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Perm vs contract offers

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    Perm vs contract offers

    Hi all,
    My partner has just been offered a contract for £500 a day. He is a perm and his salary is 60k. In addition he gets 20% bonus.

    Wondering how the two compare. what day rate do you think compares to a say £70k perm salary - taking into account contractor risks etc?

    Cheers
    Bluedrop

    #2
    70k works out at about 310 per day taking into account annual leave etc, but you pay a higher percentage of taxes for the perm role (if contract is outside IR35) can't claim (home - work mileage) expenses etc
    Can't decide for your situation, but for me a 500 pd contract would be a no brainer.

    Comment


      #3
      Originally posted by bluedrop View Post
      taking into account contractor risks etc?
      the big unknown.

      How long is the contract?

      Let's say it's a year long, and comparably £500/day is way better than his permie role.

      It lasts 3 months, the project is canned, and his contract cancelled with no notice. How quickly could he get another contract? If it came to it, how quickly could he get a similar paying job to his last permie role?

      search for the term warchest on here. It's what we refer to on here as our savings (whether retained in our Ltd co bank accounts, or just normal personal savings accounts) that would keep us going through lean times. Could your family survive 6 months of him not earning? If not, contracting might not be the way forward.

      Comment


        #4
        Yes, we have a warchest to cover one year.

        Its a 6month contract, but its a 12month new project. He was told in the interview that an extension is likely if things go ok.

        Comment


          #5
          Originally posted by bluedrop View Post
          Wondering how the two compare. what day rate do you think compares to a say £70k perm salary - taking into account contractor risks etc?
          It's not a question that anyone here can really answer - you need to look at your lifestyle etc. and see what you think. For example, if he gets a reasonable benefits package and lots of holidays in his £70k, then make sure you look at the value of those when he is comparing them.

          How secure is the permie role? How likely is he to maintain the contract rate? How likely is he to get another contract without any significant downtime?

          Ultimately - does he WANT to be a contractor? If not, then just looking at a headline figure isn't worthwhile.
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          Comment


            #6
            It's not about the money. You just cannot compare rate to salary. There are far too many unknowns and some of them introduce an element of risk that need to be considered. Contracts are not often for a year and you can get walked off/rate cut at a moments notice. If you can't stomach a couple of months off out of the blue go perm.

            Am always of the thinking if anyone is considering a permie gig vs a contract gig they should always take the permie one. 99 times out of a hundred it's just the rates that are pulling them and haven't considered anything else so go permie.
            'CUK forum personality of 2011 - Winner - Yes really!!!!

            Comment


              #7
              Thanks for your valuble insights everyone. please keep them coming. i will show this thread to my partner.

              Comment


                #8
                There's a tendency for inexperienced contractors to extrapolate the day rate over a year and wildly overestimate the financial benefits of contracting. In my experience, these rates are likely to be roughly equivalent, on average. You would certainly bring in more over one year on 500pd than 70k, but the permie benefits need to be factored in and, by design or otherwise, you're unlikely to work consistently (over a period of, say, 10 years) more than 200-220 days per year. Some years could be much less. I dare say that contractors whose decision to contract was primarily motivated by money are the most disappointed after an extended period of contracting. It's a lifestyle, firstly.

                Comment


                  #9
                  Personally I don't think £500 a day is worth leaving a £70k permie job for.

                  Don't get me wrong £500 a day is a sweet rate. But you will need to bank a lot of days for it to work out. Year on year.
                  http://www.cih.org/news-article/disp...housing_market

                  Comment


                    #10
                    Originally posted by bluedrop View Post
                    Thanks for your valuble insights everyone. please keep them coming. i will show this thread to my partner.
                    As already stated money shouldn't be the primary reason to go contracting there are other things that new contractors don't think about.

                    For example at the moment is your partner in a role where there is career progression to a more lucrative role even if it's not with this employer? If so you are better of staying permanent until you get there as this is hard to achieve as a contractor. There are a few contractors who go back to permanent roles to get to the next step in their career.

                    Also is your partner proactive in sorting out their training needs? As a contractor you have to ensure your skills don't become stale and you get no help in doing this. Least as an employee you can find excuses to get training or at least use new software/try new techniques.
                    "You’re just a bad memory who doesn’t know when to go away" JR

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