Chris Trotman<\/a>, head of sales and underwriting at Protectivity, said most self-employed workers value the flexibility and autonomy that working for themselves provides. He added that self-employment also carries financial risks that employment automatically absorbs, and that many people do not fully understand the scale of this gap until they encounter it.<\/p>\n\n\n\n Full-time employees in the UK are entitled to 28 days of paid annual leave <\/strong>each year, including bank holidays. For an employee earning the median salary of \u00a339,039, this represents \u00a34,704 in paid time off.<\/p>\n\n\n\n Sickness can create another financial difference. According to Protectivity, the average UK employee takes 4.4 sick days a year, worth an estimated \u00a3740 at median earnings, which would usually be covered by an employer at full salary.<\/p>\n\n\n\n For self-employed people, taking time away from work can mean losing income altogether. The research <\/strong>found that 79% of self-employed people who had a period of sickness absence during the previous year received no income during that time. Self-employed workers also take 35% fewer sick days than employees, not because they are healthier, according to the research, but because they cannot afford to stop working.<\/p>\n\n\n\n Pensions add another long-term cost. Under automatic enrolment rules, employers must contribute at least 3% of qualifying earnings to an employee’s pension, worth approximately \u00a3984 a year at the median salary.<\/p>\n\n\n\n Self-employed workers do not receive these employer contributions and must instead arrange their own pensions<\/a>. According to Protectivity, missed employer contributions compounded across a full working career at a standard annual growth rate of 5% could amount to more than \u00a3119,000<\/strong> in lost retirement savings.<\/p>\n\n\n\n Self-employment can also make obtaining a mortgage more difficult because income may fluctuate and can be harder to demonstrate. Stephen Perkins<\/a>, managing director of Yellow Brick Mortgages, said the early years of running a business can involve lower profits as companies invest and grow, potentially reducing the amount a person can borrow.<\/p>\n\n\n\n Replicating an employee benefits package can itself consume a significant share of income. Anita Wright<\/a>, a chartered financial planner at Ribble Wealth Management, said reproducing benefits including pension contributions, insurance cover and paid time off can absorb between a fifth and a third of gross income on top of tax.<\/p>\n\n\n\nPaid Leave, Sickness and Pensions Create a Sizeable Gap<\/strong><\/h2>\n\n\n\n
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Replacing Employee Benefits Requires Deliberate Financial Planning<\/strong><\/h2>\n\n\n\n