1.5x rate difference in same team (same role, direct vs agancy)

**ShandyDrinker** · 9 December 2016, 21:47

Originally posted by stchez View Post

Hi All,

I've been a contractor for a while but this year I seem to be making a blatant mistake after another.

Was having a few pints after work and somehow I managed to reveal my current rate to another contractor then he also shared his.

I was aware that he's via an agency and I'm direct but I was not expecting to have a 1.5x rate difference in my favour.

This puts us in a kind of a weird situation which I hope he'll handle nicely (and he said he wouldn't disclose any of this) but still I'm a bit worried.

Please tell me you've been in similar situation and it's OK

In a weird way this feels to me a bit more respectful and honest and at least now he's aware how much more beneficial it could be to go direct (not that it was his choice in this case).

My main worry is how team dynamics could be ruined in the coming months.

I've been in this situation as both a permie and a contractor. Sometimes you're the one on the better rate, other times you aren't. IMO there's nothing more corrosive than there being a significant rate disparity between people in a team.

If you think you're worth the extra 1.5x rate difference then don't beat yourself up about it. Don't forget that the other person had to be happy to have taken the contract at their particular rate in the first place.

**PurpleGorilla** · 9 December 2016, 22:06

First rule of fight club, you don't talk about fight club.

**stchez** · 10 December 2016, 08:58

Originally posted by ShandyDrinker View Post

If you think you're worth the extra 1.5x rate difference then don't beat yourself up about it. Don't forget that the other person had to be happy to have taken the contract at their particular rate in the first place.

I'm guessing the client is paying roughly the same for both of us. We're really talking about the agency margin so the difference is in negotiation and knowing about the client because of my network.

**SlipTheJab** · 10 December 2016, 09:24

Come renewal time your mate should get himself a better deal with the agency or leave, simples.

**jonnyboy** · 10 December 2016, 11:37

I work with 4 other contractors (well, one (a useless one) has just left), and I have found out that whilst we do the same job, I am the lowest paid of the bunch.
Now it could be that I did not negotiate when I started... but I view it this way...

1) I am happy with the rate I am getting. Yes, I could be getting more, but I am happy I am making a tonne of cash whilst still being value for money for my client
2) If things get tight, who will they get rid of first - the higher paid or the lower paid (assuming we are doing the same job and to the same quality)
3) Come renewal time, if I wanted to stay here (its a PS gig, so at the moment, I am working through my options) I have a lot more to work with in terms of them making up the IR35 tax differences

If everybody got paid the same for doing the same job.. thats called socialism, and its bad news for the world. After all, why should somebody who works a job and produces 1000 widgets a day get paid the same as somebody doing the same job who only produces 500 widgets a day. There is no incentive for the 500 widget guy to up his production, but there is now an incentive for the 1000 to start slacking off and reduce his output to 500 widgets a day.

**ShandyDrinker** · 10 December 2016, 12:30

Originally posted by jonnyboy View Post

I work with 4 other contractors (well, one (a useless one) has just left), and I have found out that whilst we do the same job, I am the lowest paid of the bunch.
Now it could be that I did not negotiate when I started... but I view it this way...

1) I am happy with the rate I am getting. Yes, I could be getting more, but I am happy I am making a tonne of cash whilst still being value for money for my client
2) If things get tight, who will they get rid of first - the higher paid or the lower paid (assuming we are doing the same job and to the same quality)
3) Come renewal time, if I wanted to stay here (its a PS gig, so at the moment, I am working through my options) I have a lot more to work with in terms of them making up the IR35 tax differences

If everybody got paid the same for doing the same job.. thats called socialism, and its bad news for the world. After all, why should somebody who works a job and produces 1000 widgets a day get paid the same as somebody doing the same job who only produces 500 widgets a day. There is no incentive for the 500 widget guy to up his production, but there is now an incentive for the 1000 to start slacking off and reduce his output to 500 widgets a day.

What if you were the person producing 1000 widgets and the 500 widgets person was earning more than you. I challenge anyone to not be riled by that situation eventually.

**northernladuk** · 10 December 2016, 12:30

I'm sorry.. But WTF did I just read????

**SlipTheJab** · 10 December 2016, 12:35

Originally posted by northernladuk View Post

I'm sorry.. But WTF did I just read????

Get with it Spasibo Comrade

**jmo21** · 10 December 2016, 13:44

twice in the last few years, another contractor at same client has told me what rate they were on, in a "oh it's a pretty decent rate here" type of way, without actually asking me what I was on.

Both times I didn't tell them what I was on, and both times it was significantly more than them.

1.5x rate difference in same team (same role, direct vs agancy)