Anyone move from FT to Contracting? Advice sought

[Eastie77]

Posting here rather than Employment for traffic

Current situation: work full time in a fairly niche technical role within a broad industry.

Pros: flexible environment, WFH whenever needed, walking distance to office which is a god-send as can pick-up/drop off DC when needed, okish salary (but see below), nice team.

Cons: have been fairly stagnant in this role for 5+ years now but that includes 2 bouts of mat leave, others have joined and left my team in that time and progressed. I’ve applied for two internal roles which I didn’t get and feedback was unhelpful “you ticked all the boxes, we just decided to go with an external applicant”, I can’t really see any areas for growth here.

Finally, I can’t prove it but I’m almost certain I’m paid less than the majority of my team members who all do the same role as me. This was partially confirmed when an outgoing team member told me he was leaving as he was “only” earning £xx which turned out to be £10k more than me..! Our pay increases are derisory and presented to us at annual performance reviews as a done deal although I have never actually challenged or asked for more.

So….as my skillset is in a niche but growing part of the industry I’m contacted on a weekly basis by other companies about similar roles. However I am really, really keen to leave perm f/t work behind and take on a contract role. I have interviews coming up for 2 such roles. They pay between £450-£550 per day. Taking a look on some basic salary calculators, if I did either role for 6 months and saved I would then basically be able to take the next 9-12 months off which appeals massively. I’m run ragged at the moment juggling the DC and missing out on activities with them due to work.

Has anyone made this kind of move from Perm to Contract and am I massively over-simplifying this? I'm told by a friend who made this move that once I get my first contract, the others will be very easy to secure but I appreciate there are risks around job security, pensions etc. Thanks

[Doobigetta]

Financially, it's definitely worth it. It would take you years as a permie to build up a redundancy pot the size of the amount you could save in one year contracting.
One thing to bear in mind is that it can take quite a while to build up a reputation and network that makes it easy to walk from one contract to the next.
And another, not unrelated, is that no one will be prepared to take even a small chance on you. If you haven't done exactly the same type of work before, you won't get a look-in, and this can get boring in the long term.

[WeAreGerbil]

Are you talking about only doing one contract at a time and then moving onto another one, or working with different clients at the same time (I do the latter and it works mostly for me but there are some downsides) and will you be working at clients' premises or from home / your own office?

[MuMuMuuuum]

I did years ago and worked out well for me. However be prepared that you may lose your flexibility. Clients are varied in their approach, some want you on site long hours, some don't care if you are home every day. That goes for needing to take time off, holidays, kids are sick etc... I worked with some clients that are a nightmare.

It's a different relationship to manage from being a permanent employee.

I'd also just warn you that the assumption you can take long periods of time off and walk into another contract is one to be careful with. Ultimately there are probably lots of freelancers with your skill set with long contracts, or consecutive contracts ahead of you. Generally I see those who do consecutive are favoured in hiring but that's my experience not a rule

In terms of take home calculators it's highly likely the changes to IR35 legislation will be rolled out to the private sector next year. It's currently in consultation phase. Check pay calcs as inside IR35 and factor this into your decision. You'll also pay your own pension, critical illness cover, private healthcare etc or any other benefits you may have in your standard package.

If you do decide to go freelance I'd recommend you get a good accountant from day 1 who specialises in freelancers, I use Nixon Williams but there are lots out there. Join IPSE, the legal service was invaluable when I had a tax investigation. And Qdos are good for insurance.

Best of luck

[Eastie77]

Thanks for all the feedback. I'd be doing one contract at a time rather than several at once. The nature of my specialism requires a full time commitment so I wouldn't be able to juggle multiple projects.

Both of the roles I'm interviewing for offer a mix of WFH and in the office a few days a week.

Doobigetta - the ability to save a significant amount is one of the main plus points for me. I'd be able to put aside a stash of money I'd never be able to save while working on a perm basis.

I've been reading up on IR35 contract pitfalls, thanks MuMu

Even after taking into account paying for private healthcare, pension etc I'll still be massively better off on a Contractor's rate

DC1 will be in Y1 come September and DC2 is with a Childminder. We have emergency back-up in the form of family members.

[WeAreGerbil]

The only downsides I can see other than the risk of not finding work are that when you're in a new contract (and if your contracts are all shortish they may pretty much always fall into the new category) you may have less flexibility rather than more if there are things you need to be present for (it's easier to negotiate leeway from people who know you better - this might be something to consider when you are hired if you have any specific demands) and also I've always felt as a freelancer my performance has to be 100% all the time, which can be exhausting (although a lot of this is about juggling multiple clients). I am often brought in when there is some problem / time pressure etc. though, which exacerbates this. Some years it's great and I give myself a lot of the summer off, some years something big comes along that I don't want to turn down because of the money and development opportunities and the summer passes me by! It can be really stressful, and I have less of a social life than I did when employed, but I also get a lot out of it.

A question though, if you got a pay rise would you stay where you are? And if so, why haven't you asked?

[rookiemere]

Taxation for contractors is likely to change in the new year, meaning that you need to be really sure it's worth losing pension, holiday pay and sick pay. Ask for the raise first

[Eastie77]

It's not just the money. I've been working full-time non-stop since I graduated (I know, get the violins out) and I'm exhausted. In a worst case scenario I'd take home around £7.5k a month with current daily rates for my specialism. If I completed a 6 month contract I'd then be able to take the rest of the year off and still pay the bills. Then return to a perm role or another contract. I know it's not as easy as that and another contract may well not just roll around. However the majority of the clients I work with at the moment lack in-house expertise in the niche area I work in and are currently using contractors with varying (results since it's hard to get the necessary skills/qualifications unless you work for a company like mine).

I can ask for a pay rise but honestly even if I got it, it would be minuscule.

[MuMuMuuuum]

A change is as good as a holiday OP. Good luck with your interviews.

[Minniemountain]

DH did it.
Job security depends on your industry I suppose.
Lack of sick pay and pressure to get back to work can be an issue. DH felt he had to get back to work much faster following surgery this year than a permanent employee would.
On the other hand, we are close to fully offsetting our mortgage due to what he earns.