Key Differences between Contract and Permanent Employment

With the gig-economy having increased in popularity over the last couple of years, so has the appeal of contract employment. However, contract employment is not for everyone (the same can be said for permanent employment) and it’s important to understand the nature and the key differences between the two types.

It’s important to note that while there are similarities between contract and independent-contract work (i.e., performed by freelancers), this article focuses only on contract work performed by contractors on a full-time basis in the professional environment and who form part of and are represented by a consulting house.

What is Contract Employment?

Contract employment is typically performed by professional contractors (also known as consultants if they form part of a consulting house) who are hired to deliver specific activities for a specific project or to achieve a specific objective over a predetermined timeframe. Often, contractors are hired due to their specialised skill sets and expertise in particular areas, like Project Management or Business Analysis. 

The employment agreement will define the scope of the activities the contractor is expected to deliver, over a specific timeframe at an hourly rate. Contracting almost always works on an hours-worked-hours-paid model. This means that a contractor’s monthly earnings could differ one month to the next, depending on the number of hours worked.

If a contractor is represented by a consulting house, the employment agreement will be between the consulting house and the consultant, and not directly with the client company. It’s important to note that a consulting house is not entitled to a portion of a consultant’s earnings. The client company is responsible for paying the consulting house for the service provided and this is treated separately to any remuneration that a consultant has agreed with the respective consulting house.

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Why is Contract Work appealing?

Increased exposure

As a contractor, you will gain exposure to new companies, project teams, challenges and technologies with each project or role you take on.

Diversity and Flexibility

Contract-based work offers excellent opportunities for you to grow your skillset as project teams are generally at the forefront of implementing industry leading innovations. As a variety of projects and industries exist, an expansive and specialist portfolio can be developed over the span of your career.


Excellent support and community options exist for those who wish to expand their networks and career paths. There are local chapters that have been established by South African and international bodies of knowledge (such as PMI, PMSA and IIBA) which support and aim to advance the careers and networks of contractors in the world of projects.

What are the key differences between Contract and Permanent Employment?

In contemplating which employment type would be better suited to you, consider the key differences outlined below:

If you’re interested in exploring contract opportunities in the world of projects, or if you’re still not sure if contracting is right for you, get in touch with the Afro Ant team.


What You Need to Know About Contractors vs. Employees –

What Is a Contract Employee? | What Is a Contract Employee? |

What Is a Contract Job and How Does It Work? | Upwork