Contracting Role

Wyndham

I'm currently out of work and I've been approached by an agency who wanted to send my CV to a client. I'm pretty sure I'm what they are looking for, and I'm seeing them tomorrow. However, the agent said it is a contracting role on a day rate, and I haven't done this before.

I've done various bits of reading up on it, and it seems as if it would work for me and my circumstances. But I wanted to post on here to see if anyone had any advice, maybe can highlight common mistakes, common differences etc?

My previous jobs have been a mixture of permanent roles and contract roles where I have been employed by the employer, rather than this sort of 'contract' role.

Thank you very much.

Nicklt

I'm a contractor.

You can either go the route of being 'employed' by the agency but would need to sort you own tax etc out or you could register under an umbrella.

You would 'work' for the umbrella company and pay them a small fee per week and they would sort your tax/NI etc. This is what I do as CBA to do tax return etc. You can also claim for expenses when umbrella (this will be expenses will come out of pre-tax income)

Things to note are that the daily rate you are shown would include holiday pay, and (not sure if this is true in all cases) employer NI. So you need to keep in mind that NI and Tax will still be deducted from that amount.

I've not been contracting long so don't have a mass of advice for you. Just remember aswell that if you don't work you don't get paid, remember the holiday pay is included so you will need to stash that away somewhere for when you do take time off.

HappyMJ

If you're just starting out then work through an umbrella company. If you want to do this long term then set up a company of your own and consider registering for flat rate VAT and you'll see more money in your pocket.

Common mistakes. Don't act like an employee. You are a consultant so have that attitude when you are working for the client.

Pay wise make sure the daily rate easily covers the expenses the agency charges (if any - most don't charge the contractor they'll charge the client), any umbrella company charges, employers national insurance (which comes out of your contract rate before your gross salary calculates how much employee national insurance and tax is made), holidays (minimum 5.6 weeks/year), sick pay (I use 5 days per year) and enough to cover your admin expenses such as insurance, phone and computer costs. I usually charge double what I would get as an employee when annual salary is divided by 260 so a job paying £26k per year would be £200 as a day rate.

Wyndham

Thank you for the quick responses, helpful and have confirmed what I've seen elsewhere.

The rate offered is around double what I would expect it to be if I were paid directly for a similar role, so that seems to be good. I think I want to use and umbrella company and have already spoken to one who I think are OK.

I take the point from HappyMJ about not acting like an employee. I've just finished a maternity cover post, and possibly took a similar attitude there - I let a few things go that I may have got involved in or cared about as a permanent member of staff as I knew I wasn't there for the long term. I just kept my head down and did my job in a professional, competent manner!

Having had direct contracts, often without security of any sort, this is looking good for the same level of security but with more money

Thanks all again.

Nicklt

HappyMJ makes a very good point, go in with an attitude of being a consultant - I do and you would be amazed at how much more people will listen to what you have to say as opposed to being a direct employee.

When people hear someone is a contractor they assume consultant, play on that as consultant are generally listened to more. (I am anyway).

When you say they pay is double what you would expect do remember the deductions that will come out of that, e.g. £20p/h sounds good what's that nearly £40k a year BUT you need to take out NI, Tax etc and also this include holiday pay. Minus holiday pay, NI deductions etc you are looking at more like £13p/h take home

Wyndham

As you've been so helpful I'm going to ask a couple of potentially daft questions....

Am I right in assuming you still get a contract of some sort, i.e. a piece of paper confirming the rate etc.

How do you manage holidays, so if you wanted a week off would you just discuss that as you would as a permanent employee?

Is there an expectation that you will work extra hours i.e. have long days?

Thanks again

HappyMJ

Wyndham wrote: »

As you've been so helpful I'm going to ask a couple of potentially daft questions....

Am I right in assuming you still get a contract of some sort, i.e. a piece of paper confirming the rate etc.

How do you manage holidays, so if you wanted a week off would you just discuss that as you would as a permanent employee?

Is there an expectation that you will work extra hours i.e. have long days?

Thanks again

You will definitely get a contract with the agency to sign. It'll detail everything you need to know.

Holidays. You discuss that with the client but tend to not ever expect any. Holidays tend to be forced upon you between contracts.

Daily rate consultants might be expected to work a bit extra from time to time but you also request flexibility. If you do 10 hours one day on an urgent matter then ask the client if you can start late or finish earlier another day especially if there is no urgency with the work on another day. It's all about give and take. Some clients do take advantage of a daily rate but I wouldn't worry about that too much. I'd expect to work at least 8 hours per day most days. If the clients employee's work for an extra half hour every day I'd take a longer lunch instead. You can do your admin work during lunch. That's filling out timesheet's and expenses.

isplumm

Hi,

Just be careful about which Umbrella company you pick - someone like Parsol are ok - never used them, but supposedly ok.

Don't believe those that suggest you will get 90% back of income - it will only end up in tears.

Also my assumption is that you will not get paid holidays - as a contractor I don't get paid holidays.

In terms of asking for time off - don't ask tell them - remember you are a consultant.

Mark

directdebiter

Great advice on here.

Start with a "reputable" umbrella company
Dont be attracted by any umbrella company that offers 90% take home pay
Reputable ones I have come across include parasol, giant, contractor umbrella
If all goes well you can move to a limited company
You will get a contract and a schedule
Enjoy contracting :beer:

If it all seems a bit daunting worth also checking out www.contractoruk.com which has lots of really helpful contracting advice

agrinnall

If you go umbrella then you may get paid holidays, but only because they would retain part of your pay to cover it (if they do, then make sure you either take them or that the contract says you get the money instead if you don't take them). With a limited company you definitely won't be paid for any day you aren't at work (holiday or sick), clients vary, some don't like you taking holiday at all, some insist you take a minimum amount, some let you take what you want (but may frown at you taking more than the allocation for permanent employees - and that would be bad form anyway because you can be sure one of them will be counting how much time you have off).

isplumm

isplumm wrote: »

Hi,

Also my assumption is that you will not get paid holidays - as a contractor I don't get paid holidays.

Mark

Hi,

Think my comment is wrong - just remembered you are looking at umbrella, whereas I am LTD.

Mark