A classic permie to contractor question

[mcNinja]

Hi,

Apologies for what seems to be a very popular question on these boards. I had a look through some previous posts but would appreciate some specific collective forum wisdom.

I'm currently a permanent java developer with about five years of experience. My current job is as secure as it gets really but I'm looking for a change.

I've been offered a role that I can take either as a permie or contractor. The contract rate will be around 4-00-450. The salary would be around 60. I've been thinking about taking the contracting leap but wasn't planning to do so until I built up a war-chest so financially it would be a bit of a risk, with a reliance on overdraft and CC if it all goes horribly wrong. It given me a few questions:

1.) The java contract maket: is it currently stable and reasonable to find work or are things difficult?
2.) I consider myself a good, professional developer. I'm more dedicated and capable in my job than many others I've met but I'm not an amazing technical guru or wizzkid. On paper I imagine most contractors have more experience than me (I could be wrong) Is this going to make things too difficult when I'm looking for the next contract?
3.) How often (in your experience) are contracts cancelled very early on. The lack of a war-chest makes this a bit of concern so it would have to be a calculated risk.


Edit:

Some additional info: The company is a consultancy. They have a mixture of employees and contractors. Employees can switch project, client and work as directed by the company. Contractors are signed up to a specific client and project. The perm role would be starting on the same project the contract is offered for but will likely end up on others (or if there's no others redundancy). I have met employees and contractors from the firm. The contractors are operating outside of ir35 (wether legally or not I don't know.)

Both the permanent role and the contract role would offer a significant take home bump for me.

Thanks for all the advice so far!

Thanks for any advice.

[SeanT]

I've been offered a role that I can take either as a permie or contractor.

Ring, ring, there are the IR35 alarm bells again. How long is the contract for?

[mcNinja]

Hi

I've not seen the contract yet so unsure about IR35. It would be a six month contract.


Thanks

[northernladuk]

The fact you can take it as perm or contract surely makes it inside IR35. You are doing effectively a permie job but just with a different remuneration model so has to be a disguised permie. That's going make a considerable difference to what you'll take home from the day rate.
There a number of calculators out there. Google IR35 calculator or something and put the numbers in.

1) Dunno
2) Not sure about developers. 5 years doesn't sound a lot to me but might be different in the development world.
3) In my experience in 8 or 9 clients over around the same number of years I've been finished early twice. It is going to be very difficult to give you a figure that means anything. It does happen from time to time and is part of the risk we take.

Personally I'd pass on this one purely because of the IR35 issue. If you are good enough you should be able to get another gig. Forget this one and try get a proper one. If you are good enough you'll get one, if not you have your answer about making it a career.

That said is the 60k more than you are on now? If so it might still be worth making the jump to get another company on the CV and wage jump which will help if you want to contract in the future.

[northernladuk]

Hi

I've not seen the contract yet so unsure about IR35. It would be a six month contract.


Thanks

Hmmm..why do they want to take you on permie for 6 months? Something sounds a bit odd here.

[malvolio]

Hi

I've not seen the contract yet so unsure about IR35. It would be a six month contract.


Thanks

£450 vs £60k pa is pretty much level pegging in terms of final take home so that's not a factor. However while a permie - especially a new hire - is not guaranteed anything very much, a contractor is guaranteed nothing at all, not even a job. And you lose a lot of comfort factors. So think very carefully.

As regards IR35, if the same role is available as either perm or contract, then sure as hell it is not going to be firmly outside IR35. Which means the contract role is paying a lot less and the only beneficiary is the end client who saves a lot of money and risk and loses a lot of legal responsibilities as well.

I'm not saying don't do it, but be very clear what you are getting into. Read the guides on this page and download the Guide to Freelancing from www.ipse.co.uk before you decide anything.

[mcNinja]

Hi

Thanks for all the great replies, some good advice there!

On the IR35 issue it's a permanent job at an agency and then working at client sites with potential for multiple different clients or projects, or contract for that agency and specifically be placed into this project. I think that may put it outside IR35?

The salary is a large jump so it's a pretty good offer too!

Thanks for the link to the guides, will take a look.

[SueEllen]

On the IR35 issue it's a permanent job at an agency and then working at client sites with potential for multiple different clients or projects, or contract for that agency and specifically be placed into this project. I think that may put it outside IR35?

The salary is a large jump so it's a pretty good offer too!

Nope.

[malvolio]

Nope.

Agreed. Quite the opposite in fact. Your "agency" will be telling you where to go and what to do. And, presumably, paying you when there's no immediate work to be done. So that's D&C and MoO covered already...

[mcNinja]

Agreed. Quite the opposite in fact. Your "agency" will be telling you where to go and what to do. And, presumably, paying you when there's no immediate work to be done. So that's D&C and MoO covered already...

Hi. I don't think that's the case. It's being contracted to work on a project at one of their clients. The contract I assume (all I can do at this point sorry) will mention the client company and their project. I wouldn't be told to go and work on other projects for their different clients and once the project is finished my contract I assume is complete.

Maybe I'm being naive but it seems different to the permanent role on offer which would be paid when theres no immediate work and would be told where to go.

I appreciate everyone here has more experience of the ins and outs than I do.

I think the summary so far is if the contract falls inside ir35 then the permeant role is a better choice as theres no real financial rewards and slightly more security.

If it falls outside..?