By Xenios Thrasyvoulou of PeoplePerHour
Oh, those existential questions – who am I? What am I? Why am I here? If you’re one of the huge number of people not working on a complete PAYE basis, you probably find yourself pondering those questions more often than most. For many in the world of business, the terms ‘freelancer’ and ‘contractor’ are practically interchangeable, but there are differences between the two states, many of them occupation-related.
Existentialism is all very well when accompanied by a pint and a bowl of bar room peanuts, but there’s no time for navel-gazing when there’s money to be made, so let’s make things clear and help to resolve at least one of those important questions.
Contractors Vs Freelancers: The Face-Off
So, what are the real differences between freelancers and contractors?
- As the name suggests, ‘contractors’ typically work on a contractual basis, meaning that they are given a set amount of money to complete a set amount of work in a set amount of time. The contract may be extended if the relationship prospers, but if the work is no longer required, the contractor will still be paid.
- Serial monogamy tends to be the contractor’s way of life; more often than not, they will focus on one project at a time; getting one job done before moving on.
- Due to the working relationship, and the type of work required, contractors frequently work on their employer’s premises.
- As previously mentioned, occupation can also dictate which category an independent worker fits into. Contractors are commonly found in the IT industry, and a variety of technical jobs.
- The business structures employed by the two groups also vary. Contractors will often register themselves as ‘sole traders’, and that can bring a number of financial obligations, including higher tax liabilities, to the employer.
- Finally, there’s the psychology. Contractors will often feel more secure in their work than the freelancer, partly because what they do is ‘serious’ stuff, and partly because each job they are employed to do will last for a lengthier period.
Strangely, the word ‘freelancer’ has been misappropriated in recent years, with many businesses employing it as a generic catch-all for everyone outside of the PAYE system. Perhaps the change has been instigated by the associated ease of the word. Employing a freelance professional to complete a job has never been simpler than it is now, with marketplaces bringing together all of the self-employed experts any entrepreneur could need. Whatever the case, the time of the freelancer seems to be upon us.