Contract vs permanent - have you done the real maths?

A contractor on £700 a day earns more than a permanent employee on £100,000.

Simple, right?

Not necessarily.

The contract versus permanent debate comes up constantly across renewable energy, particularly as developers, IPPs, EPCs, consultancies and grid businesses compete for experienced people who can actually deliver projects.

And the headline number rarely tells the whole story.

For candidates, the question is bigger than salary versus day rate. You need to consider time between assignments, benefits, tax position, pension contributions, travel, flexibility and the value of having some certainty about what happens next.

For employers, the calculation is equally easy to oversimplify. A contractor may look expensive on a spreadsheet, but what does a three-month vacancy cost when a project is already under pressure?

With global renewable energy employment now estimated at 16.6 million jobs, competition for skills remains significant. The latest IRENA and ILO analysis also makes an important point: record renewable capacity additions are not translating neatly into equivalent employment growth, with automation, economies of scale and grid bottlenecks changing where people are needed.

The maths is changing.

So it is worth doing it properly.

The £700-a-day illusion

Imagine you are considering a contract at £700 per day.

Multiply that by five days and 52 weeks and you get:

£700 x 5 x 52 = £182,000

Next to a £100,000 permanent salary, contracting appears to win comfortably.

Except very few contractors invoice 260 days a year.

Take away 25 days of holiday, eight bank holidays and perhaps another 15 working days between assignments, for illness, training or simply because the next project does not begin immediately.

You are now billing for roughly 212 days.

£700 x 212 = £148,400

That is still attractive, but the gap has already narrowed considerably.

Then consider what the permanent package might contain.

Employer pension contributions. Paid annual leave. Sick pay. Private healthcare. Life assurance. Bonus. Training. Professional memberships. Potential share schemes.

The precise value varies enormously between employers, but comparing £148,400 of contract revenue with a £100,000 salary alone is not comparing like with like.

And we have not even touched the tax position.

IR35 status, the engagement model and an individual's circumstances can materially change take-home income. That calculation needs proper tax advice rather than a recruitment blog.

The point is simpler: day rate multiplied by 260 is not your real number.

Contractors need to price in the bench

One figure experienced contractors understand particularly well is utilisation.

It does not matter what your day rate is when you are not billing.

Someone working 220 days at £600 generates £132,000.

At 190 days, it becomes £114,000.

At 160 days, it is £96,000.

That is why a higher rate is not automatically a better financial decision.

A £750-per-day six-month assignment with an uncertain pipeline afterwards could ultimately produce less annual income than a £600-per-day contract with visibility over extensions.

There is also a wider market consideration.

Recent discussion among UK contractors in 2026 has reflected concerns around longer gaps between assignments and pressure on rates in parts of the economy. These are anecdotal experiences rather than renewable-energy-specific data, but they are a useful reminder that utilisation risk is real.

When assessing an opportunity, ask yourself:

What happens after this contract ends?

That question belongs in the calculation too.

Permanent employees should calculate the package, not the salary

The same mistake happens in reverse.

Candidates sometimes dismiss permanent opportunities because the base salary looks considerably lower than their potential contracting income.

But calculate the whole package.

A £100,000 salary with a 10% employer pension contribution already represents another £10,000 of value.

Add a 15% bonus and the theoretical package reaches £125,000 before healthcare, insurance, paid leave and other benefits are considered.

There is another financial variable that is harder to put into Excel: stability.

A permanent employee generally knows what they will earn next month.

For some people, that matters enormously. Mortgages, childcare, family commitments and personal appetite for risk can make predictable income more valuable than the possibility of earning more.

For others, the opposite is true. They are comfortable carrying more risk in exchange for flexibility, independence and potentially higher earnings.

Neither decision is inherently better.

They are simply different financial propositions.

Employers need to do the real maths too

There is another side to this conversation.

Hiring managers often look at a contractor's day rate and compare it directly with a permanent employee's salary.

That can make contractors appear expensive.

But salary is not the full cost of permanent employment either.

Employers need to account for pension contributions, National Insurance, benefits, bonuses, recruitment costs, equipment, training and other employment overheads.

More importantly, they need to consider why they need the person.

If you require a grid specialist for a defined phase of a project, does it make sense to spend months recruiting permanently?

If an experienced project director can join quickly, solve a delivery problem and leave after nine months, is their day rate really the right measure of cost?

The UK's grid build-out provides a good example of the scale involved. National Grid continues to invest in major infrastructure through the Great Grid Upgrade, including projects such as the proposed 140km Sea Link connection between Kent and Suffolk.

At the same time, the IEA's June 2026 assessment of the renewable energy workforce points directly to increased demand for skilled workers across renewables and grids, alongside continuing skilled labour shortages.

Against that backdrop, the expensive option is not always the contractor.

Sometimes it is the empty chair.

What does a vacancy actually cost?

This is where the calculation becomes more interesting.

Suppose you need a specialist engineer for a project.

The permanent budget is £90,000, but you cannot find the right person.

You spend another six weeks searching.

What happened during those six weeks?

Did another engineer absorb the workload?

Did a project manager spend 20% of their week covering the gap?

Did an external consultant pick up work that should have been handled internally?

Did a design package slip?

Did an approval take longer?

Did the project programme move?

Those costs rarely appear next to the recruitment budget.

They are still costs.

A £650-per-day contractor working for three months costs roughly £42,000 based on 65 working days.

That number can look substantial in isolation.

But if that individual protects a programme worth tens or hundreds of millions of pounds, comparing £42,000 against the salary of a permanent employee misses the commercial question completely.

The calculation should be:

What is the cost of solving this problem versus the cost of leaving it unsolved?

That is the real maths.

The renewable energy labour market makes flexibility valuable

Renewable energy is not a particularly tidy industry.

Projects move through development, financing, construction, commissioning and operations. Workloads rise and fall. A business might suddenly need additional grid capability because a connection milestone is approaching, then require significantly less of it six months later.

The people requirement changes with the project.

That makes the contract versus permanent decision particularly important.

Permanent hiring makes sense when the capability is core, repeatable and required over the long term.

Contract hiring can make more sense when the requirement is urgent, specialist, project-based or temporary.

And increasingly, businesses need both.

The global renewable workforce continues to grow, but IRENA and the ILO's latest figures show that employment growth slowed to 2.3% despite record deployment. That suggests the challenge is becoming more nuanced than simply "renewables needs more people". Employers need the right skills, in the right location, at the right stage of a project.

That distinction matters.

Expert Thoughts

Adam Standley, Director of Contract Recruitment at Hunter Philips, says the real cost of hiring is often missed when businesses compare day rates directly with permanent salaries.

"One of the biggest mistakes we see is comparing a contractor's day rate directly with a permanent salary. It looks like a straightforward calculation, but it doesn't tell you very much about the actual cost to the project. If you've got a critical role sitting vacant for two or three months, the cost of that gap can quickly become more significant than the premium you're paying to bring an experienced contractor in immediately. In renewable energy, this becomes particularly important because requirements can change quickly as projects move through development, construction and commissioning. Sometimes you need permanent capability that will stay with the business for years. Other times you need someone with very specific experience who can come in, solve a problem and keep the project moving. The same applies to candidates. A higher day rate doesn't automatically mean you'll earn more over the year once you account for time between contracts, holidays and the benefits you're giving up. Whether you're hiring or considering your next move, you have to look beyond the headline number. The real question is what gives you the best value over the period that actually matters."

So, which is better?

There is no universal answer.

For candidates, contracting can offer higher earning potential, greater variety and more control. Permanent employment can provide stability, benefits, progression and longer-term involvement in a business.

For employers, contractors can provide speed, specialist expertise and flexibility. Permanent hires can build institutional knowledge, leadership capability and continuity.

The mistake is deciding based on the biggest number on the page.

A day rate is not annual income.

A salary is not total compensation.

And a vacancy is not free.

Whether you are building a renewable energy team or deciding what your next career move should look like, do the real maths first.

Hunter Philips works across the global renewable energy market, helping businesses and professionals navigate both permanent and contract hiring across wind, solar, grid, battery storage and related infrastructure. Our approach is straightforward: understand what the project actually needs, understand what matters to the person, and find the hiring model that makes commercial sense. This reflects Hunter Philips' wider tone of being data-led, straightforward, professional and focused on the realities clients and candidates face.