# How much extra do contractors get paid?



## stubarny (Oct 21, 2011)

Hello,

I used to assume that contractors get a kind of small 10%-20% premium over permanent staff because of the uncerntainty.

But I stumbled accross this advert today which is advertising a £500 per day contract for 3-6 months, leading to a £70k permanent job:
http://www.indeed.co.uk/viewjob?jk=...4q06ag622&from=ja&alid=4246bcfaeda9c1db&jva=1

So I calculate that the contract rate has a 64% premium over the permanent rate on an annualised basis? Does anyone know if this is normal?! Seems crazy given that contracting work is so easy to find (as far as I'm aware normally only 1 relevent person is interviewed for each contract position?)

Cheers,

Stu


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## Joe4 (Oct 21, 2011)

I don't know about the UK, but from what little sample size I have seen in the US, the contractors I knew made at least 50% more than the permanent staff.  But of course, they don't get company benefits (insurance, retirement, etc).


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## dk (Oct 22, 2011)

You also need to allow for the fact that contractors don't get paid for annual leave, public holidays and sick days.  Assuming 20 days annual leave, 8 public holidays (guess), and 5 sick days for the average worker then a contractor would need to get 15-20% more to allow for this alone.  Then add in the uncertainty as you mentioned and the lack of company benefits as mentioned by Joe and you can start to see where the % premium adds up.  We have a "consultant" who reports into the accounting manager but she gets paid more than twice as much as a daily rate than who she reports to.  However, she would be the first to go if we need to start cutting costs and shedding headcount.  On top of that she also needs to pay her payroll tax (doesn't apply to the UK i think but it's a approximately a 5% of gross) as well as cover her own expenses for things like professional subscriptions and insurance (most companies would reimburse professional employees and insurance would obviously be covered by the company).  

The other thing to consider is working hours.  Contractors who are offered a daily rate would be expected to work the minimum hours pretty much every day and there would be less leniency for leaving early for "doctors appointments" and Friday afternoons in the pub (and turning up late the next day!).

I'm basing this on my experiences in Australia but I think they operate similarly to what I've mentioned above in the UK (haven't lived there for 9 years but spent 27 years there before that).

EDIT: Oh yeah, just looked at the job advert and notice that they mention a £70k plus "fantastic bonus package".  Given that the job is working for a bank I'd imagine that they are not fibbing - you may be looking at £20k+ if they're having a good year and you perform well. 

Cheers
DK


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## arkusM (Oct 25, 2011)

My Dad and I where chatting about this the other day and in Canada they figure on ~32% add to permenant employee salary for benefits, and for his employees in the US they are looking more toward ~42%. But that is just one company.


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## MrKowz (Oct 25, 2011)

When I was contracted to a position as a Pension Analyst here in the US, I was paid a fraction of what the position normally pays, as well as no benefits aside from the worst health insurance plan I've seen in a long while.

To give ya some figures, I made 32k/year (Full Time-Hourly); and the position is worth ~50k-55k/year.  The health insurance was $120/mo and was honestly horrible.

One poor thing about contracted positions as well is that they have the potential to end early if you do your work too well.  My position was 1-3 years, but because of an Excel program I wrote, production was sped up so much that it lasted not even 9 months.


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