Assesssing Job (Temporary Employee vs Contractor)

S

Sheepshooter

Guest
Hi,

I need some help comparing two jobs on a purely finanicial basis, so if anyone could help I would greatly appreciate it.

1) Current Job: Temporary Employee - 45k per annum (20 days holidays, no other benefits)

2) Job Offer: Contractor - 27 euro per hour (would need to set-up my own company and all cost associated with that, etc)

I don't know where to start when comparing these, so even if you point me to some information online that would be a good start.

Thanks
 
Generally speaking you will work on average 2000 hours in a year so an hourly rate of €27 equates to an income for the company of approx €54K.

Note that this is company income and not personal.
Startup cost for a simple limited company should not exceed €400, this is to get a company to do it for you and not to do it yourself.

Out of this €54K you must pay yourself a salary (and associated income tax)
The remainder can be paid into a pension fund or taken as expenses if you are incurring legitimate business related expenses, such as mileage etc.


How long does the temporary staff position last versus how long is the contract on offer?
Are both options open to you for the same job or are there 2 positions in question?
 
Thanks for your reply

There are two positions in question.

The temporary staff position is my current job - I'm coming to the end of my initial 6 month contract in June, and they're talking about offering me another 6 month contract on the same terms.

The contract position is a job I've been offered with another company, its also a six month contract.

From a purely career prospective the contract position is the better option, but i need to balance that with the finanicial aspect. Both positions are likely to last longer than 6 months mentioned, but the temporary staff position would have the edge in this regard.
 
From a purely financial point of view, if you want to head down the contracting route you need to engage an accountant if you incorporate as a limited company.
I pay €2k annually for this service, could probably find cheaper but I'm very happy with the service I am getting.

Outside of that annual charge then it's just down to the fact that you will lose all the benefits that a staff person enjoys such as holidays, sick pay, VHI etc...

It is a close call in your case (€45k vs €54k), is the rate of €27/hour set in stone or can you negotiate?
Are you particularly skilled in an area that is in demand?
Do you know anybody else currently contracting in a similar role that might be able to give you an insight into the rates others are achieving?
 
Contractor scenario
37.5hours @ 27 = 1012.5 per week
10 bank holidays per year - unpaid
20 days holidays per year - unpaid
Insurance - covered in an unbrella (costs about 750 to do yourself, upfront)
Accounting - about 400-500 to do at cheapest (counting in startup company formation costs) or 4% via Prima or 5% via CXC
46 week year @ rates above is 46575
Minus accounting is 44246-44712 depending on who you pick
Bear in mind as a contractor you lose your PRSI A contribution which means you could have problems getting welfare if you are out of work again (technically you are still entitled to means tested JSA but anecdotal evidence suggests you really have to fight a case for this in practice)
Ask if the contract is rolling and if there are hard limits on renewals - be careful you don't make the mistake I made and end up in a company which reveals after 6 months that they have just started a policy of 11 months maximum time for contractors. Its worse if its just a flat 6 month with no renewal option - this I would say absolutely no to. (Reason I took contract above was the agent told me he had other contractors in there for 3 years).

Up to yourself, you won't have huge savings out of 44k a year so think carefully. If you take temp and stay on they have to treat you exactly the same as an employee after 2 years which they are not obliged to do with contract staff. The rate is poor for contract in that scenario to be honest.
 
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