Advice for first timer IT perm-> contract

[Rafd]

Hello,
I worked for the same large IT company for 7 years and resigned and took a year away with the aim of relocating from London when I return next month.

Happily my previous employer has offered remote contract work when I return. I have no idea yet on the nature of the contract or rate they will offer but could do with some advice as I have never contracted before.

My first question is how best to negotiate a rate. Obviously this is limited by what they are prepared to pay but what is the typical premium for contract work over full time employment? I am unsure if I will fall inside IR35 but expect that I may well do unfortunately as the work is likely to be across multiple projects.

Many thanks!

[northernladuk]

I would guess if they have offered you a contract they already have a rate in mind so ask them. Either that or find out what you want and tell them. The IR35 issue is debatable but IMO if you are going to do the same your inside without a doubt. All that has changed is the way you get paid.

[Rafd]

Thanks for the reply. Unfortunately I have no concrete offer yet and will have to wait until I return to the UK for an interview/meeting on the details of the position.

Before this I am trying to learn as much as possible about the world of contracting and how to play it with negotiations.

From what I can tell I would be caught by IR35 but would be interested to know the opinions of some more experienced contractors. I have had a year away and will now be working from home. I will be using a company laptop as they require hardware encryption. Initially I will only have the one client probably on a part time basis. The role is similar but if it helps perhaps I could request to be contracted for a specific project.

After posting I found this similar thread:
http://forums.contractoruk.com/busin...-too-much.html

Sadly the consensus of contractors asking approx previous salary divided by 100 seems unrealistic in my case. I'll have to wait and see what is on the table but that thread has given some good pointers on how to calculate a break even rate.

Many thanks!

[northernladuk]

There is the option of sacking them and doing it properly. It always seems a nice safe idea to go back to your employer but once you are a contractor the security you think you have with your ex employer has all gone. Sack them and go be a proper contractor on astronomical rates. No one on here regretted it so you won't.

[SlipTheJab]

I would guess if they have offered you a contract they already have a rate in mind so ask them. Either that or find out what you want and tell them. The IR35 issue is debatable but IMO if you are going to do the same your inside without a doubt. All that has changed is the way you get paid.

Hardly a Friday to Monday scenario if the OP has been away for a year, assume outside IR35 until proven otherwise!

[Rafd]

Interesting.. I'll have to look into the IR35 thing a bit more by the sound of it.

It is tempting to start contracting for someone else but a few things are luring me back to my previous employer. After a year off the job it will be far easier to slip back into than a completely new job. Also once I have a bit of contracting under my belt and refreshed my skills it should be easier to land more roles with other companies. Finally, my previous job was very interesting and fairly relaxed in an r&d group.. I imagine most highly paid contracting roles are a bit tougher!

[northernladuk]

Hardly a Friday to Monday scenario if the OP has been away for a year, assume outside IR35 until proven otherwise!

I read in to it he resigned with view to be away but this happened. Not that he was actually gone for the year.

Re-reading this isn't correct as you point out but still Monday to Friday assumes a two day break, what's your say they won't argue it's the same as a career break or a sabbatical. One working day he's an employee, next working day he isn't. Arguable and very woolly though of course

[WordIsBond]

Re: IR35. You were away for a year. So it is little different (as far as IR35 is concerned) from quitting, going to contract elsewhere for a year, then coming back for a contract.

Also, you are working from home, and you weren't before. WFH does not put you outside IR35, but the fact that it is a change, along with the time away, pretty much removes the fact that you used to be an employee there from the equation.

So it comes down to the standard tests. If they want you to do the same as before, and they can just move you from job to job, you'll be IR35. If they will agree to give you a contract for a specific project, give you the specs, and let you get on with it at home, you can probably be outside IR35.

Read up on it. Recognise that you probably have a year and a half before the rules change, and we don't know what the new rules will be. But they will probably be built around supervision / direction / control. If you can stay on the right side of that equation (and working from home will help you argue you have), you may be able to stay outside IR35. It would be good to move on to another client, too.

[WordIsBond]

A couple thoughts on rate.

If you are out of London, presumably living expenses will be lower, so you can afford to reduce the rate somewhat from the *100 formula.

If you are just going to stick with this client, and are relatively confident that they'll stick with you long term, then you are going to be inside IR35, but that also means you don't have to worry too much about building a war chest. Obviously you want to make enough to build up some savings, but if you don't have to worry about being on the bench for 12-24 weeks sometime, then you don't need to have that in your company to cover you. But if you are going to look for other clients and move around, you do need to charge enough to build up a reserve for down time.

[Rafd]

Thanks for the help.. This is really useful advice. The job was in London and I am relocating to Bristol. Perm positions in Bristol at my level appear to pay less than I was earning in London. I would need to factor this in to my desired rate.

Although living costs are generally lower in Bristol, unfortunately I don't expect this to be the case for me as I had a bargain on my rent and cycled to work.

Working from home will require me to rent a flat with a spare room which will add a few hundred a month. I may even rent shared office space if it is permitted by company security. On top of this I will probably be required to visit London on a fairly regular basis so transport costs become a factor.

Lots to think about.. Thanks for the help!