines whether you need to work as a PAYE employee through an umbrella company (and pay more tax), or whether you can contract as self-employed contractor through a Limited Company. As of April 2017 all contract work in the public sector now usually falls within IR35 which means you would have to use an umbrella company to contract. Most private contracts fall outside of IR35 if you can prove it’s project work and you’re self-employed. See these links for more information.
The main industry to offer UK contract jobs is IT. We have teamed with an IT employment partner to help professionals find IT contract work. They also offer free career advice to set you up as a contractor, IR35 compliance assistance and free umbrella company services.
If you’re unsure about contracting, it may be helpful to read this article on why it pays to contract.
Usually of a short duration, as and when required, sometimes without a contract. These positions are usually more casual roles such as admin or hospitality. Rates are usually offered per hour. Jobs are usually found via a temp employment agency. By law, temp jobs must now offer holiday pay.
Many temporary jobs are now offered on Zero Hours Contracts. This means that there are no set hours that you are required to work. You are essentially on call for when an employer needs your services. You don’t have to agree to work hours you don’t want to do, so it offers flexibility both to you and the employer. The employer still needs to pay you annual leave and the minimum wage.
Fully employed by the employer. The benefits of permanent UK employment beyond a regular salary are benefits such as pensions, healthcare, and sometimes other benefits such as bonuses. These vary by employer, so it’s best to check with each one. UK companies offer 20-25 days paid holiday leave.
Unless you have other income sources and assets, you will also have all your tax and National Insurance payments taken care of via your employer’s PAYE system.
Note, depending on the industry, permanent positions are not necessarily more stable than contract jobs. This is because in the current political and economic climate since Brexit, many companies are preferring to switch roles to contract positions.