Did you make the same or less when going from contract to perm?

W Stewart · August 2014

So I'm working on a 6 month contract as a Linux Administrator that will end in December. I like the job and there's a pretty good chance that I'll be offered a permanent position when my contract ends but a concern of mine is whether or not I'll be made an offer at the same salary that I'm making right now.

I understand there are benefits that need to be factored in but I was also brought in through a recruiting company so I know they're paying a lot more than what I'm getting in a paycheck. Additionally, I'm paying for my own health insurance right now but I don't know if every company will take that into account with salary negotiations.

I'd just like to know from people who have been offered permanent positions at a company they contracted with whether the company typically offers you less, more or the same salary.

Danielh22185 · August 2014

I would say it's fair to expect a 10-20% decrease in cashflow but the benifits if good should easily compensate. If you end up paying a significant amount less in health insurance it might even itself out.

kohr-ah · August 2014

My case I went up 5k. My friend went up 8k. 2 others I know went down about 5k or so.

So it depends the company really.

coreyb80 · August 2014

I received a $3K raise when I was converted to perm.

VAHokie56 · August 2014

when I transitioned it was a straight conversion of my hourly rate at the time that became my base salary rate...but I also got amazing benefits and a huge yearly bonus so in reality it was a raise.

shodown · August 2014

I was with one company and I was making about 75hr as a contractor, the full time perm position was about 80K. I felt it was a slap in the face, I told the recruiter that got me the job about it, and he worked out a deal to keep me a perm contractor.

RHEL · August 2014

shodown wrote: »

I was with one company and I was making about 75hr as a contractor, the full time perm position was about 80K. I felt it was a slap in the face, I told the recruiter that got me the job about it, and he worked out a deal to keep me a perm contractor.

When I was scouting out jobs, I could make 90-100K/yr on contract or 75K perm with benefits. My benefits easily equal out to 20K/yr or more, so it makes sense to me.

jibbajabba · August 2014

[noparse]
In the UK you earn a lot more as contractor if you have your own limited company.

For one particular senior job you can expect to earn about £60,000.00 ($100k). Net after tax : £3,500.00 / month ($5800).
Contractor daily rate for the same job varies, it is between £350 - £450 / day ($588 - $750) - say average £400 / day ($670)

Contracts here are on average 3 months with an average hours of 173 / month or 21.67 days.

That makes a contract value of £8,666.67 ($14,560.4

per month. Depending on how you "do it" - how much salary you pay yourself, how much dividends and all that (not going into that right now) you can expect to have a take-home of 75.41% or £6,804.65 ($11,436.71).

So, to sum things up

Permanent take home: £3,500.00 / month ($5800)
Contractor take home: £6,804.65 / month ($11,436.71)

Pretty much twice as much.

HOWEVER - as contractor you don't have any benefits, paid holiday / vacation, pension etc. etc. Plus the added risk that you don't have a new contract straight away (most companies do extend though).

Another "UK" nugget - whilst longer contracts are certainly nice to have - you do risk sliding into IR35. This is in tax terms a status where the tax office believes that you aren't a contractor but work for a salary.

Basically if they see you do get benefits from the company - you work for them long term (like a permanent employee), they easily make you pay tax on top of all that.

So you need to decide what's more important

[/noparse]

5ekurity · August 2014

I took a $5K hit when going contract to perm; since I had to provide my own insurance and whatnot otherwise, it made sense to go to perm.

--chris-- · August 2014

I made the same, but with much better growth and more frequent/larger raises.

W Stewart · August 2014

Here's a question. If i'm a w2 contractor vs a 1099 contractor, how does that affect how much the company pays in taxes?

MSP-IT · August 2014

I was bumped up $18k when I went contract to perm.

ratbuddy · August 2014

W Stewart wrote: »

Here's a question. If i'm a w2 contractor vs a 1099 contractor, how does that affect how much the company pays in taxes?

I'm in that boat. Basically, your actual employer (CDI in my case) pays the employer side of your taxes. It's 7.65% of your earnings. If you were on a 1099, you'd be paying the self employment tax which includes that 7.65% extra. As with any job, the social security and medicare taxes you see withheld from your paycheck are matched by the employer. If you have $100 gross earnings and pay $7.65 towards medicare and SS, your employer also pays $7.65. When you're on a 1099, you pay both sides, resulting in a lower net to you. There's a cap, but it's over $100k IIRC.

Say you're making $1k a week on W2, you are costing your employer $1076.50 before any other benefits or overhead come into play. On 1099, you're costing just the base $1k plus whatever else, since you pay that extra $76.50 yourself.

DoubleNNs · August 2014

I would have thought more people would have made a pay increase when they went from contract to perm. I'm surprised.

Reseven · August 2014

I went up $8k when I went from contract to perm. Benefits were like night and day too.

BradleyHU · August 2014

shodown wrote: »

I was with one company and I was making about 75hr as a contractor, the full time perm position was about 80K. I felt it was a slap in the face, I told the recruiter that got me the job about it, and he worked out a deal to keep me a perm contractor.

health care, which is usually the majority of your bennies, aint cheap...you probably weren't getting health coverage on contract, so they were paying you more since they don't have to pay for that for you...

N2IT · August 2014

The conversation rate was about the same but I asked for a 5% increased and recieved it. Just asking for something small like that is a wise move IMO. It keeps you content because your pay if ascending and the overall cost isn't a huge deal breaker usually.

Did you make the same or less when going from contract to perm?

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