Contract vs Perm: 4 Years of Both and What I’d Choose Now

I’ve done both. Multiple times. Permanent roles at startups and enterprises. Contract gigs at £500-650/day. I’ve felt the security of a salary and the rush of invoicing five figures a month.

Everyone asks: “Which is better?”

The answer is: it depends on who you are and what season of life you’re in.

Let me break down the real trade-offs - not the sanitised version, but what actually matters when you’re making this decision.

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The Money Reality

Let’s get the obvious out of the way: contractors earn more per day.

A Senior DevOps Engineer on £90k permanent is roughly £360/day (assuming 250 working days). A contractor doing the same work might charge £550-650/day. That’s a 50-80% premium.

But it’s not that simple.

What permanent gives you:

• 25-30 days paid holiday
• Sick pay
• Pension contributions (often 5-10% matched)
• Training budgets
• Stock options at some companies
• Job security (relatively)
• Paid parental leave

What contractors don’t get:

• No paid holidays - every day off is money lost
• No sick pay - get ill? That’s your problem
• No pension match - you fund your own
• No training budget - certifications come out of your pocket
• IR35 headaches - if you’re inside IR35, you’re paying employee taxes without employee benefits
• Contract ends? Start hunting immediately

When you actually do the maths - factoring in holidays, pension, sick days, and the stress of finding the next gig - the gap narrows.

SCENARIO                    PERM £90K       CONTRACT £600/DAY
========                    =========       =================
Gross annual                £90,000         £132,000 (220 days)
Holidays (25 days)          Paid            -£15,000
Sick days (5 avg)           Paid            -£3,000
Pension (8% match)          +£7,200         £0
Gap between contracts       N/A             -£6,000 (avg)
-------                     -------         -------
Effective value             ~£97,200        ~£108,000

Still better money. But not the 2x gap people imagine.

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The Time Off Problem

This is the one that catches people.

As a permanent employee, you get paid holidays. You book two weeks off in August, you get paid. Simple.

As a contractor, those two weeks cost you £5,000-6,000 in lost income. Plus the bank holidays. Plus any sick days. Plus the gaps between contracts.

Real example: I once took a week off as a contractor. It felt like burning money. I couldn’t relax properly because I kept calculating what that beach holiday was really costing me.

As a permanent employee, I take my holidays guilt-free. They’re part of my compensation. I’m not losing anything.

If you’re the kind of person who needs proper downtime to function - and most of us do - this matters more than you think.

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The Boredom Factor

Here’s where it gets personal.

Some engineers thrive on variety. They get bored working on the same codebase for two years. They want new problems, new tech stacks, new teams. Contracting is perfect for this. Every 3-6 months, you’re somewhere new. Fresh challenges. No legacy baggage (that’s someone else’s problem now).

Other engineers want depth. They want to see a system through from inception to maturity. They want to build something they’re proud of over years, not months. They want to see the long-term consequences of their decisions. Permanent roles offer this.

Neither is wrong. But you need to know which one you are.

TYPE                GETS ENERGY FROM        DRAINED BY
====                ================        ==========
Variety-seeker      New challenges          Same problems
Depth-seeker        Mastering systems       Starting over

I’ve worked with brilliant contractors who would be miserable in a permanent role - they need the variety to stay engaged. I’ve also worked with brilliant permanent engineers who would hate contracting - they want to own something long-term.

Ask yourself: Do you get energised or drained by constantly starting fresh?

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The Responsibility Question

This is the big one that nobody talks about.

If you don’t have major financial responsibilities, contracting is a no-brainer.

No mortgage. No kids. No dependents. You can handle gaps between contracts. You can take risks. You can say no to bad gigs because you don’t need the money next month. You can stack cash when rates are high and take extended breaks when you want.

This is the ideal time to contract. Build your runway. Save aggressively. You have leverage because you can walk away.

If you have a mortgage and kids, the calculus changes.

That gap between contracts isn’t just an inconvenience - it’s genuine stress. The inconsistent income makes financial planning harder. The lack of sick pay means a serious illness could be financially devastating. The lack of job security means you’re always one client decision away from scrambling.

I’ve seen contractors with families who make it work. But they all have significant savings - usually 6-12 months of expenses - to buffer the uncertainty. Without that buffer, contracting with dependents is playing with fire.

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The Stack-Up Strategy

Here’s the advice I give to engineers in their 20s and early 30s with no major responsibilities:

Contract. Stack cash. Aggressively.

You have a window right now where your expenses are low and your earning potential is high. Use it.

• Live below your means
• Save 40-50% of your income
• Build a 6-12 month emergency fund
• Invest the rest

The goal isn’t to contract forever. The goal is to build financial security so that later in life, you have options. You can take the interesting permanent role that pays less. You can start something. You can take time off. You can say no to bad opportunities.

Money buys optionality. Contracting early is how you stack it.

Then, when life gets more complicated - mortgage, kids, whatever - you can choose permanent work from a position of strength, not desperation.

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The Career Progression Question

One argument for permanent: it’s easier to get promoted.

As a contractor, you’re brought in to do a job. You do it, you leave. There’s no promotion path because you’re not on the ladder.

As a permanent employee, you can grow from Senior to Staff to Principal within the same company. You build relationships. You get visibility. You get sponsored for opportunities.

PATH                    CONTRACTOR              PERMANENT
====                    ==========              =========
Title progression       Lateral moves           Vertical growth
Relationships           Transactional           Long-term
Visibility              Project-based           Org-wide
Sponsorship             Rare                    Common

If your goal is to reach Staff or Principal level, permanent roles are the clearer path. Not impossible as a contractor, but harder.

That said, many contractors don’t want to climb the ladder. They want to stay hands-on, do good work, and get paid well for it. That’s a valid choice. The IC ladder isn’t for everyone, and contracting lets you opt out of the politics entirely.

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The Learning Angle

Contractors often learn faster - but shallower.

You see more companies, more tech stacks, more ways of doing things. You learn what works and what doesn’t across different contexts. This breadth is genuinely valuable.

But you rarely see anything through long-term. You don’t learn what happens two years after that “perfect” architecture decision. You don’t experience the maintenance burden of choices you made. You miss the deep lessons that only come from living with your decisions.

Permanent employees learn slower - but deeper. You understand the full lifecycle. You see the consequences. You develop intuition that’s hard to get any other way.

Best of both worlds: Do a mix. Contract for a few years, then go permanent somewhere interesting. Take what you learned across multiple companies and apply it deeply. Repeat.

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My Personal Take

I’ve done both, and I’ll probably do both again.

When I contract: I’m in execution mode. Stack money, gain exposure, stay flexible. I don’t get emotionally invested in the company’s success because I know I’m temporary. I do good work and move on.

When I go permanent: I’m in building mode. I want to see something through. I want to influence direction. I want to grow within an organisation. I accept the lower daily rate because I’m getting something else - stability, depth, progression.

Right now, I value building. But I know that might change. And because I stacked cash early, I have the freedom to choose.

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The Decision Matrix

Choose contracting if:

• You have few financial responsibilities
• You want to stack money quickly
• You get bored easily and crave variety
• You’re comfortable with uncertainty
• You have a strong network to find gigs

Choose permanent if:

• You have a mortgage, kids, or other dependents
• You want depth over breadth
• You want to progress to Staff/Principal
• You value stability and benefits
• You want to build something long-term

There’s no objectively correct answer. It depends on your situation, your personality, and what phase of life you’re in.

The real mistake is picking one and never reconsidering. Your circumstances change. Revisit the decision every few years.

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Stack when you can.
Build when you want to.
Keep your options open.
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