Employed vs self-employed
Being your own boss and escaping the nine to five grind may seem like a dream to many employees - but is self-employment really a better option? Or do the lack of structure and financial instability outweigh the benefits?
To get a clearer idea of the pros and cons of each option, we spoke to two senior graphic designers, one self-employed and one in full-time employment. Who has the better deal?
Case study: Lucie Roberts, 48, London, self-employed graphic designer and founder of graphicdesignand.com
Why did you choose self-employment?
My father is a self-employed artist, and from the minute I finished art college in 1986 I knew I would do the same. I worked for a publisher, the Women's Press, for two days a week at the start and over the years I have taught to supplement my income.
Are you able to pick and choose your work?
Not at the beginning. I was successful at first because I was happy to do the work other people would turn down. Today, I can choose what I want to do. I still get work through contacts from my days at the Women's Press, and I've also had the chance to start a small business and have a little team working for me.
How do you feel about job security?
That is a big factor, but today I think no job is secure; it's a false notion. But I worry about doing a good job - it's vital in my line of work. I have income protection insurance, which would protect me if I can't work because of long-term illness, but there's no safety net if the job offers stop coming in.
What about holidays?
I very rarely go on holiday and I never used to take time off work until my daughter Katy (now two) came along.
Is it hard to switch off from work?
I don't ever switch off, but I enjoy my job. It's my vocation and a way of expressing myself. I don't see it as a chore.
How do you manage family life?
I'm lucky because my partner Damian, 50, is also self-employed as a scriptwriter, so we can negotiate childcare together. This is the first time in my life my personal life has come first, as Katy won't wait - she has constant demands and I have to deal with those first.
Do you feel you miss out on employee benefits like a pension?
I don't think I'll ever stop working. My father still paints and he is now 86, so I can't see myself stopping for a long time yet. I don't really trust pensions either, and we have other investments, including a second flat, which will help to support us in the future.
Is it a hassle dealing with your own finances?
It can be and it takes time. I still do my own bookkeeping, but I have an accountant who does the rest. I would be stupid not to have someone else look over my finances; it saves time but also puts my mind at rest.
Would you ever go into full-time employment?
No. I enjoy not being answerable to anyone. However, I am a bit of a slave to my work and it has been tough. But when things work you know it's because of your hard work, and you can give yourself a pat on the back for that.
Case study: Debi McCormack, 40, Cheltenham, part-time creative director for Apt Marketing & PR
Why did you choose part-time employment?
I was self-employed for five years before becoming employed. The benefits far outweigh the downsides and I wouldn't go back to working for myself again. I found self-employment to be a very hard life and although the flexibility was useful when I had my children, Maisie, 7, and Casper, 4, it was a very lonely world.
Now I find work much easier; there is not so much pressure on me and I have a regular income.
What about job security?
We live in very uncertain times and there are fewer and fewer jobs around. Knowing I have a permanent, secure job is a massive relief to me. It's much better than being on your own as when you're self-employed there is no one to look after you if you can't find work.
What are the main changes in your career?
I no longer have to worry from month to month about what jobs are coming up or how I will cope financially. I work 22 hours a week at the moment and am looking to increase this to 35.
How do you manage family life?
It's harder now to manage childcare as my partner Sean, 41, an IT manager, and I are both employed - as my hours increase we may need to look into paid childcare. But I'm lucky that my children are now at school and, as I don't have a very long commute, this is fairly manageable.
What employee benefits do you get now?
I have all the normal benefits: a pension, paid holiday, life insurance and paid sick leave. I no longer panic if I'm ill.
What are the main benefits of full-time employment?
Job security and satisfaction. In self-employment it's hard to progress and you're only as good as your last job, whereas now I am part of the growth of a company.
Generally thought of as being interchangeable with life assurance, but isn’t. Life insurance insures you for a specific period of time, at a premium fixed by your age, health and the amount the life is insured for. If you die while the policy is in force, the insurance company pays the claim. However, if you survive to the end of the term or cease paying the premiums, the policy is finished and has no remaining value whatsoever as it only has any value if you have a claim. For this reason, life insurance is much cheaper than life assurance (also called whole of life).
Income protection insurance
If you can’t work in the event of sickness or illness, income protection insurance aims to give you an income, with the amount of income set by you up to 75% of your gross (before tax) income with the premiums varying by how much of your salary you want to cover, as well as your age and health and when you want to start receive any payouts. Any payouts from income protection insurance are tax-free and usually continue until you recover, reach your selected pension age or the period of cover specified in the policy comes to an end. Income protection insurance does not cover redundancy but you can buy it as a bolt-on.