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grumpyjr
23rd September 2016, 19:03
Hi All,

First post so please go easy on me NorthenLad :wink I promise I have read all the guides and been a long time lurker.

I am in a contract at the moment and have been offered a fairly decent Permie package. I just wanted to see what the thoughts are on an equivalent salary to £500 per day working 220 days a year? I have read a few posts on here but they seem to be quite old and so I was just wondering what the current thinking is based on the changes to Dividend tax etc etc.

Some experienced contractors I've spoken to have suggested deducting around 30% from turnover to get a "take home" figure. Just wondering what the general consensus was as the package offered equates to around 90k so take home of about 58k.

Whorty
24th September 2016, 18:14
There are various calculators on the web that can give you an idea. At 500 per day, inside IR35 it will be a perm salary of about 90k, outside IR35 something like 114k. These will package values so included in these will be pension, bonus, BUPA etc that you might get as a benefit.

Very few companies will pay a contractor a salary that is anywhere near their day rate equivalent.

In my line of work, my day rate is 550-600 yet a perm salary would be 60k plus benefits (so total package around 70k). Well short of my day rate, but then I'd get this every month and have no time on the bench which is what the extra day rate cash pays for :)

And who doesn't like bench time ... catch up on the gardening, Tour de France, long holiday :banana:

greenlake
24th September 2016, 19:12
I am in a contract at the moment and have been offered a fairly decent Permie package.

http://assets.amuniversal.com/67a80fc06cca01301d50001dd8b71c47

malvolio
24th September 2016, 19:40
£500 a day is £62.50 an hour is roughly £62,500 to get the same net takehome. Thats very roughly...

SueEllen
24th September 2016, 19:40
There are various calculators on the web that can give you an idea. At 500 per day, inside IR35 it will be a perm salary of about 90k, outside IR35 something like 114k. These will package values so included in these will be pension, bonus, BUPA etc that you might get as a benefit.

I actually had a company interview me for a role with a salary around the £110K mark. The interviewer sounded suicidal so I chose not to progress onto the next step.

I personally find it amusing that when some permies interview you they don't realise that if they sound miserable then unless you are desperate you aren't going to take the role.

blackeye
25th September 2016, 00:36
£500 a day is £62.50 an hour is roughly £62,500 to get the same net takehome. Thats very roughly...

How?

jamesbrown
25th September 2016, 01:24
How?

Well, I think you can deduce the rule of thumb being applied. It's pretty useless though. They all are. Apples meet pears. You can't use a contractor's day rate as a bargaining chip or yardstick for a permie salary. The best way to benchmark a permie salary is to look at the permie market, not extrapolate from a contract rate.

MrMarkyMark
25th September 2016, 06:17
Well, I think you can deduce the rule of thumb being applied. It's pretty useless though. They all are. Apples meet pears. You can't use a contractor's day rate as a bargaining chip or yardstick for a permie salary. The best way to benchmark a permie salary is to look at the permie market, not extrapolate from a contract rate.

In IB, I have seen a guy jump straight from contractor to Director, just recently. The guy would have been on a good day rate, others on not much more may only make VP, or at worse AVP.
Obviously, you need to "sponsored" by senior management so sometimes there is much more to it, than purely day rate.

blackeye
25th September 2016, 16:00
Well, I think you can deduce the rule of thumb being applied. It's pretty useless though. They all are. Apples meet pears. You can't use a contractor's day rate as a bargaining chip or yardstick for a permie salary. The best way to benchmark a permie salary is to look at the permie market, not extrapolate from a contract rate.

Agreed.

I certainly don't think £500/d = £62k perm, even with great benefits. Unless you start putting value on the intangible benefits such as development etc.

Fronttoback
25th September 2016, 16:14
In IB, I have seen a guy jump straight from contractor to Director, just recently. The guy would have been on a good day rate, others on not much more may only make VP, or at worse AVP.
Obviously, you need to "sponsored" by senior management so sometimes there is much more to it, than purely day rate.

I have seen this too. If you are useful and on a good day rate and they want you to go perm, if your contract market is good you can leverage that to get a senior perm role. Depends on market conditions at the time you approach this transition. But in principal I've seen several (non-management) contractors cross over into senior perm management roles. Obviously you have to be polished to pull this off. Not a boiler room techie who's never had a shave.

And I'm talking about 200k/Yr plus bonus IB perm roles, fr 750/day sterling gigs.

MyUserName
25th September 2016, 22:49
You cannot compare the two. They just do not equate.

I am permie now after leaving contracting a few years ago. I have a young family and need to be able to do the school run as my wife cannot drive. I want to be home before they go to bed etc. the only contract I got offered was Bloomburg in London at £650 a day but they expect long hours. Even if I somehow made that work 6 months later I might have everything thrown up in the air again if my next gig is somewhere else

I got a permie job where the commute is 45 minutes each way every day. For the forseeable future that will not change. I can move back and forth between teams doing everything from compile work up the GUI side and no one minds me training in the car park at lunchtime, even when I do it in full plate armour. Several people have even come and joined in, although not in armour.

No accoutants, no agents, no HRMC, no staying on top of legislation to make sure I am IR35 compliant. None of that hassle at all.

The benefit of a permie job have been (for me) security, regularlity and reduced stress, you cannot really compare that in a maths calculation because those feelings wil vary by person and by time - for some people what I have described above is probably a form of torture!

VectraMan
26th September 2016, 08:00
£500 a day is £62.50 an hour is roughly £62,500 to get the same net takehome. Thats very roughly...

Extremely roughly.

I think the hourly rate x 1000 kind of works if the question is what the equivalent skilled and experienced person would get as a permanent salary vs. contract rate. Though in my personal experience of going permie the salary was about 10-20% more than that.

If the question is what salary do I need to keep the same take home then the answer is: more than anyone is going to pay you.

malvolio
26th September 2016, 09:10
Extremely roughly Like I said... But there is a degree of calculation behind it.


If the question is what salary do I need to keep the same take home then the answer is: more than anyone is going to pay you.
Yes, but that is the basis of the 1000*hourly estimate. IT allows for the things that contractors have to pay for or that permies get for "free" (aka paid for by their employer, and it's a long list) and return the same net pay from the gross income. Also permies' salary is a lot more that what appears in your pay packet; most companies operate at 75%-100% overhead on your declared salary. It's that cost of employment you are comparing with, not the headline salary

All that aside, if you are contracting for the money, you're doing it wrong. There are many other benefits to consider on both sides, as MyUserName explained earlier.

LondonManc
26th September 2016, 10:03
I wouldn't compare the two.

What you want to go permie for is different to what you wanted to go contracting for, or should be.

It's very personal. I went contracting for the working style - my line of work is project-based, so ideally lends itself to contracting and gives me a far greater variety of experience.

If (and it's a big if) I was to go back perm, it would be to climb the corporate ladder. I wouldn't see the point in doing the same thing at multiple companies as a perm. I'd therefore want to take the first step on to a ladder at director role in IB (head of MI/BI department in other industries). I'm happy contracting at the moment though, so I'm content to wait for the approach to go perm.

If you've noticed, I've not even mentioned rate or salary; it's not relevant to me because it's about the role. As such, it'll have the right remuneration package attached. ;)

Fronttoback
26th September 2016, 10:30
Really not getting these guys who are touting lifestyle over cash. If you are upping your risk in the contract market, you must have increased cash compensation- otherwise you have not hedged your bets properly.

Once you have that level of income, you must step into something similar in the permie world. Anything else opens you up to the following trick..

You have made a bit of dough and think you can go back into the permie world at a senior level because you have no financial pressure to complicate your career strategy- you have more career risk appetite. You'll be back on the tools within a year once you realise that you've been duped into some "director" perm role in order to milk your specialist contractor skills at a reduced rate! That is why cash must be king! Because then, if it backfires, you break even and don't go backwards. Don't be tricked by a job title of "director" into selling your specialist skills at a cheap rate. Director of what size team is important to ask. If you are starting up your own team, run a mile - you will get hired, the budget will disappear and you'll be "helping out" where your skills are useful.

LondonManc
26th September 2016, 10:48
Really not getting these guys who are touting lifestyle over cash. If you are upping your risk in the contract market, you must have increased cash compensation- otherwise you have not hedged your bets properly.

Once you have that level of income, you must step into something similar in the permie world. Anything else opens you up to the following trick..

You have made a bit of dough and think you can go back into the permie world at a senior level because you have no financial pressure to complicate your career strategy- you have more career risk appetite. You'll be back on the tools within a year once you realise that you've been duped into some "director" perm role in order to milk your specialist contractor skills at a reduced rate! That is why cash must be king! Because then, if it backfires, you break even and don't go backwards. Don't be tricked by a job title of "director" into selling your specialist skills at a cheap rate. Director of what size team is important to ask. If you are starting up your own team, run a mile - you will get hired, the budget will disappear and you'll be "helping out" where your skills are useful.

You're clearly ignorant to the director roles within IB then. The appropriate salary comes with the director role; hence no need to talk about it. :)

MrMarkyMark
26th September 2016, 11:05
Really not getting these guys who are touting lifestyle over cash. If you are upping your risk in the contract market, you must have increased cash compensation- otherwise you have not hedged your bets properly.

Once you have that level of income, you must step into something similar in the permie world. Anything else opens you up to the following trick..

You have made a bit of dough and think you can go back into the permie world at a senior level because you have no financial pressure to complicate your career strategy- you have more career risk appetite. You'll be back on the tools within a year once you realise that you've been duped into some "director" perm role in order to milk your specialist contractor skills at a reduced rate! That is why cash must be king! Because then, if it backfires, you break even and don't go backwards. Don't be tricked by a job title of "director" into selling your specialist skills at a cheap rate. Director of what size team is important to ask. If you are starting up your own team, run a mile - you will get hired, the budget will disappear and you'll be "helping out" where your skills are useful.

To be very frank, its the cash that gives me the lifestyle I want.

i.e. the choice of having long breaks, travelling etc. the ease of getting involved in more than the day job etc. etc.





3

VectraMan
26th September 2016, 12:02
To be very frank, its the cash that gives me the lifestyle I want.

i.e. the choice of having long breaks, travelling etc. the ease of getting involved in more than the day job etc. etc.


Time for this one:

Dilbert Comic Strip on 1998-08-19 | Dilbert by Scott Adams (http://dilbert.com/strip/1998-08-19)

MrMarkyMark
26th September 2016, 12:44
Time for this one:

Dilbert Comic Strip on 1998-08-19 | Dilbert by Scott Adams (http://dilbert.com/strip/1998-08-19)

Yep, love that one :happy

malvolio
26th September 2016, 13:35
To be very frank, its the cash that gives me the lifestyle I want.

i.e. the choice of having long breaks, travelling etc. the ease of getting involved in more than the day job etc. etc.





3
Someone else who hasn't studied motivational theory... :happy

That choice is not a function of cash income, it is a function of being your own boss. Freedom is an enabler, income is merely a comfort. I can earn more a year as a permie, so why am I not one and have absolutely no desire to be one?

MrMarkyMark
26th September 2016, 13:46
Someone else who hasn't studied motivational theory... :happy

That choice is not a function of cash income, it is a function of being your own boss. Freedom is an enabler, income is merely a comfort. I can earn more a year as a permie, so why am I not one and have absolutely no desire to be one?

Good point :).

Oh, so can I.

The thing is, it was going to be employed to start a BI practice from scratch and being its practitioner.
Basic around £130K, Bonus around £30K

They would have wanted every hour God sends, so gave that one a swerve.
Guess that proves your theory :laugh





1

blackeye
26th September 2016, 19:55
I have seen this too. If you are useful and on a good day rate and they want you to go perm, if your contract market is good you can leverage that to get a senior perm role. Depends on market conditions at the time you approach this transition. But in principal I've seen several (non-management) contractors cross over into senior perm management roles. Obviously you have to be polished to pull this off. Not a boiler room techie who's never had a shave.

And I'm talking about 200k/Yr plus bonus IB perm roles, fr 750/day sterling gigs.

I've seen this a few times too. The transition was primarily programme manager (very senior, running huge multi million £ programmes) to director level perm.

From what I've heard, the perms are not any more secure than the contractors at this level.

vetran
26th September 2016, 21:08
I've seen this a few times too. The transition was primarily programme manager (very senior, running huge multi million £ programmes) to director level perm.

From what I've heard, the perms are not any more secure than the contractors at this level.

I swapped a lower salary long term for less stress. On my third child and watching lots of colleagues having heart attacks & divorces I think it was a good choice. We still have a lifestyle most people envy and I have just been playing 5 little monkeys with my little one after spending the evening out with mates. I'm not in a hotel or working late to keep up with the youngsters.