ChatterBank0 min ago
Contract v Permanent salary
4 Answers
I am currently working as a contractor on a daily rate but the company I work for want me to go permanent with them.
Is there a formula I can use to convert my daily rate to an annual salary so that I can use this when I negotiate with them for a comparable annual salary? How much do I need to take out of the equation now that I would be getting pension, health insurance & other benefits?
Is there a formula I can use to convert my daily rate to an annual salary so that I can use this when I negotiate with them for a comparable annual salary? How much do I need to take out of the equation now that I would be getting pension, health insurance & other benefits?
Answers
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As a rough guide, you can reckon on working 220 days a year after you deduct weekends, bank holidays & holidays plus a few days on the sick.
As to how much the benefits are worth, ask your employer. Many employers (mine included) like to put a money value on the benefits given, hoping that you will think you are being paid more � my employer even gives a monetary value to my annual holiday (double counting or what!).
Bear in mind that if an employer gives you a benefit which they claim costs them X pounds, the benefit may be worth nothing to you, in that it is something you don�t want (what gain is life insurance if you have no dependants?)
As to how much the benefits are worth, ask your employer. Many employers (mine included) like to put a money value on the benefits given, hoping that you will think you are being paid more � my employer even gives a monetary value to my annual holiday (double counting or what!).
Bear in mind that if an employer gives you a benefit which they claim costs them X pounds, the benefit may be worth nothing to you, in that it is something you don�t want (what gain is life insurance if you have no dependants?)
As an addition to my last post � there are a number of other things you need to consider.
Let�s say you are paid �100 per day on your contract rate. From my previous post, you will be grossing around �22,000 per annum. If the company are providing a pension, health care plus sick pay benefits, redundancy etc. you can probably reckon on a notional value of 10% of your salary. And therefore might reasonably ask for �20,000.
But more importantly, you need to consider the market rate for your job. You might find that your employer is paying you well over the odds (to employ you on a contract basis), since they can get rid of you at a moments notice, and others doing your job for the company are earning nowhere near the amount you are paid contract.
Conversely, the company may be getting a good deal at your contract rate and want to make sure they keep you (at such a low rate).
Something else to consider is that you have no employment rights until you have been employed for a year � until then, the company can sack you for no reason at all � and you cannot claim unfair dismissal (unless they sack you based on sex discrimination).
Don�t forget that the company are likely to want you to contribute something towards your pension which reduce your take home pay.
If you are not being paid a massive premium rate as a contractor, my advice is to try and secure a salary at your gross contract rate. Look at things from your employers point of view � they are getting an employee that they know they want � if they had to take on an unknown from outside, it could take that person up to 6 months to learn the company processes to be of significant use to the company.
Good Luck !!!!
Let�s say you are paid �100 per day on your contract rate. From my previous post, you will be grossing around �22,000 per annum. If the company are providing a pension, health care plus sick pay benefits, redundancy etc. you can probably reckon on a notional value of 10% of your salary. And therefore might reasonably ask for �20,000.
But more importantly, you need to consider the market rate for your job. You might find that your employer is paying you well over the odds (to employ you on a contract basis), since they can get rid of you at a moments notice, and others doing your job for the company are earning nowhere near the amount you are paid contract.
Conversely, the company may be getting a good deal at your contract rate and want to make sure they keep you (at such a low rate).
Something else to consider is that you have no employment rights until you have been employed for a year � until then, the company can sack you for no reason at all � and you cannot claim unfair dismissal (unless they sack you based on sex discrimination).
Don�t forget that the company are likely to want you to contribute something towards your pension which reduce your take home pay.
If you are not being paid a massive premium rate as a contractor, my advice is to try and secure a salary at your gross contract rate. Look at things from your employers point of view � they are getting an employee that they know they want � if they had to take on an unknown from outside, it could take that person up to 6 months to learn the company processes to be of significant use to the company.
Good Luck !!!!
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