Contract job

[SLTG]

Recently, someone offered me a 1-year contract job opening. I have never dealt with anything like it. What would be the pro and cons. I like what they do and interested about the job but a little nervous about it.

thanks
sltg

 

[corus]

The pros are probably that the contract will last longer than a year. The cons are that they may finish you within a week. In addition, working contract means you have no sick pay (depending on the country you're from), you get no redundancy entitlement, and no holiday pay. Bear this in mind when you agree the rate. It's also better to form a company under your name so you can offset your expenses against tax.

corus

 

[COKA]

Another pro is that you will get higher pay then someone doing the same job full time, and a con is that you don't have health insurence.

Coka

 

[ewh]

PROS - Generally higher rate; usually overtime available; don't have to let the office BS bother you; tax-free per deim (under certain circumstances); get to work in different environments (see new things and meet new people)

CONS - No job security; fewer benefits (in my experience, vacation, holidays and insurance can be negotiated); hard on family life

I have experienced 10 years as a contractor, but it got to the point that I was tired of moving around and wondering where the next job was. If you are young and single, it is a great way to gain experience in different industries while being well paid.

 

[SLTG]

So, it's more like hourly based salary without paid vacation basically. As far as tax goes, I would have to pay more tax since I "earn" more (those benifits that is included on the salary). Do I get any break on this?

Do I have supervisor or senior people that I report to?, how does my work in job contract compare to full time employee type of deal.

Thanks
sltg

 

[cudaracer]

Just be sure if they tell you that it could become permanent that you get a time frame, and something in writing. The last place I worked was originally contract through a job shop. It was supposed to go direct within three months, and didn't. I was there for about a year with no insurance and no benefits(I know...it was my own fault for going along with it)when I had a medical problem and had to pay about three throusand dollars out of pocket. On the other hand with the way the job market is contract is becoming the only way to get work.....

Don

 

[ewh]

At my last contract position (in the U.S.) I received 33% of my rate as tax free per deim, with unlimited O.T. (@ 1.5 times my base rate + per deim). The bucks added up fast, but only 2/3rds of what I brought home was taxed. You had to maintain a home base greater than 50 miles from the worksite to qualify for this. The contract shop rolled my vacation time into my rate, gave 10 holidays/year, group insurance and 401K plan.

At the job before that, I got pretty much the same deal, with 50% of my rate at per deim, but $10 less per hour. I was contract there for three years before the client company made me go temp/direct, which eliminated the benefits. I was out of there a year later.

If you have skills that are in demand, it pays to negotiate!

 

[tygerdawg]

I agree with all, especially CORUS & CUDARACER. If you really need the money, then you should consider taking the rate they offer. But if not, then you should do your own hard analysis and determine what rates you will need to pay your bills comfortably.

Case in point: To survive the recession after layoff before 9-11, I incorporated a company for liability and tax purposes and started freelancing. After barely surviving for a couple years, I took a 90-day "temp-to-perm" position at a rate much less than my going rate. The logic was to put up with it, later I'll get somebody else to pay my health insurance and I can work a regular 40 hour week. Ninety days came and went, and at seven months they dropped me. The boss "graciously" offered to keep me on another five weeks. I told him only if he paid me through my company and at my rates. He looked at me like I had a crowbar sticking out of my ear.

Luckily I have a skill in short supply (robot programming) and I recently learned that others doing this are charging outrageous rates, and getting away with it. So I jacked up my rates accordingly and nobody has complained.

Market economy, market rates, baby. Good luck.

TygerDawg

 

[ewh]

"Do I have supervisor or senior people that I report to?, how does my work in job contract compare to full time employee type of deal."

The work is pretty much the same as if you were direct. You are generally assigned to specific engineers or programs and do the same type of work as the directs. The good thing is that you don't have to stress out about how poorly you may think the company is run, unless you do desire to go direct. Some companies are better than others at accepting you into corporate "family" and treating you just as they treat any other employee. For me, being like a duck and letting the BS roll off my back was a definite benefit.

 

[BJC]

SLTG
here are a couple of sites that cater to hard core contractors and job shoppers, you can learn a lot by snooping around the site.The second one publishes a magazine and you have t osubscribe to get access to everything.

http://www.roadtechs.com/

http://www.ceweekly.com/

ewh - The "cons" you listed go with a lot of jobs, contract or not. it's going to get worse. Remember Yogi" The future ain't what it use to be"

 

[IRstuff]

Do I have supervisor or senior people that I report to?, how does my work in job contract compare to full time employee type of deal.

That somewhat depends on your seniority and potentially makes a big difference in your tax liability.

If you are simply given a statement of work and a task, then you might be considered to be a contractor with its tax aspects.

Alternately, if you are under fairly tight supervision and review, then you'd be considered a temporary employee.

You should consult with a tax professional as well as your customer to determine which is the case.

TTFN

 

[SLTG]

Guys,

Thanks for the respond. Let say the contract is for 1 year, can I quit before then. I know I can get laid off/fired at anytime, does it go the other way around?.

Also, what is the best way to determine your rate?. Any website that does that?

Thanks
SLTG

 

[EngineerDave]

I worked a contract job for a while. The terms were not set up in the beginning but I was replacing someone who was possibly returning within 1 year (he was taking care of sick family in his country of origin, the leave of absence policy was very nice at this company, but it had some problems that I'll discuss some other time)

In the end I was there 5 years and after 2 years of being a contract worker I was hired full time.

The negative with that contract job were the following

1) The rate was lower than what colleagues who worked for the actual company had.

2) Benefits, etc were worse than the actual company

3) Stigma of being contract in such a company can grow tiresome. In this case everyone that was contract wanted to be hired on. It was discouraging to see the company hire in so many new people, while not converting contract workers to full-time.

However, If I liked enough items about the job, I would consider it again.

Key questions for me are

1) Is the job in a location I like
2) Do they work in an industry or manufacture a product I find interesting.
3) Do the people you meet within the company appear to be happy? (This is always tough, I never get a good read for the morale within a company when I visit)

 

[trainguy]

SLTG,

If this is for an engineering job, professional liability insurance is a very real issue. I was a consultant for 3 years, and spent a large part of my time dealing with setting up the insurance, and worrying about future coverage requirements.

For that reason alone, I do not do it anymore. Depending on your local laws, you need coverage for a long time AFTER you've completed the work, and it can be a real nightmare of you're sued down the road and you do not have the insurance co. lawyers on you side.

Something to think about...

tg

 

[BJC]

SLGT
There are various types of contracts. Most of the ones in the engineering world are just high tech "kelly girls". These are the same as temporary jobs. You don't need insurance as it is usually covered by the owner (or your employer if you go through a "Shop". most companies don't like to contractors directly with indivuals, it's to much trouble for them.
The keys to contracting as a temp are:
1.) Technical competance, They bring you in because they need expertise. make them pay for it. Study and develope an expertise in some field. Your a "hired gun" to do a job they can't. Work hard, do a good job, lstay away from the water cooler and BS sessions. If your good your reputation will preceed you.
2.) Most contractor are for an hourly rate, when it's time to go home - go. Start again tomorrow.
3. ) Get a good shop to represent you. They take a cut but if there good there worth it. They can get you work and money ( the more you make they more they make).
4.) Adjust your life so you don't have to work all the time. 6 monts a year working at $90 an hour is the same as 12 months at $45.
In my experinece the tougher times get the more employer want controctors, they still have work to be done and don't want to hire anyone.
I am not necessarly recommending the contractor life, it's just the with a lot of people our of work it's an option everyone should keep in their pocket. Some firms hire contracotrs to get a "look at" them and then offer them a permenant job ( if there is such a thing)

 

[SLTG]

BJC,

What do you mean by "shop"?, The recruiter said that they are the one that giving me a paycheck every month, not the real employer. In this case, should I have liability coverage?. The job isn't for public service, but it is mechanical design work for defense system.

So if you start your own bussiness as a contractor in mechanical design work, you would need liability coverage?

Also, how do you determine your hourly rate?.

Thanks
SLTG

 

[BJC]

Shops are businesses that supply people to companies when thy need them for special projects or temporary situations. Try the phone book under "engineering job shops", They use to be big in the aerospace industry. I've met people who worked 25 oor 30 years and never had a "real" job. .
Job shops use to be smaller businesses but now many large companies ( likke Bechtel and the Washington group) run their own. They can hire people for more money and shorter durations that way. There are a bunch of them listed on the Roadtechs website. Heres a typical companies website

http://www.statco.net/open.html

Shops use to deal almost exclustivly in engineers and designers. In the last 6 or 8 years I've seen shops that supply butchers, bakers and candlestick makers.
The pay for jobs is probably down at the moment because of the way the economy is. When times are good and companies need you they pay overtime, per diem etc. Contract employee expenses can be charged directly to a job, just like nuts and bolts. Your wages as a contractor are treated differently by accountants that employee wages. Companies usually set a limit of what they will pay and then ask "Shops" to find someone who fits their needs. Your rate will be set based on a lot of things including: your expertise in what they are looking for, competition( how many people are willling to work cheaper than you), and how bad they want you. Your "pimp" works with the company and you to get you in and get you all the money he can get for you ( he/she makes more that way).
I am not recomending that people do this just pointing out that it may be better than doing nothing. I know people that do it and love it.
Most shops pay by the week.
Your recuiter sounds like a shop. Will you be working independantly? or will you be taking direction from someone in the company. One way your just an employee getting your pay check through another company, the other way your a consultant. Your best stratigy is to become very good in some areas. Once your reputation is know the'll call you when they need you. You'll be like the high priced gun fighter in the old westerns, sometimes second best just aint good enough.
I used the term "pimp" above because thats what shops and the people who ran them were refered to. The analogy was that when a company needed help they wanted it so bad they'd pay anything for it and when they were through with you they didn't want to see you again. The Roattechs site used to be called Roadwhore.
Sorry about all the rambline, hope ti helps a little -it's chow time.

 

[johnwiss]

I think the Pros outweigh the Cons--you probably will, if you seek full-time employment later, pick up where you left off prior to the consulting. Thus "captive" employment is where your salary and title is baselined. If you have a good title then career-growth wise, you won't be penalized for taking one year or so as a consultant. You can defer a lot more money pre-tax for retirement when you are self-employed (about 4 times as much per year). A SEP IRA is a good way to go. You also get quite a few tax deductions when self-employed--gasoline, wear/tear on car, part of mortgage etc. Also you should command at least 50% more pay then if you were a captive employee of a company. If they like you they will probably offer full-time work at a level higher than if you just were referred the usual way. If you are really good at what you do the consulting opens a lot of doors.

 

[GregLocock]

" Also you should command at least 50% more pay then if you were a captive employee of a company."

That depends a lot on where you are. Based on 1800 billable hours, which was about what I was doing, my pay dropped by only 5% when I worked as an employee instead of as a contractor.

I /know/ that in Sydney (Australia) an Autocad contractor was typically paid less than he would have earned as an employee.

Sure, for short term contracts the rates are higher, but a 12 month contract is a long one.



Cheers

Greg Locock

 

[johnwiss]

Check your professional association (IEEE, SAE, etc.) to research consulting rates vs. years of experience and education level. I really find it surprising that consultants get less compensation than captive employees. The company is not burdened with employment insurance, FICA, benefits, etc for consultants. In my field I know 25% premiums for consultants are typical and for high-demand types the 50% figure is achievable. If you are getting lower than captive employment you are either not negotiating agressively enough or targeting the right companies or maybe your field is in a slump of some sort. Take the full-time job if it pays the same or more--the benefits are worth about 25-30% of the salary component of your compensation package.