£39k to £30/hr contracting, what do I do?

[CrispSandwich]

Don't move for 30 quid an hour. How are you going to build a war chest to survive a 2 to 10 month gap between contracts. I'm not in your line of work, but is that really rate for contract work?

In Automotive engineering things seem to be a bit different. Contracts are lower value as people are less likely to move as most of the UK industry is based in West Midlands, and people seem to be outside of IR35 for indefinate length of time. I knew one contractor working for an OEM who had been there 8 years and was still outside IR35!!!!! I dont know a contractor who does less than 18 months per contract really.

£30/hr for entry level contracting is kind of standard for this kind of work, but I have heard of experienced people getting £50/hr plus

[northernladyuk]

Ok just to clarify a few things, Im not massively keen on the position and the current timing is pretty terrible. I am just trying to work out a realistic figure I could earn if I remained outside of IR35 for 2 years or so then transferred to permanent.

Senior management at my company are quoting for a big OEM in West Midland (JLR) and want me to work on site in Gaydon (well they havent told me directly but this is what I have heard), which is about 30 minute commute.

The contracting position, while based in Derby is also a resident engineer role for another OEM (Aston Martin) on the same site in Gaydon and while I would be driving to from Solihull to Derby 3 times a week eventually I would have the same 30 minute commute. Moving to Derby as a permie isnt really an option for a £5k pay bump with a house to sell etc.

I also have interest from another supplier in Solihull which I could cycle to at £45k permie which is my number one choice really until the kids are in school, 2nd baby is due April 2018

I would be concerned at these rates about the potential foe extended and unexpected gaps between contracts. And sometimes you need to manage this by sucking up a long contract. Take a look around at your skillset and industry and see what contracts are going for 350 to 400 pd. What skills and experience do you need> Then spend the next couple of years, engineering your role so you can get this experience. IMO £30 ph is too tough to build a contracting career around, if you are looking at giving up a permie job. If you do end up redundant, then maybe it's worth a go.

[l35kee]

It's not a great day rate at £225 assuming standard working day. For a permie salary of £40+k you'd be wanting to get contracts at around £400 a day, or £350 min maybe.

Depends if you want to go contracting generally I guess. I wouldn't personally jump on a contract so far away for that kind of rate though.

[washed up contractor]

Hi everyone,

Looking for a bit of advice so thought I would post in here. Currently I am working for a tier 1 automotive supplier working as a Systems Engineer, and have been in the role for just over 2 years with 2 years previous as an Analogue Design Engineer. The role I work in is fine, but the company direction isnt looking too good. There is a lot of restructuring and outsourcing going on, and in a few years I wouldnt be suprised if they close the UK facilities completely.

I am currently earning £39k base salary with a bonus which after pension, childcare vouchers and student loan leaves me with about £2k take home pay. This is due to increase to £42k next July. There have been redundancies every year and the payout for me would be approx £20k tax free. This is announced 2nd week of December when the job market is very quiet and I tend to get interest in my CV around March which is too late. I have a fiance due to go on maternity leave for the second time and the extra pay contracting would make a big difference to our lifestyle as she is only entitled to statutory maternity pay.

I have another automotive supplier interested in a contracting role advertised as £45k permie or £30/hr contractor which is the standard x1500 rule but the values I get for take home pay estimates vary wildly! What could I realistically expect with 400 miles a week commuting? What would you recommend to someone in my position?

Thanks,

You're falling into the trap of thinking a £30 an hour contract is a 52 week a year continuing source of income like your soon to be £42k a year salary.

My first suggestion to anyone in this position is stick to the permie job to volunteer for rundundancy. Then re evaluate exactly why you want to go contracting. Is a major factor the anticipated increase in income because contracting income can and does, fluctuate wildly.

Also, if you have 2 young children, you may more than likely have to work away from home. I can tell you from personal experience, being a weekend dad when you're working away is very tough.

Only you know your income and expenditure and only you can decide if you could work away from home with 2 young children left behind.

[poorautojobber]

I'm a long term lerker and finally feel I can help someone out.

Most of the people on here seem to be IT jobbers and the rates and working are obviously very different I've been auto jobbing for many years and have worked all over the world so think I can give you some pointers.

It all depends on what you do and who you know if I'm a completely honest. Advertised jobs tend to be lower rates I would consider £30 to be a reasonable start rate for a new jobber. Some of the OEM start rates are laughable and are aimed at grads/EU nationals. If they find someone they are tulip or move on to better roles very quickly.

Suppliers pay the best rates. OEMs control their rates from top to bottom they know what the agent is getting and what you get. They ultimately control and keep down the rates they place hundreds of roles a year agents agree or don't work for them.

Jobs should always be project based and billed accordingly. Work to the law and you won't have problems. Read the IR35 threads on here. projects tend to be long 2-3years. In 12 years I've been out of work for a grand total of 1 week and that was just waiting for a job to start. I haven't gone through a job website for 9 years. I don't think anyone is out of work other than by choice at the moment and I can see at least another 5 years where I'm at if I wanted it.

It's all about the hours! Agree upfront how many you will be working 37.5 hours is pointless and not worth it. Discuss the possibility of working from home for some of those hours even cad guys can do it now.

You will find plenty of jobs on your doorstep for that money do not jump at the first role. I would not work for that money locally but I'm 'in' you are an unknown quantity. Contacts, Contacts. Take the hit on the first job and renegotiate or move on after a suitable period.

You need a war chest and building it with your situation will be a little tough. I always budget to have 1 years mortgage on hand just in case. Never be tempted to spend it.
If you want to move do it before you start jobbing or wait until you have some books mortgages are a real pain these days but are available at normal lending rates.

The biggest potential problem on the horizon is IR35 reform in the private sector (read on here about public sector reform) you will be 'outside' but you will be reliant on someone else to determine your destiny and they will be tempted to play safe. I personally will walk and go and do something else HMRC seem determined to **** the economy and use brexit as cover.

I may be tempted to wait until next year to see what the budget brings on that.

[Potbellypig]

Hi OP - I work in Gaydon as a contractor too...
1) I live 25 miles away from Gaydon and it takes anywhere between 40 minutes to over an hour to get home and/or in (depending on what time you leave).
2) Everyone I work with in Gaydon and the suppliers (apart from management) are all contractors, and there hasn't been one case of someone failing IR35 as far anyone can mention. I've spoke to many people about this.
3) £30 p/hr is pretty standard - it's mainly suppliers that pay upwards of £40.
4) The company are quite good with flexible working. I work from home twice a week, another site once a week and Gaydon twice a week. Many people also do similar working hours.

I hope this helps.