Why Are So Many People Leaving Engineering Jobs to become Independent Contractors?
Unleashing Career Freedom: The Surge of Independent Contractors in Engineering
In recent times, a growing number of professionals in engineering roles have been opting to shift from permanent employment to the realm of independent contracting. But what exactly is driving this trend?
Independent contractors enjoy appealing remuneration packages, albeit with the trade-off of relinquishing certain benefits associated with traditional employment. However, higher earnings are just one facet of the equation.
Regardless of your area of expertise – be it process engineering, manufacturing engineering, automation engineering, or any other specialised field – you may be contemplating a move towards independent contracting. Let's delve into the primary reasons why numerous professionals have already embraced this choice.
Unlocking Higher Earning Potential
Independent contractors often command higher rates compared to their permanently employed counterparts. Instead of a contract of service, you are remunerated for your contract for service.
In the UK, it is uncommon to find engineering positions that offer upwards of £120,000 annually. However, as an independent contractor, your earning potential can soar to £500 to £700 per day or even more, depending on your experience, expertise, and the organisations you contract with. With 226 working days in a year, your earnings could surpass £150,000 and beyond.
Nevertheless, it's important to consider that by opting for higher earnings, you may forego certain in-work benefits such as health insurance, pensions, holiday pay, and sick pay. On the flip side, you gain the flexibility to choose and customise these benefits according to your preferences and preferred providers.
As an independent contractor, you become your own boss. You have the autonomy to select contracts and choose who you work for. This level of control empowers you to manage your time more effectively and seamlessly transition between different companies.
Given the increasing number of engineers transitioning to independent contracting, finding new contract engineering jobs has become more accessible and attainable than ever before. According to Jennifer Doyle from Contracting PLUS, approximately 70% of new enquiries received by their team come from individuals new to contracting. Companies are recognising the benefits of hiring contractors to enhance flexibility, reduce costs, manage headcount, and access specialised expertise.
Leveraging Tax Advantages
Typically, contractors establish their status either through their own limited company or by contracting through an umbrella company.
While every individual's circumstances differ, both structures offer distinct tax advantages. For instance:
Limited Company: With a limited company, you have greater control over your salary and can leverage your company's funds to contribute towards your pension. Additionally, you can claim expenses to reduce your taxable profits.
Self-Employed Contractor: If you choose to be a self-employed contractor, you can benefit from the earned income tax credit of £1,650 per year, which has increased in line with the employee (PAYE) credit. The Earned Income credit is available to Umbrella Directors and Personal Company Contractors. Furthermore, you can explore additional benefits, such as the option to purchase an electric car through your own company and cover associated costs.
Before embarking on your journey as an independent contractor, it's essential to consult with experts who can guide you through the tax benefits associated with different independent contractor arrangements. Contracting PLUS is a highly recommended advisor in this field, offering complimentary consultation calls with their expert team, without any obligations.
Escape Workplace Drama
Every workplace has its fair share of characters, and clashes among personalities can lead to personal and professional differences.
According to a study by DDI, a significant 57% of employees leave engineering jobs due to issues with their bosses. However, as an independent contractor, you can distance yourself from such challenges. You no longer have to endure the toxicity of a difficult boss or a negative work environment. Instead, you can focus on your engineering role and, for the most part, surround yourself with like-minded individuals of your choosing.
Achieve a Better Work-Life Balance
As your own boss, you have more control over your schedule. While you must honor the agreed-upon days and hours in your contract, being an independent contractor provides greater flexibility to design your professional life around your personal commitments, unlike permanent employees who often have to mold their personal lives around work.
This flexibility allows you to manage your time effectively to accommodate activities such as:
- School runs
- Pursuing sports and hobbies
- Engaging in voluntary work
- Celebrating special occasions and events
- Attending appointments
- Providing care and support to family members or friends
Although you need to allocate time off strategically and consider the financial implications for your business, being an independent contractor grants you the freedom to establish these arrangements at the outset of your contract.
Cultivate a Healthier, Happier You
Employment can often make you feel trapped in a never-ending rat race, with repetitive schedules and a lack of personal freedom.
As a contractor, you enjoy greater freedom over your time. A more balanced work-life equation allows you to indulge in activities you truly enjoy. Consequently, you return to work feeling rejuvenated, enriched by life's pleasures, and motivated to excel professionally. When you are happier in your work, you are 10 times less likely to take sick leave.
Nurture a Fulfilling Professional Journey
As an independent contractor, you benefit from a variety of work assignments and have the opportunity to collaborate with a wide range of client companies. You have more freedom to choose roles that align with your career aspirations and can aim for contracts that enhance your experience and expertise.
Career development holds great significance for most professionals. In fact, a LinkedIn report revealed that 73% of employees who left their jobs would have stayed if there were more opportunities for career growth. Engineers share this desire for continuous learning and progression.
As an independent contractor, you are in control of your self-development. If you wish to enhance your skills in a specific area, you can do so, accommodating it within your schedule and by accepting contracts that align with your goals. Moreover, by maintaining your skills and expertise as a subject matter specialist, you increase your value to clients, expand your options, and unlock further potential for career growth. As the demand for your services grows due to your expertise, your ability to command higher rates of pay increases.
For instance, consider the significance of the European Medical Device Regulation (MDR). Compliance with these regulations is mandatory for medical device companies. Your engineering expertise, coupled with in-depth knowledge of MDR, positions you as a highly sought-after team member. For example, you could contribute to the development or enhancement of quality management systems that ensure device effectiveness throughout its entire lifecycle.
Independent contracting offers numerous benefits. With companies increasingly recognizing the advantages of hiring contractors, there is a growing number of contract opportunities and a rise in earning potential for independent contractors in the engineering field.
Chris, a former manufacturing engineer at a renowned medical device company, is elated with his transition to becoming an independent contractor. He shares, "As a contractor, the lucrative income has provided invaluable support for my family, enabling my partner to focus on other aspects of our lives."
If you are contemplating a departure from the monotonous routine of your engineering job and are curious about the potential value of your experience and expertise as an independent contractor, reach out to HERO Recruitment today.
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