2020 has seen more people working remotely than ever before. This is due to the global pandemic caused by Covid-19. While many people lost their jobs or were furloughed, many others were able to carry on working, albeit from their homes as salaried workers.
Other people however choose to work from home or move from site to site as freelancers. Freelancers can be working for companies and hired to work on specific projects or they can be working for themselves and hiring out their time and skills to various businesses.
Due to mass unemployment being caused by Covid it would seem a great idea to become a freelance worker. If you have the skills and equipment necessary then it can be a good way to create an income on your own terms but it is not all plain sailing. What are the pros and cons of being a freelancer compared to a part-time or full-time salaried worker?
What is the difference between freelancing and salaried employment?
Put very simply if you were an employee being paid a weekly or monthly salary you would have set hours, set responsibilities and a set role within the company. You would receive payment usually monthly on a specific date or day such as the last friday of the month. You would be expected to be in work between specific core hours usually and you would probably perform the same role every day.
A freelancer essentially works for themselves. They will have to find work or advertise their services and wait for someone to hire them. They may be paid several times during a project as certain phases are met or they may wait weeks for payment.
A freelancer can within reason choose their own hours. If they prefer working at night then they can structure their life around this. They will often work from home so they can stop and start work to their convenience as long as deadlines allow. Salaried employees will very often have set hours to work such as 9am to 5pm and may be expected to work longer with no extra pay.
Salaried workers will normally have work and tasks for them to perform every day. If there is a slow day they will still be paid. Workflow for a freelancer can be unpredictable. There may be a huge amount of projects arriving all at once or there may be weeks of nothing leading to anxiety and stress over money and bills.
Income for freelancers and salaried workers
As mentioned above the salaried worker will receive a set amount each month. This may include bonuses and/or overtime payments depending on their contract. They know when they are getting paid and can structure their lives around this including paying rent and other bills. Freelancers also need to know how to price up their work. They can use an hourly to salary calculator to help with this but it can be difficult to set prices for projects correctly.
Freelancers on the other hand have unpredictable incomes in line with their workflow. They can have clients refusing to pay or paying late. Projects dragging on with no end in sight. Days, weeks or even months with no significant income. Many freelancers end up taking on part time roles to increase their incomes which means they end up becoming part-time salaried employees working for someone else. Quite possibly what they were trying to avoid in the first place.
Paid and unpaid holidays
Salaried workers are usually given a set amount of paid vacation time, perhaps 4 weeks a year depending on the country they work in. This holiday can be booked in advance and will be paid for by the employer. Freelancers may not be able to take holidays due to either work commitments or lack of funds. Any holiday time taken will be unpaid as the freelancer is essentially their own employer.
Sick pay will differ between regions and different companies but many employers will pay sick pay to an employee who is legitimately unable to attend their place of work. While some countries do not require employers to provide sick pay, a freelancer will definitely not receive any sick leave and will have to drag themselves out of bed to complete projects or face non payment.
Every company should provide good employee benefits such as health care, dental care, insurance, 401ks, vision plans and more whereas a freelancer has to look after themselves. They will have to organise a pension plan as they have no company pension too.
Choosing your work
A freelancer gets to choose what projects and for who they want to work for to a degree. While a freelancer may not be able to reject too many clients they can keep some control over their work whereas a salaried employee will be expected to take on whichever project is given to them.
No management hierarchy
Freelancers don’t answer to anyone except their clients (and their bank managers) and have the freedom to work in a much more relaxed manner. Salaried workers are likely to have at least one level of management above them and will have to deal with a certain amount of red tape that freelancers are able to avoid.
Funding your own equipment
A freelancer will have to pay for any tools, software or computer equipment needed to do their job but a salaried worker will have everything provided for them by the company they work for.
Being a freelancer brings many financial worries and can mean long hours and worries about where the next job will come from. A salaried worker has none of these worries but has much less freedom than a freelancer and may have to deal with a lot of bureaucracy. Salaried employers enjoy (hopefully) stable employment, regular pay, good benefits and paid holidays. Freelancers have options of choosing their own hours, working from home and being their own boss. These things need to be weighed up carefully before choosing which role is correct for you.