Contract work

[Hightower]

I've been offered a position with a company that is to be contract employment though an agency.

I've never worked contract before, so what questions should I be asking the Agency and what are the pros and cons?

[C2 RIBS]

Working through an agency normally does not give you the same company perks, eg Sick pay,Time off, annual holidays. If you dont work by taking days of/leave then no pay. Agency work gives you a little more flexibilty. If you have another income it can be useful as you can take work as required and choose jobs to suit.

[Neil Harvey]

Andy,

I've never done it either, but I think some of the considerations should be the following:-
1) pension arrangements - what provisions are there? How does it compare to your current company arrangements etc?
2) annual leave - how does this work? is there annual leave like with a normal employment contract, or does taking a day off cost you money? (a reduced monthly pay packet reduces incentive to take time off).
3) How do the agency earn their money? does it come out of your salary as an service provision percentage? Or do you receive a salary at a set rate with the agency charging the "customer" your salary mark-up?
4) Who is paying the national insurance?
5) Is tax deducted at source (correctly) or do you need to put money aside each month?
6) How long is the contract for - does it give you enough job security?
7) Maybe have a look at these for some considerations:-
http://www.hiluxsurf.co.uk/forums/sh...=contract+work
http://www.hiluxsurf.co.uk/forums/sh...=contract+work

I'm sure there are lots of people out there it works for, you get more flexibility etc in some ways and are not so tied, but these are double edged swords.

I'm sure there are more things to consider, but as a starter for 10, hope it helps.

Neil

[Nos4r2]

As someone who works for an agency full time:-

Originally Posted by Neil Harvey

Andy,

I've never done it either, but I think some of the considerations should be the following:-
1) pension arrangements - what provisions are there? How does it compare to your current company arrangements etc?

There aren't any-get your own.

Originally Posted by Neil Harvey

2) annual leave - how does this work? is there annual leave like with a normal employment contract, or does taking a day off cost you money? (a reduced monthly pay packet reduces incentive to take time off).

You get paid holiday. It's usually worked out per hour worked and you take as many hours as you want as long as you've accrued them.

Originally Posted by Neil Harvey

3) How do the agency earn their money? does it come out of your salary as an service provision percentage? Or do you receive a salary at a set rate with the agency charging the "customer" your salary mark-up?

you receive a salary at a set rate with the agency charging the "customer" your salary mark-up.

Originally Posted by Neil Harvey

4) Who is paying the national insurance?
5) Is tax deducted at source (correctly) or do you need to put money aside each month?

They pay tax and NI for you-you get a regular payslip with hours worked on it..

Originally Posted by Neil Harvey

6) How long is the contract for - does it give you enough job security?

Makes no odds how long the contract is-it'll last as long as they need you or depending on how good you are. It's a good idea to make yourself indispensable....

Originally Posted by Neil Harvey

7) Maybe have a look at these for some considerations:-
http://www.hiluxsurf.co.uk/forums/sh...=contract+work
http://www.hiluxsurf.co.uk/forums/sh...=contract+work

Nova is not a good move as a 1st time thing. Talk to people doing the same job that are using it to get an idea of how well it'd work for you. You get no holiday pay with it-it's effectively like being a sole trader with them administering the accounts for you and paying you a wage.

Originally Posted by Neil Harvey

I'm sure there are lots of people out there it works for, you get more flexibility etc in some ways and are not so tied, but these are double edged swords.

I'm sure there are more things to consider, but as a starter for 10, hope it helps.

Neil

Works well for me-I can do a full weeks work in 4 days and have Fri-Monday weekend. If they like you and you're in demand it can work really well- and if you get a bad contract you can walk away and it doesn't go down on your CV....

On a negative note-keep close track of hours worked,mileage paid etc if they pay it. Agencies are notoriously good at buggering up wages.

[codprawn]

i have done loads of contract work in the past - always had my own ltd company. No holiday pay - no sick pay - no pensions. if you don't work you don't get paid - simple!!!

As Nos says they can last any sort of time. We once had a contract that was supposed to be for 3 days - it lasted 2 1/2 years!!!

[Matt]

I've been working as a contractor for the last coupla years.
No career potential, no job security except for the relationship with your client, no pension, sick, holiday etc - but you factor all that into the rate and buy your own pension, plus factor in holidays. Contractors never get sick either!

As per codders, always been through my own limited co (beware of IR35).
Personally I like the flexibility.

There are also a number of (what I personally consider) shadier tax options that involve offshore funds and loans to keep your tax to a minimum - I know lots of people currently doing it but it's not for me.

And if you do fall under IR35 by working there too long, the 100% pension rule is good if you can afford to not have the income now and invest in your retirement.

[havener]

I've done contract work both through my own company, and PAYE through a larger contractor. Both have always worked for me, wouldn't go back to normal employment now.

If going through an agency, and you're submitting timesheet, etc ( not an invoice), these days there is little difference between that and "normal" employment. Holiday entitlement is there (that's law now) and the only real difference is there's no pension entitlement, but that's pretty common in companies anyway these days.

Check the hourly rate your customer is offering you is net to you and not before agency's margin.

Otherwise, like Matt has said, ook out for IR35 - that's what HMRC use to decide whether you a are genuine company or a tax dodge. Things like using your own IT kit (not customer provided laptop) and the degree of control you have over your working hours, what you do, etc go to make up the decision. For example, if your contract is simply to do X by Y date, and how / when / where you do it is up to you, you're safe being a ltd company. If however your client dictates your start / finish time, provides all the equipment for your job, and tells you how to do it, HMRC would consider that employment not running a business.

And whatever you do, I would always carry your own liability insurance so if it all goes wrong and someone sues you for a bad decision, you don't lose everything.

[Hightower]

Thanks for your different veiwpoints, I'll have a closer look tonight when the kids have gone to sleep.

I guess what I need to be asking the agency at this early stage is:

1. Hourly rate

2. Holidays

3. Sickpay

4. Liability insurance

5. Travel expenses

6. Length of contract

I've never heard of IR 35 so will make enquiries about this.

From what I extracted from the interveiw yesterday the client wants me to take over the running of a small mechanical workshop with the aim of eventually doing all the machining work in house. They're having trouble with sub-contracing the work out as they lose control of the work when it goes out the door.

I'll be a one band man to start off with and will be given freedom to balance machining work with organising the way things are run, "something I could make my own" he said.

I was told this position could lead to a permanant job with them, however lots of full time employees have gone contract as there is more money in it for them, seems a little strange to me but the Production Manager seemed like a laid back, forward thinking guy.

The core hours are set to 39hrs, but am expected to work Mon to Fri but have flexibility with what hours are worked providing they get their minimum of 39.

I have been offered the job and await a call from the agency to discuss conditions.

Andy

[havener]

Andy,

I'm in Fareham all next week (well, near there) - if you want to meet up for a beer and discuss, drop me a PM.

Simon

[Hightower]

PM sent Simon.

[Hightower]

OK got some more info.

The position is initially for a 3 month contract but I'm sure this is just to check me out as there is a longer term potential that comes with the job.

There is no sick pay, as expected. Just SSP after 3 days.

Holiday is payed at 10.17% on top of the hourly pay (up front), this equates to 24 days holiday over the year to include bank holidays, is this normal?

I get paid overtime over 39 hours worked at 1.5X my hourly rate, this I have been told is good, as contractors don't generally get paid overtime rates, is that correct?

The agency will deal with all my paperwork relating to timesheets, tax etc.

If anyone can offer opinions or advice to the above, or any other question I should be asking then please feel free to comment.

[Nasher]

Andy

That looks about standard to me, the agency contractors at Raymarine were being paid holiday pay the same way as you've been told, but not sure about the Overtime.
24 days including Bank holidays is not a lot, more usual to be about that plus the banks as well.

All depends on the rate though to say if its worth while.

What agency is it? as some have a better reputation than others at getting things correct with regard to pay etc.

Nasher.

[Hightower]

Morsons, used to be Pentagon.

Give me a call if its convenient.

[Nos4r2]

Check with the agency if you get paid overtime if you work it during bank holiday weeks. For example my basic pay is 8 hours in a day-anything over 8 hours is overtime rate so if I work 4x10 hours in a week 8 hours is at overtime rate. You'll notice it quite markedly on bank holiday weeks otherwise.

[Hightower]

My understanding is that is anything over 39 hours that is paid at the overtime rate. So not so attractive to work extra in the evenings. That said I only work 5 hours on a Friday so not too bad for Good Friday, but could suffer on the Mondays.