If I have the option of being a remote employee or a remote contractor, which should I take?

Question

I’m a New Zealander just starting to do some remote contracting.
The nature of the work will be a more specialised version of my previous full time job. Initially, my goal is to rapidly up-skill and learn best practice by working for an industry leader. I also intend to build a business locally with a slightly different angle. I’ve just come back from 9 months travelling, so I’m not in a massive rush to hit the road again, but long term I want to have the option to consult abroad.
I am in discussion with a Canadian company who is hiring. Their job advertisement states that they offer freelancer/contractor work at 20-40 hours a week, and full-time employees 40 hours a week.
If I have the option between these two, which should I choose?
Some things going around in my head:

employees have more protection if the client sues (and this North America)
i want to work on my own business in my spare time
i want to work for other clients and do different types of work
if I contract for 40 hours a week, then I have as little time for my own work as if I was a full-time employee

Note that I don’t have the offer yet, but given my experience to date I think have good potential.
Thanks,
Dan

kathrynoh · Accepted Answer

I did IT contracting for many years. One of the BIG advantages of contracting is that, all things being equal, you’ll earn much more contracting. Most IT companies expect unpaid overtime as par for the course with full time employees. When you’re a contractor, you get paid for every hour (if it’s an hourly rate, check on that for sure).
If the 20-40 hours a week a fixed number or does it mean you might work 20 hours one week, 40 the next, 35 the next etc? Having fluctuating working hours like that would mess with working on other projects because you don’t know how much time you can commit in advance.
Another advantage of contracting is that you can get out of all that BS that goes with working in a corporate environment. Team building and corporate policy stuff etc. Unless you like that kind of thing! I hate it.

opt · Answer

One thing I’d recommend, is to find out what they’re offering between the two options, because sometimes companies can be unrealistic and/or you may find either the salary or the hourly rate to your advantage. (Similar to evaluating whether it’s better to rent or buy in a particular housing market. Sometimes inequalities favor one option.)
Typically they won’t want to tell you, so you’ll have to play the game the best you know how. It’s a business negotiation, so you should be able to deflect politely and within reason.
It can also be an apples-to-oranges comparison in some ways, because as a contractor you are essentially a business, and should need to charge more.
If you were an American and this was a US company, for example, you’d be on the hook for self-employment tax (if 1099 status; W-2 and they’d cover that).
This discussion prioritizes money, of course, and you also mention specific business goals that may dictate one option over the other without regard to financial considerations.
No answer here–that’s your call, just hoping to help with the thought process.

panoramica · Answer

Hi @kathrynoh, thanks for your feedback. Yes I did a fair bit of overtime as a full-time employee, but I left out of a need to follow my own vision rather than theirs.
Yes I think the 20-40 hours is a range, and I agree that that would make planning difficult. I would prefer to stay at the low end, otherwise I would feel resentful because I wouldn’t have time to follow my vision.
I don’t mind team building if it really does build the team and helps you achieve more, but not for the sake of it. This place is quite small though, as was the place where I last worked. They’re certainly not big corporates, just good at what they do.

charlotte1 · Answer

Hi Panoramica,
It’s a real apples and pears question.
If your looking to get a mortgage take the full time contract, although knowing Canadian immigration law (I’m a recruiter and lived there so have a loose understanding) it might be difficult for them to offer you the full time job offer as they will have to give you working rights for Canada. Where as a contract / remote will be simpler.
Also if your domiciled (living in Chiang Mai etc) you can get away without paying income tax. So take the contract and if it’s amazing and you want to get more involved you can always go full time @ a later date. Where as it very hard to move from an employee contract to a contractor.

panoramica · Answer

Hi @charlotte1, thanks for your reply. Both roles are remote, so are working rights for Canada still applicable? I have a sister in Canada which makes residency appealing, but I did ask them about that straight up and they just dodged the question (or didn’t read my email properly). Their ad definitely says Remote though.
I am living in my home country and also want to get a consulting business going here, so from that point of view contracting offers a flexibility that being an employee doesn’t. But if residency was an option, I might have to think twice.

panoramica · Answer

Thanks @opt for your thoughts. So far I’ve only asked whether there is a difference in the way that the workers are treated, in terms of team integration, education and support - and they said it was the same. Now that a trial contract has arrived (to see if I’m right for the job), I’m forced to think about my future decisions a bit more pragmatically and a bit less idealistically

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