Contract or Permanent IT Job? How to Compare the Offers
Updated 8 November 2026 · 6 min read
IT job ads in the UK, Australia, Germany and the Netherlands often mix permanent roles with contracts paid by the day. A day rate can look far higher than a salary, but the two are not directly comparable. This guide shows how to compare them fairly and how to decide which suits you.
Turn the day rate into a yearly figure
Contractors are usually paid only for the days they work. After weekends, public holidays, your own holidays, sick days and gaps between contracts, many contractors bill somewhere around 200 to 220 days a year. Multiply the day rate by a realistic number of days, not 365 or 260, to get a fair yearly figure.
- Example: a rate of 500 a day × 210 billable days = 105,000 a year before costs and tax.
- Compare that with the permanent salary plus the value of its benefits, not the salary alone.
Count what a permanent job pays for you
A permanent role usually includes paid holidays, sick pay, employer pension or retirement contributions, sometimes health insurance, training budgets and equipment. As a contractor you pay for these yourself, and you may also have accountancy, insurance and business costs. Add them up before deciding which offer is better.
Check the tax status
Tax rules for contractors differ by country. In the UK, contracts are marked inside or outside IR35, which changes how much of the day rate you keep. In Germany, someone who works like an employee for one client can be treated as “bogus self-employed” (Scheinselbständigkeit). In Australia, many contractors work through an agency or their own business. Ask an accountant in the country concerned before you accept your first contract.
Security and career growth
Permanent roles offer more stability, notice periods that protect you, and a clearer path to promotion and leadership. Contracts can end at short notice, but they are often well paid and let you build experience across several companies and technologies quickly. Many people work permanently early in their career, contract once they have in-demand skills, and switch back when they want stability.
A quick way to decide
If you need a work permit, permanent roles are usually the easier route, because most visas are tied to an employer. If you already have the right to work, savings to cover gaps between contracts and skills that are in high demand, contracting can pay more. Either way, compare offers on the same basis: yearly value after costs, not the headline number.