contractor
A contractor is engaged for a defined piece of work rather than employed, which means better rates and none of the protections.
In plain English
Contracting looks like the same job with a bigger number attached. It is not the same job.
A contractor is engaged to deliver defined work, for a defined period, usually at a considerably higher day rate than an equivalent employee. The higher rate is not generosity. It is compensation for everything that has been removed.
No pension contribution from anybody. No paid leave, so a week off is a week unpaid. No sick pay. No notice period worth the name, and frequently a clause allowing the engagement to end with very little warning. No employer paying half your tax administration or anything else.
So the honest comparison is never day rate against salary. Take the day rate, multiply by the days you will actually bill, subtract holidays you will not be paid for, subtract the pension you must now build yourself, subtract tax you must set aside, and subtract the weeks between contracts when you earn nothing.
What survives that arithmetic is the real number, and contractors who never do it are frequently earning less than the employee sitting beside them while feeling considerably wealthier.
Contract by all means. Just do the sum first, and build the safety net yourself, because nobody else is going to.
You leave a ₦9 million salary for a contract at ₦80,000 a day. Billing 200 days a year is ₦16 million, which looks excellent. Subtract unpaid leave, your own pension, tax set aside and two months between contracts, and the gap is far smaller than it appeared.
Questions people ask
Is contracting better paid than employment?
The headline rate usually is. Whether it is better paid depends on billable days, unpaid gaps, and everything you must now fund yourself.
What must I fund myself?
Pension, leave, sick cover, tax administration and the periods between contracts. Set money aside from every invoice, on the day it lands.
How large an emergency fund do I need?
Larger than an employee's. Six months of essential spending is a floor, because engagements can end quickly and gaps are normal.
Last reviewed