Contract or permie?

[Francko]

[..]
But I'm not giving hints on Malvolio - nor even my sig...

Oh well, I had the equivalent in A levels in English Literature so I should have known.

"While we tend to think of Malvolio as an ambitious social climber who rejects his middle-class origins in hopes of marrying into nobility, we cannot be at all certain that this is what Shakespeare had in mind.3 In most sixteenthcentury aristocratic households, particularly those of important noblemen, the steward had his own status. He was often a kinsman of the master and invariably a man of gentle birth."

[Fungus]

Ignore the amateur economists. If you've really done the maths (or arithmetic, anyway), £450 a day contract is around £45k a year permie with a decent package. So it's not all that much different

You must be on a different planet from me.

A decent package presumably includes health insurance and pension contributions. I doubt that adds up to more than £10K before tax, and probably less. So how can £55K equate to ~£100K? (The amount I've saved as a contractor puts to shame my permie earnings.)

Okay, lets be extreme, and say that you need to rent a flat or live in a B&B. That'll add about £6K per year, lets say £10K before tax. So now we have £65 versus £100K, assuming a worst case. And in reality permies often commute long distances to work, which costs a lot in fuel and car wear and tear.

Fungus

[Fungus]

But I'm not giving hints on Malvolio - nor even my sig...

The version I've heard is "Twll tyn pob Saes". It's not polite. I think it means something like "All Englishmen are feckwits". (Saes means Saxon, and is the Welsh version of Sassanach, meaning English.)

Fungus

[ASB]

A decent package presumably includes health insurance and pension contributions. I doubt that adds up to more than £10K before tax, and probably less. So how can £55K equate to ~£100K? (The amount I've saved as a contractor puts to shame my permie earnings.)

A 45k salary (plus car allowance, pension contribution, small bonus, ER's NI, Holidays) equates to approximately 65k for a working year of approx 1650 hours.

This equates to a day rate of approx £300.

Of course this is only entirely valid for comparison if you are IR35 caught.

[malvolio]

"Sh*t" is probably a better word then "feckwit" (which is Irish anyway - how dare you!).

And we all know Malvolio is in Twelfth Night (the clue is in the cross-garter'd avatar, after all!). How's your Latin?

And going back to Fungus's pointless observation - you have ommitted a few details, including but not limited to (deep breath), paid holiday, SSP, critical illness cover, chronic illness cover to retirement, income protection, guranteed payment, bank holidays, business expenses, pension, health care, Employer's NICs, training, staff benefits, company car (perhaps), first place in the queue if the company goes bust, 52 weeks a year payment regardless and not having to cover x months a year unpaid looking for the next role. Or does the Government provide these for free, perhaps? I also assume you don't have your own company or you might have been aware of them.

Now go away and do it again and try to get it right.

[Francko]

[..] 52 weeks a year payment regardless and not having to cover x months a year unpaid looking for the next role. Or does the Government provide these for free, perhaps? [..]

Funny point, you are not even allowed to receive your meager 52 quid a week!

[Fungus]

And going back to Fungus's pointless observation - you have ommitted a few details, including but not limited to (deep breath), paid holiday, SSP, critical illness cover, chronic illness cover to retirement, income protection, guranteed payment, bank holidays, business expenses, pension, health care, Employer's NICs, training, staff benefits, company car (perhaps), first place in the queue if the company goes bust, 52 weeks a year payment regardless and not having to cover x months a year unpaid looking for the next role. Or does the Government provide these for free, perhaps? I also assume you don't have your own company or you might have been aware of them.

Now go away and do it again and try to get it right.

I got it right first time. I've never met anyone on ~£45K basic who effectively gets ~£65K. So you are talking about very special - i.e. unrealistic - cases. In fact most permies I have met with my sort of skills are on £40K basic maximum (outside London). Many are on ~£35K. Outsourcing has reduced salaries.

Paid holiday: Yeah, right. All I care about is the amount per year and the number of days of leave. If you like accounting tricks, fine.

Company car: None of the permies I work with or have ever worked with - many of whom are highly capable engineers - get a company car. Only senior managers get that.

Training: Yeah, right. When I was a permie, I went on ONE course, to learn COM. And I had to talk myself into it, since I needed it to leave and contract. And that was in 6 years of permiehood. Very very few permies I've worked with have been on courses. Maybe one C++ course in 10 years, which is prompty forgotten because they do not use the skills. Whereas I've met more than a few contractors who go on courses paid for by the client - though they do not get paid there hourly rate while on the course. I did once meet a permie who spent his life going on courses. He was with Nokia. But it's unusual.

Critical illness cover: That's health insurance? You can buy that, as I mentioned earlier.

Chronic illness cover to retirement, income protection: You can buy those and they don't cost a huge amount. Income protection that cuts in after 6 months costs ~£300 per year. And of the permies I have worked with, none had chronic illness cover to retirement. One who had potentially terminal cancer was on a greatly reduced salary after 6 months. Basically it was just enough to live on and no more.

Quote: "52 weeks a year payment regardless and not having to cover x months a year unpaid looking for the next role."

I have been out of work for 1 week in 7 years. Most contractors I know are in a similar position, though not all. That is the nature of contracting. There is a risk element.

Bank holidays: I get those off too. As I said earlier, it's the total yearly income that counts.

Quote: "first place in the queue if the company goes bust".

You mean for payment? I would not work for such a tatty enterprise. I stick to big companies. Those tend to be the ones that employ contractors anyway. In my experience, when a company starts having cash flow problems, its the permies that go out the door, not the contractors. Contractors are the accountants gift. They have less overheads, so you can hire them, then get rid of them. Permies are more risky. It's ironic.

And another advantage of contracting. When my mother was seriously ill, a few years ago, I was able to take time off (unpaid) to visit her. I spent several weeks off, though I took a laptop and was able to do some work. As a permie I could never have taken time off because my mother was ill. Sadly she died, but at least I was there at the time. That was a definite quality of life issue that meant a lot to me.

And what about unpaid overtime? I recall often working late, including till midnight for one company without extra pay.

And what about the other tulipe of permiedom? In one job I was forced at one weeks notice to take 1 weeks holiday in the middle of November. That's holiday entitlement down the drain.

The main advantage that I can see is not having to be nomadic. However, I've yet to be in a company that does not lay off permies, so that advantage is not necessarily that big.

Fungus

[malvolio]

Really not sure what you're trying to prove here, especially since you;re wrong. The equivalence betwee hourly contact rate and anmnual permie rate has been around for a long time now and is generally accepted as accurate.

Tell you what, go live in the real world for a while, study basic economics, then come back and tell me we've been doing it wrong all along.

[Francko]

I got it right first time. I've never met anyone on ~£45K basic who effectively gets ~£65K. So you are talking about very special - i.e. unrealistic - cases. In fact most permies I have met with my sort of skills are on £40K basic maximum (outside London). Many are on ~£35K. Outsourcing has reduced salaries.

That's not quite right, although yes many permie salaries pay that. Not to mention that in the long run manager/director salaries are the same or above the net income of a good contracting rate.

Paid holiday: Yeah, right. All I care about is the amount per year and the number of days of leave. If you like accounting tricks, fine.

Yes, including the number of sick paid days. Sure, you can have insurance for that. But not many companies are happy for a contractor missing two-three weeks as year as it's mostly the case with permies.

Company car: None of the permies I work with or have ever worked with - many of whom are highly capable engineers - get a company car. Only senior managers get that.

Yet some companies have good benefits. Not all of them.

Training: Yeah, right. When I was a permie, I went on ONE course, to learn COM. And I had to talk myself into it, since I needed it to leave and contract. And that was in 6 years of permiehood. Very very few permies I've worked with have been on courses. Maybe one C++ course in 10 years, which is prompty forgotten because they do not use the skills. Whereas I've met more than a few contractors who go on courses paid for by the client - though they do not get paid there hourly rate while on the course. I did once meet a permie who spent his life going on courses. He was with Nokia. But it's unusual.

As usual the reality is in the middle. But certainly most of the companies budget a few grands for training, books, certifications, which otherwise you should pay yourself.

Critical illness cover: That's health insurance? You can buy that, as I mentioned earlier.
Chronic illness cover to retirement, income protection: You can buy those and they don't cost a huge amount. Income protection that cuts in after 6 months costs ~£300 per year. And of the permies I have worked with, none had chronic illness cover to retirement. One who had potentially terminal cancer was on a greatly reduced salary after 6 months. Basically it was just enough to live on and no more.

Quite right on this.

Quote: "52 weeks a year payment regardless and not having to cover x months a year unpaid looking for the next role."
I have been out of work for 1 week in 7 years. Most contractors I know are in a similar position, though not all. That is the nature of contracting. There is a risk element.

This I completely disagree. First you basically had no life and you don't want to do that when you approach 40 or you get over that. I had a period of 6 months once working saturday and sunday, sure I made lots of money but at the end I needed a 1 month holiday to recover on which I have spent a good part of the savings. And that extra flexibility with days that you were talking about comes with a price, it's not free. If we want to get serious, many companies offer you unpaid leaves when you are permanent.

Bank holidays: I get those off too. As I said earlier, it's the total yearly income that counts.

If you took them off, you would already have 54 weeks so you consider normal only 2 weeks off? Oh dear, that's less then what they allow me to work (or napping) from home in this permie job.

Quote: "first place in the queue if the company goes bust".

You mean for payment? I would not work for such a tatty enterprise. I stick to big companies. Those tend to be the ones that employ contractors anyway. In my experience, when a company starts having cash flow problems, its the permies that go out the door, not the contractors. Contractors are the accountants gift. They have less overheads, so you can hire them, then get rid of them. Permies are more risky. It's ironic.

This is a general rule for permies and contractors. Of course, the biggest company offers more safety but in general as a contractor you are the last to be taken into account when it comes to financial problems.

To sum it up there are advantages and disadvantages but there must be a premium for contractors. If you are not taking this into account you are generally creating a loss in your business. Sure now you can work 300 days a year, let's see in 5 years or in case of an unfortunate event. Didn't you also consider that you have no pension at all and that the notice period is very little? At least in most of good companies as a permie you get a few months salary if they want to dump you for no reason. I tend to agree that 45 an hour which roughly would give you 337 a day, and on average 66k a year. In a 10-20 years time the person who had been permanent at 45k will be much better off than you and at least with a pension. That unless you can resort to some of those special schemes at your own risk. Contracting is good but it must have a price and most of the people now seem to disregard that, selling themselves for less. And the bulltulip about contractors being independent, well respected individuals in the organisation for my experience is crap. It all depends on the environment so I wouldn't factor anything on that.

[Fungus]

Really not sure what you're trying to prove here, especially since you;re wrong. The equivalence betwee hourly contact rate and anmnual permie rate has been around for a long time now and is generally accepted as accurate.

Tell you what, go live in the real world for a while, study basic economics, then come back and tell me we've been doing it wrong all along.

I've worked in goodness knows how many UK IT companies and that is the real world. I understand basic economics.

Fungus