Reply to: 65k or £450 p/d

[Segush]

65k is pretty good in O&G especially in a large company. I left a permie role with 7 years experience in the 40-45k range, SE based, and i know principal engineers who take home around the 65k range.

Same here, I agree with what Scoi has said. Yes you can get more than 65k in areas like London or Aberdeen. We are talking about you being a senior or principal engineer not at management level of course.

[Scoi]

The fact that engineering contracts are generally defined length project work is a good thing in terms of IR35, not the other way around? or have I missed something?

Also, £65k in the O&G industry for anything more than 6-8 years experience is quite poor. I would take the contract option.

My legal advice weren't happy that i was doing pretty much what the permies do, to the same procedures and standards set by governing bodies or the clientco. Most engineering contractors are just temporary members of staff as the project requires lots of people for 1 year so need to have a few arguments of your skills filling a hole in the permies set to be comfortably outside.

65k is pretty good in O&G especially in a large company. I left a permie role with 7 years experience in the 40-45k range, SE based, and i know principal engineers who take home around the 65k range.

[Ninja1980]

Depending on the area of oil and gas, 65k is a good full time wage and usually 10+ years experience. My current ClientCo is trying to switch me to permie so have a similar decision to make.

Things to think about:

O&G companies are swamped one year and dead the next so the promise of a long contract is worthless, that's why most of us are on 6 month contracts with one weeks notice at any time, including within the contract period. How important is job security to you. If you prove yourself as a contractor they will let permies around you leave before letting you go. If you're average you get benched. if you're average and expensive you get benched first.

Fortunately companies are quiet when their neighbours are in need of contractors, so outside the 7 year dip it's quite easy to find a role if you're not too fussed on switching locations or have a warchest to last while you wait.

Permies at current ClientCo work 35 hour weeks, take that into consideration along with benefits/sick/holidays etc.

Do you want to and are you good enough to become principal/chief/director? Being a permie stuck in the same role for 5 years is tulip when you would take home double being a contractor. If the company sees you becoming the next xxxxx then the enjoyment and pay in the next role may be a big factor.

IR35 is a gamble in engineering if you dont have the right contract or conditions. We are generally brought in to fill a gap on a project where they dont have the resources or right skill mix for the year or 2 the project runs, sounds exactly like temporary staff. It's highly unlikely you will get investigated but if you do, you lose all the financial benefits of being a contractor, a contract of 'years' needs to be sorted. I now have 3 at current clientco for each project i'm involved in with a explanations as to why current permies can't do the role and i make sure i do different hours etc to do as much as i can to highlight that i am not permie in disguise. Fellow contractor was in the same ClientCo for 7 years and was fine with IR35.

A 450 day rate should see you around the £6k per month after everything taken into account.

Its a personal decision, do you want the long term stability and benefits or the fast cash with risk attached.

The fact that engineering contracts are generally defined length project work is a good thing in terms of IR35, not the other way around? or have I missed something?

Also, £65k in the O&G industry for anything more than 6-8 years experience is quite poor. I would take the contract option.

[BlasterBates]

Do your own calculations:

I typed 450 per day into this website

<snip>

To get the same income via permanent employment would require a salary of £80,917.

...and that's inside IR35

[Segush]

It pretty much depends on your personal situation. I would have stayed in my previous staff job if I had been on that salary. But I got stuck after 5 years and had to leave or be happy with what I was given. Now on my first contract I would not be able to afford working here (with all the cost associated with renting commuting to work etc) with that staff package, it would just not work for me unless I were considering moving here....

[jamesbrown]

Presumably that's why they're offering £65k then. Is it unattractive when you've factored in 4 weeks holiday?

But no other benefits. A 65k employment package will likely come with significant extras. There's an element of subjectivity of course, but it doesn't sound like the OP really wants to become a contractor, so there would presumably have to be a bigger financial incentive. I don't see one on 450pd under a caught scenario. Anyway, enough mindless speculation for one day. Time to do some proper work

[d000hg]

450pd for 240 days per year, assuming 60% of take home under a caught scenario, roughly equates to that 65k per year salary, so very roughly speaking, it's pretty unattractive.

Presumably that's why they're offering £65k then. Is it unattractive when you've factored in 4 weeks holiday?

Can anyone do the maths proper, I don't know how it works once you factor in both NI types and IR35 Tax Calculator - IR35 Tax Calculators, Contracting News, Guides and Solutions for UK Contractors reckons even inside IR35, £450 is worth a chunk more - but all these calculators use slightly different systems.

A very good point indeed. I was (possibly/as usually incorrectly) assuming a permie salary and benefits would have made this a pretty unattractive option.

I hadn't thought about benefits other than holiday though. On a £65k job you'd presumably expect a decent package like matched pension and maybe even healthcare?

[Scoi]

Depending on the area of oil and gas, 65k is a good full time wage and usually 10+ years experience. My current ClientCo is trying to switch me to permie so have a similar decision to make.

Things to think about:

O&G companies are swamped one year and dead the next so the promise of a long contract is worthless, that's why most of us are on 6 month contracts with one weeks notice at any time, including within the contract period. How important is job security to you. If you prove yourself as a contractor they will let permies around you leave before letting you go. If you're average you get benched. if you're average and expensive you get benched first.

Fortunately companies are quiet when their neighbours are in need of contractors, so outside the 7 year dip it's quite easy to find a role if you're not too fussed on switching locations or have a warchest to last while you wait.

Permies at current ClientCo work 35 hour weeks, take that into consideration along with benefits/sick/holidays etc.

Do you want to and are you good enough to become principal/chief/director? Being a permie stuck in the same role for 5 years is tulip when you would take home double being a contractor. If the company sees you becoming the next xxxxx then the enjoyment and pay in the next role may be a big factor.

IR35 is a gamble in engineering if you dont have the right contract or conditions. We are generally brought in to fill a gap on a project where they dont have the resources or right skill mix for the year or 2 the project runs, sounds exactly like temporary staff. It's highly unlikely you will get investigated but if you do, you lose all the financial benefits of being a contractor, a contract of 'years' needs to be sorted. I now have 3 at current clientco for each project i'm involved in with a explanations as to why current permies can't do the role and i make sure i do different hours etc to do as much as i can to highlight that i am not permie in disguise. Fellow contractor was in the same ClientCo for 7 years and was fine with IR35.

A 450 day rate should see you around the £6k per month after everything taken into account.

Its a personal decision, do you want the long term stability and benefits or the fast cash with risk attached.

[jamesbrown]

A very good point indeed. I was (possibly/as usually incorrectly) assuming a permie salary and benefits would have made this a pretty unattractive option.

450pd for 240 days per year, assuming 60% of take home under a caught scenario, roughly equates to that 65k per year salary, so very roughly speaking, it's pretty unattractive. On a purely financial basis, the permie position sounds better and, without the other benefits of being a contractor (i.e. not being treated like a permie and, by the sounds of it, not really wanting to be a contractor), it sounds pretty clear cut to me. Any movement upwards on that 65k?

[northernladuk]

Unless you go contract and opt in to IR35.

A very good point indeed. I was (possibly/as usually incorrectly) assuming a permie salary and benefits would have made this a pretty unattractive option.

[d000hg]

Contracting is not an option in your situation unless you want to be looking over your shoulder every day and have the potential of losing everything you own a few years down the line.

Unless you go contract and opt in to IR35.

[MyUserName]

Please explain. How is the tax man going to know that he was planning on staying at the company for years? If the contract is outside IR35 and his working conditions outside IR35 then he still has no employee rights - no holidays or sick pay, no redundancy, no exployee rights.

It is not as clear cut as any of that. A lot of it has to do with intend of the client and intent of the contractor and the actual working relationship involved.

If you are working as a contractor purely because you get to keep more money that way then you are walking into exactly what IR35 was designed to trap.

The role that the client is trying to fill is one of an employee, if you fill it with a contractor then that pretty much makes him a disguised employee and inside IR35.

[northernladuk]

Had me rubbing the screen and then thinking I had a flea inside the laptop.

Doh!

LOL... and have you tried moving the sliders on SimonMac's avatar yet??

[geoffreywhereveryoumaybe]

Like the Flea!

Had me rubbing the screen and then thinking I had a flea inside the laptop.

Doh!

[northernladuk]

Please explain. How is the tax man going to know that he was planning on staying at the company for years? If the contract is outside IR35 and his working conditions outside IR35 then he still has no employee rights - no holidays or sick pay, no redundancy, no exployee rights.

HMRC asks the client what the role is and if he sees it as enduring. If the client they demonstrates this role is part of their heirarchy and strategy going forward it becomes obvious it isn't a short term role with deliverables, even if the the OP managed to word it as such, which he would have serious trouble doing.

The contract might be outside IR35 but his working practices cannot if the client sees the role as a normal vacancy. The client will expect that person to be a resource to the company and do as requested which would be D&C. It is the same role, the only difference will be how the OP is paid. If that can stand up in an IR35 investigation then HMRC have made a bigger balls up of IR35 than we thought.