Anyone who has 'went perm', how has it been?

[wattaj]

(52*5)-25-8 = 227 working days for a perm gig a year. Sick day policies are so different place to place with some only giving ssp. But let's just be generous and say an extra 7 and go with 220 days (happens to be same 44 weeks most contract calculators use).

You really don't get much in terms of other benefits with a monetary value besides a usual 3 or 4% pension contribution. Rest of the benefits are fluff that employers don't pay for. Let's just give a generous monetary value of 3k for these fringe benefits you likely won't use.

So let's say 4% pension contribution on 55k salary.

That's an extra 2200 a year.

So that's 60200 for 220 days a year.

At 500 a day inside ir35 you need to pay employer ni let's call that 13%. So gross income of 435 a day.

435 x 220 = 95,700

95700/60200 = 1.59 or 159% of the equivalent perm salary.

That's being quite generous.

That 59% increase in pay is your compensation for the risk of taking short term contract work. People in multi year permicontract work are getting paid a premium they don't deserve and are milking the system.

I've covered this in a few different threads but a lot of people here still say the same garbage about perm equivalency and they are misunderstanding what they are reading or hearing.

Employers have several additional costs with perm employees such as training and onboarding costs..

These are not costs or benefits to an employee so when making an assessment for you as an employee or contractor you should ignore these things. They are only for an employer/client to consider not you.

Almost.

You seem to ignore the most inside roles quote an "umbrella rate" from which both Employee and Employer's National Insurance should be deducted. And one cannot ignore training costs; yes, the company will pay for the employee, but these are also costs to the contractor and should be accounted for.

Ok, one can ignore company fees, expenses, and insurances for inside roles, but the contractor may also have a company for those occasional outside roles, so perhaps not.

But do not discount the "fluff" so readily. Large employers will offer staff many benefits that a contractor would have to pay for put of taxed income.

Swings and roundabouts, but the difference is not quite as impressive as you are making out.

[WTFH]

Fluff...
pension - 5-10%
health insurance- £800
phone - £400
laptop - £500
Software - £100
Insurance - £400

there’s over 2k in fluff before the pension.
the reality is that the difference is not 59%, it’s probably half that if you genuinely looked at the figures.
Hourly rate x1000 is a good guide for real contractors. For permie-tractors who have been working for the same “client” for more than 2 years, well, speak to HR.

[jayn200]

Almost.

You seem to ignore the most inside roles quote an "umbrella rate" from which both Employee and Employer's National Insurance should be deducted. And one cannot ignore training costs; yes, the company will pay for the employee, but these are also costs to the contractor and should be accounted for.

Ok, one can ignore company fees, expenses, and insurances for inside roles, but the contractor may also have a company for those occasional outside roles, so perhaps not.

But do not discount the "fluff" so readily. Large employers will offer staff many benefits that a contractor would have to pay for put of taxed income.

Swings and roundabouts, but the difference is not quite as impressive as you are making out.

I included employer NI. I actually put down 13% and it's a little less than that on the total amount. I also put down 3000 for those fluff benefits. I happen to know most employers actually spend less than 3k on those but again I was being generous. You'd be surprised how small the premiums on those misc insurance packages are.

You're right I didn't include the umbrella costs and also didn't include time spent looking for new contracts.. some other minor things. This was just a quick and dirty calc to show that 55k is not where close to 500 per day when it comes to take home pay. There is a heavy premium paid to contractors, we all know this. I don't know why people try to pretend it isn't there. If the premium wasn't there most of us wouldn't be contractors.

Every single contractor out there whose at 500 day rate can get a perm role at 55k or higher so you wouldn't have any contractors if the earnings matched up, but we all know they don't. Contractors are compensated for the shorter duration of their employment and also the fact that to an employer they are saving on many costs that they theoretically don't have with contractors vs perm employees.

Of course as a contractor you shouldn't care what costs an employer/client has.

I mean honestly if you think 55k salary is equivalent to 500 day (inside) contract then you shouldn't be contracting. Go Perm. Why the hell are you contracting? In your mind you can obviously earn more in a perm role.

[WTFH]

... 55k ... 55k ... 55k ...

There’s only one person on this thread obsessed with 55k being the equivalent of £500 per day, and it’s the one complaining that they know better than everyone else and they aren’t being taken seriously.

You might learn something if you switched to receive, rather than sticking to transmit all the time.

[wattaj]

I mean honestly if you think 55k salary is equivalent to 500 day (inside) contract then you shouldn't be contracting. Go Perm. Why the hell are you contracting? In your mind you can obviously earn more in a perm role.

Now, now; let's not get prissy.

I don't think that a £55k salary is equivalent to a £500 pd rate, but I do contend that the difference is not quite so great as it might first appear. And it's certainly not as great as 59%; even acknowledging your admittedly fag-packet calcs.

For example: note that I mention Employee and Employer National Insurance; that's ~12%(?) on top of your ~13% for an "umbrella rate" excluding the umbrella margin.

My approximation -- ignoring pension contributions and "fluff" -- comes much closer to 37%... BUT, it's the pension contributions and "fluff" that will narrow the difference to the point where the arseache in being an inside IR35 contractor make any such difference almost meaningless for most.

I'm happy to have a battle of the spreadsheets, but it's likely to be pointless: some will want to agree with you, others will want to agree with me. Such is life.

[elsergiovolador]

Fluff...
pension - 5-10%
health insurance- £800
phone - £400
laptop - £500
Software - £100
Insurance - £400

there’s over 2k in fluff before the pension.
the reality is that the difference is not 59%, it’s probably half that if you genuinely looked at the figures.
Hourly rate x1000 is a good guide for real contractors. For permie-tractors who have been working for the same “client” for more than 2 years, well, speak to HR.

People miss it that contractor has to buy all the tools (e.g. laptop, software, phone) and being inside one cannot claim it as a cost to business, however employer can do that with employee's tools.

[PCTNN]

So let's say 4% pension contribution on 55k salary.

Really? That low? Before going contracting I've had 3-4 permie jobs (mainly in banking) and THE LEAST I ever got was 7% matched contribution. And this was still pish compared to some of my pals working at universities and local government (although lower salary).

Also, yes it's good to be cautious and not take annual bonuses into consideration but again, does it ever happen to not get a bonus? I've always got at least 8% every year.

And another thing: depending on the company, permies can get that random 2% salary increase due to increase in cost of life. Every. Year.

Last but not least, and this is not a material benefit but can turn into one: if you stay put in a permanent job and do a little bit more than the bare minimum, you're basically in pole position for a promotion. In big companies, people leave all the time, so opportunities to capitalise on that are plenty.

This is all stuff that contractors don't get, and as someone said, it was fine to miss on these things when contractors used to get paid 2x what the permies used to, but nowadays it's a little different and it's only getting worse.

[PCTNN]

Really? That low? Before going contracting I've had 3-4 permie jobs (mainly in banking) and THE LEAST I ever got was 7% matched contribution. And this was still pish compared to some of my pals working at universities and local government (although lower salary).

Also, yes it's good to be cautious and not take annual bonuses into consideration but again, does it ever happen to not get a bonus? I've always got at least 8% every year.

And another thing: depending on the company, permies can get that random 2% salary increase due to increase in cost of life. Every. Year.

Last but not least, and this is not a material benefit but can turn into one: if you stay put in a permanent job and do a little bit more than the bare minimum, you're basically in pole position for a promotion. In big companies, people leave all the time, so opportunities to capitalise on that are plenty.

This is all stuff that contractors don't get, and as someone said, it was fine to miss on these things when contractors used to get paid 2x what the permies used to, but nowadays it's a little different and it's only getting worse.

This is to say that I am on 500 a day (inside ir35) and if someone offered me a permanent job at 70k basic salary (plus benefits), I would take it without thinking one second.

[Lance]

This is to say that I am on 500 a day (inside ir35) and if someone offered me a permanent job at 70k basic salary (plus benefits), I would take it without thinking one second.

dunno why. Perm vs. perm there.....
Inside IR35 = perm for pretty much everything that counts

[PCTNN]

dunno why. Perm vs. perm there.....
Inside IR35 = perm for pretty much everything that counts

That's not what I've found.

For example, when projects started to get canned due to covid at my current client, it wasn't the permies' heads to be the first on the chopping block.

Contractors don't get to go to training/conferences and it's not even a case of you need to pay it yourself, it's more the case of you can't go to the conference because your permie counterpart is so you need to be in the office.

It's contractors who are undervalued, not permies, despite contractors knowing more than the permie workforce combined.

And this is for around 1000quid a month difference.