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job_security

Contracting versus permanent: Job security as a project manager

Contractors usually earn 25%+ more than their permanent counterparts because they offer their clients flexibility—the flexibility to end or extend their contract fairly easily. The flipside of this for the contractor is that their job security is generally much lower than that of a permanent employee.

As a permanently employed project manager you can generally expect a higher level of certainty around the future. This doesn’t mean you have 100% job security, as project work is often fickle in nature, but you are at least protected by employment laws in a way that contractors simply aren’t.

Risk versus reward

This introduces the first real trade-off of permanent versus contract positions: risk versus reward. Project managers with mortgages and kids might be drawn to the relative certainty of permanent employment, knowing that if they are made redundant there will often be some kind of associated financial compensation. For them, this certainty may be far more valuable than additional salary.

For contractors, depending on the specifics of the contract, you can expect a 2–4 week termination clause in your contract and termination can be without a given reason. Further, contracts are often for a fixed length of time (e.g. 3, 6 or 12 months) and with no guarantee of renewal. So, as a contractor, you need to be comfortable with this uncertainty and the fact that you might be out of work between contracts.

Some recruitment agencies try to counter this uncertainty by giving you an annual salary drawn from your daily earnings, so your take home pay is smoothed to include annual and sick leave, just like a permanent project manager would enjoy. For some this might appeal, for others it won’t.

Remember, if a contractor earns 25% more in take-home pay than a permanent employee, assuming tax and other factors are equal, you can feasibly be unemployed for three months (25%) of the year and still earn the same total amount as a permanent employee over a 12-month period. Food for thought!

Winner: Permanent

The contracting versus permanent series looks at the various factors that may encourage a project manager into a permanent or contract role according to:

  1. Income
  2. Job security
  3. Employment management
  4. Career development
  5. Delivery pressure
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Andrew Wayland runs Online Course Academy an Australian provider of online project management training. He has a decade of experience in projects and has worked in banking, utilities, government and logistics.
has written 5 articles for us.