I had an interesting conversation with a gentleman who is new to London. He was talking about working and the different types of situations available within the financial services world. I realised I have always had a taxonomy for this so I thought it worthwhile to share.Permanent Employee
The usual vision of employment as known by your great grandparents. An employer, a specific workplace, duties and responsibilities. Salary and perhaps bonus and commission as applicable. After a specific period of time, the employment is secure in the sense that redundancy payments would be required from the employer.
Permanent Employee (short term contract)
All of the above but the duration of the employment is for a fixed term, possibly with an option to extend. The classic example of this is for maternity cover and, in these enlightened times, paternity cover for a staff member taking time out for raising a family.
The typical contractor in a big firm is given a specific set of duties, tools of the trade and requested to get on with it in an efficient manner. Classic example is the contract DBA. Paid by the day with a "no play, no pay" model.
Consultant - independent
Often project based, an independent consultant will typically have a wider degree of discretion around performance of duties. Classic example is the Project Manager. Also paid by the day on a "no play, no pay" deal.
Consultant - small consultancy firm
Similar to the independent consultant, the difference here is that the rate spread between the income of the consultant and the outgoings of the client. That margin funds the consultancy business overheads. Often organised on a partnership basis such that total remuneration is contingent upon persuading clients to take on board more consultants from the firm. Sometimes referred to as an "eat what you kill" model. There is one twist in that the consultants are usually permanent employees of the consultancy with an associate pool of independent consultants drawn in and "re-badged" as needed for specific niche work.
Consultant - large consultancy firm
Same as the small consultancy firm but with larger overheads and higher consultancy rates. The use of associate consultants is much rarer in this category.
Typically paid on a retainer basis, so a regular payment is made which allows for a "use-it-or-lose-it" allocation of days per month.