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Been offered a perm role - but what's this 20% in their calculations?

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    Been offered a perm role - but what's this 20% in their calculations?

    Hi all

    Currently contracting but but being offered a perm role (a few of us are)

    In terms of the salary negotiation, the word is that HR will argue the perm salary equivalent = (Day rate x 220 days) * 20%

    Yet no one - other than HR, who I haven't spoken to yet - can explain that 20% deduction

    I'm guessing it's tax related or an offset for the non-monetary comp they'll be paying me

    Any ideas?

    Cheers!

    PS: this might seem simple to some but I havent been a perm for 10 years!

    #2
    So £500 a day, 500x220x0.2 = £22,000 a year. Shome mishtake shurely?
    Down with racism. Long live miscegenation!

    Comment


      #3
      Been offered a perm role - but what's this 20% in their calculations?

      Assume you are will be doing the same role as a permie as you are doing now as a contractor?

      Then calculate how much tax HMRC will be looking for for your past contract (as will be so IR35 caught) and factor than in also

      Minus 20% or times 20% ???


      Sent from my iPhone using Contractor UK Forum

      Comment


        #4
        Originally posted by NotAllThere View Post
        So £500 a day, 500x220x0.2 = £22,000 a year. Shome mishtake shurely?
        Come on man! You know it’s a 20% reduction

        Comment


          #5
          Originally posted by GhostofTarbera View Post
          Assume you are will be doing the same role as a permie as you are doing now as a contractor?

          Then calculate how much tax HMRC will be looking for for your past contract (as will be so IR35 caught) and factor than in also

          Minus 20% or times 20% ???


          Sent from my iPhone using Contractor UK Forum
          Minus

          Good point about the past contract thing.

          Better to negotiate a short break between roles then I guess?

          Comment


            #6
            Day rate x 220 days * (1- 20%)

            Wish I could get that permie or FTC.

            I'd only get Day rate x 220 days * (1 - 70%) That shows how much of a premium I get paid as a contractor + how much less tax HMRC are going to get post 2020

            Comment


              #7
              Seems a good deal, depending on what your current day rate is? The on cost of employing you as a perm can be a lot more than 20%. Employer's NI alone is about 13-14%. Chuck in health care, pension contribution, sick pay, holiday pay, training etc...

              Comment


                #8
                Originally posted by edison View Post
                Seems a good deal, depending on what your current day rate is? The on cost of employing you as a perm can be a lot more than 20%. Employer's NI alone is about 13-14%. Chuck in health care, pension contribution, sick pay, holiday pay, training etc...
                Thank you - useful reply. Day rate is £675 - how does that change the equation in your mind? Id be getting 26 days holiday, healthcare, pension etc

                Comment


                  #9
                  Originally posted by gypsymoth View Post
                  Thank you - useful reply. Day rate is £675 - how does that change the equation in your mind? Id be getting 26 days holiday, healthcare, pension etc
                  Based on that day rate, I would be looking for a salary of around £90-95k plus benefits. If they are offering you 220*675 = 148,500, minus 20% = 118,800, I would seriously consider the perm offer just in monetary terms (assuming you are getting the usual benefits like bonus, car allowance etc.)

                  If the HR person has any idea what they are doing, they will benchmark the new permanent role against data from specialist Reward Consultancies. I've done this exercise myself a lot this year with HR for a whole IT department. At that point, I would expect the Head of HR to say that £118k is too high a salary!
                  Last edited by edison; 16 September 2019, 19:08.

                  Comment


                    #10
                    Originally posted by gypsymoth View Post
                    Minus

                    Good point about the past contract thing.

                    Better to negotiate a short break between roles then I guess?
                    Will make zero difference, just curious to why you would believe it would ?

                    Chap down the pub tell you this?


                    Sent from my iPhone using Contractor UK Forum

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