Consultant vs Employee
In simple words, an employee works full–time for the company. He gets benefits like monthly salary, vacations, benefits, overtime, promotions, leave encashment, gratuity, PF, Insurance, etc. Consultants are specialized professionals, who are experts in their field, often hired for a specialized task / project.
With that out of the way, let us look at some of the Pros and Cons for each.
1. A Consultant gets paid for the task given whereas employee gets paid for the month, even if a job is not given to him. So, money inflow is fixed for an employee but may unpredictable for a Consultant.
2. Consultant can delegate a job to someone else. An employee can only do that to his team member, if at all.
3. Terms and conditions can be fixed depending on the situation. Employees have to paid as per industry norms and government laws.
4. Having a Consultant means fewer Compliance headaches. Many governments have strict laws for company having more than a certain number of employees.
5. Employees salary gets taxed before being paid. Consultants pay tax at the end of the year.
6. Employees have to manage with the post-tax salary. Especially items like travel, newspapers and books, meetings, etc. All these are deductible by Consultants, who pay tax on income minus expenses.
7. Consultants have a unique set of skills (or expertise), for which they spend their own money, which is deductible as expenses. Employee usually get trained at company expense.
8. Employees have fixed working hours. Not so, for the Consultant, who is usually paid for the outcome.
9. Employee can work only for one company. Consultants can work for many companies, at the same time.
10. Consultants are paid for their expertise and knowledge. Employees are hired to fill in their work force.
11. Consultants can work from their own office, or even from home. Employees usually work from the company’s office.
12. Consultant can be terminated at any time without consideration. Contracts are for short time and can end before decided period or may not be renewed. Employee can be terminated only for good cause and that too after proper notice and procedure is followed.
13. Consultant needs bring all or most of the tools and other assets required to complete the work. Employee is provided with the tools and assets.
Each role has it’s Pros and Cons. What you need to consider is your risk–taking appetite, mental makeup, strengths & weakness and specialized skills, before taking the final decision.