Reply to: Contract versus Perm

[Whorty]

Yes, remarkable how you don't get ill so much when you're a contractor ;-) I think if I was genuinely getting a higher salary as a contractor, that would obviously balance out the lack of benefits. All my colleagues are perm and on a higher wage than me, which kinda sucks.

So the perms are earning more than you, and you're a contractor? Inneresting!

[hobnob]

I'm currently earning £51,000 a year working three days a week as a contractor and I like the freedom it gives me. I've been offered a perm staff job earning £50K for five days. Which works out better financially when you take into account 25 days paid holiday + 8 days paid bank hols + 3% match on pension contributions?

Coming back to the original post, it would help to be more specific about those numbers:

* You mentioned "3% match on pension contributions". Do you mean that you will contribute 5% and the employer will contribute 3%, i.e. the standard for auto-enrolment?

* I assume that £50k is the gross salary for the permie role (since it's a round number). Looking at a salary calculator website, and assuming that you make 5% pension contributions, your net salary would then be c. £35,800 (from July onwards).

* Is your current contract going through an umbrella or your limited company? Is that £51,000 the company's income (based on your daily rate) or is that what you get personally? If you're using a limited company, how are you splitting your income between salary and dividends? Are you reclaiming expenses which you'd have to pay for the permie role? Are you making pension contributions at the moment?

Based on all that, you should be able to compare the net income for both roles. If you post your figures here, other people can comment, but we can't do the sums for you.

In terms of holiday, you're currently doing 3 days a week. Is that always the same 3 days (e.g. Mon-Wed) or do you adjust them based on bank holidays? Putting it another way, how many billable days are you doing per year? I'd guess at a maximum of 150 (3 days per week x 50 weeks, with a couple of weeks off over Christmas/New Year).

There are 251 working days in 2022 (i.e. 365 minus weekends and bank holidays). If a permie takes 25 of those days as paid leave, they'll be working 226 days. I.e. even with the paid days off, you'd still be working 50% more days each year. Would you get 50% more income as take home pay?

[Gibbon]

Yes, remarkable how you turn up for work with dialysis neck lines in ;-)

FTFY

[northernladuk]

Yes, remarkable how you don't get ill so much when you're a contractor ;-) I think if I was genuinely getting a higher salary as a contractor, that would obviously balance out the lack of benefits. All my colleagues are perm and on a higher wage than me, which kinda sucks.

You need to read up on being a contractor and use the correct terminology. You said you change jobs being a contractor but you don't. Your job is being a contractor via a LTD, the work you do are gigs, assignments, whatever. Best not to call them jobs as it gets confusing.
Also you get the lowest salary that is possible as a contractor. Your salary is less than national minimum wage. Your income is much high as it's salary plus divs.

If you want to contract the use the right terms. It avoids confusion and problems down the road.

[fastandcurious]

Yes, remarkable how you don't get ill so much when you're a contractor ;-) I think if I was genuinely getting a higher salary as a contractor, that would obviously balance out the lack of benefits. All my colleagues are perm and on a higher wage than me, which kinda sucks.

[Whorty]

Yeah I'm new to contracting and I do get that being tied into a permanent role might feel like a prison sentence. The advantage of contracting is that I get to switch jobs often and work on a wider range of projects. But having no sick pay or paid holidays can be troublesome. Thanks for your thoughts in any case.

The sick pay and paid holiday should be covered by the extra pay you get as a contractor, so it shouldn't be troublesome. Seems you want the extra pay of a contractor, but then sick/holiday pay and all the benefits of a perm on top.

That's what NLUK was saying above ... what's important to you, is it just money (so take the contract at higher money) or is it the benefits that go with being a perm (like sick pay ... contractors don't get sick, it costs us too much money )

Contracting is not all about money though. Flexibility, time off between contracts (no income though) etc ....

[fastandcurious]

Yeah I'm new to contracting and I do get that being tied into a permanent role might feel like a prison sentence. The advantage of contracting is that I get to switch jobs often and work on a wider range of projects. But having no sick pay or paid holidays can be troublesome. Thanks for your thoughts in any case.

[northernladuk]

Ohhhh, sorry. I didn't realise there is an anti-permanent cult going on here. I guess I should have been initiated first.

I'm not saving lives or have a job that changes them so of course it's about the money. Would you work without it?

There is an anti everything culture going on because you've dumped this in General. A quick glance will tell you there isn't a single professional question in this area and the title does say 'All hope abandon ye who enter here. Seriously.'

Money can be a prime reason but not a prime motivator. Many a survey has been held about why people leave work and money was actually down around 5th place in most of them. If you take the best paying of the two but it is a boring job, long travel, no prospects, short term and whatever then your comment that it's all about the money is clearly wrong.

What I am getting at is there are other aspects to both roles you need to look at. The list is pretty long so have to look at what is important to you and work a list of pro's and cons. Job prospects, length of gig, location, tech you are working with, quality and location of company and so on. There are also massive differences between contract and perm to consider as well. Some on here couldn't go perm if it was the last job on earth for example. Your contract will end at some point soon so the benefits from that will disappear completely and the perm job suddenly becomes the best by far. You are comparing apples and pears after all.

It's not beyond the realms of possibility that the lower paid role is actually much more exciting and has better prospects so would be the best option in the short to medium term.

So, when we get people comparing apples and pears and focussing only on rate as you are I say what else is there to compare the two. Money isn't the only thing and longer term it's not the most important. You said that yourself when you said you liked the flexibility so you've contradicted yourself already. List everything out and then you will have a comparison between the roles. Add the money to that and see if the difference income can be offset by other pros for that role.

[d000hg]

Ohhhh, sorry. I didn't realise there is an anti-permanent cult going on here.

THere's not, just a very grumpy bugger. Clearly contracting doesn't make everyone happy

[fastandcurious]

Is there nothing else to consider bar the money that might help you make a decision? Nothing? Really? If you don't know what they are then we can't help you.

NF - Is there a magic 8 ball plug in we can use for questions like this?

Ohhhh, sorry. I didn't realise there is an anti-permanent cult going on here. I guess I should have been initiated first.

I'm not saving lives or have a job that changes them so of course it's about the money. Would you work without it?

[vetran]

Subtle clues if you read the question.

have you asked your accountant?

One thing I liked about being a contractor was having multiple contracts so I wasn't at the whim of just one ruthless customer. OK the biggest one sunk me but it took a year in a recession.

[northernladuk]

Subtle clues if you read the question.

I don't do subtle

That said he could have put a very sensible and intelligent post up. I don't do intelligent or sensible either it appears.

[d000hg]

Is there nothing else to consider bar the money that might help you make a decision? Nothing? Really? If you don't know what they are then we can't help you.

NF - Is there a magic 8 ball plug in we can use for questions like this?

Subtle clues if you read the question.

[northernladuk]

Is there nothing else to consider bar the money that might help you make a decision? Nothing? Really? If you don't know what they are then we can't help you.

NF - Is there a magic 8 ball plug in we can use for questions like this?

[cojak]

It’s not about the money, there’s little in it once you calculate pro rata and benefits - it’s about freedom vs stability.

which do you value more?