to reject this job offer?

[sootythecat]

To my delight, an old company I used to work for agreed to have me back part-time. We agreed a full time equivalent rate in the low £30,000s (as an employee).

A few weeks later they came back and said they want me to be self-employed (as I have another small business of my own). They offered me an hourly rate of £18.50.

I don't think this equates to anywhere the agreed PAYE rate once you take into account holiday pay, sick pay, childcare tax credits, training allowance, annual bonus, all the other employee benefits....

What do you think?

(ps am well aware I'm very lucky to have this job offer in the first place, just a bit narked its not what we agreed to).

OTHeHugemanatee is right! you need to calculate for when you don't work eg. Every sick day you take, every day you miss because your child is sick, especially days when their office is closed eg over Christmas. You definitely do not work 52 weeks a year. On job interviews lately when I got asked if I'd do that type of arrangement, the answer was a firm 'no' from me. Do not let them goad you into what they want, you have to protect yourself - and being self-employed means that they can dump you whenever so you need to be financially compensated for that lack of security.

Whilst I think you have a point about the compensation for benefits, this is really about flexibility on their part.

The fact they have requested it means (I would assume) that they are not sure they need you in the middle term & so want a more flexible arrangement so they can give you notice without having any obligations.

You need to factor in your obligations in terms of childcare. I've had to pay 1 terms nursery fees when I've worked on 1 months notice in the past which hurts.

In your shoes, I would be tempted to push back & argue that your not interested in anything but the original offer that had been agreed verbally.

SuperStrength I completely agree. The reason I say no to contract/freelance position is that I don't think people will hire you as permanent if they think they can get you for contract/freelance.

Piss take, you may need to pay both employers and employee Ni and tax. Plus pay an accountant then sort out your tax returns which is a PITA! I agree with the higher figure, Dh is self employed like this.
I am a nurse and our daily at my level in the private sector is £300 a day, I am worrying you are a nurse because £18.50 an hour is what a lot of agencies try and get away with at the moment for self employed.

Ps to people who might have a heart attack over that for a nurse, I work in industry, think on the next time you think the NHS needs disbanding and being made private, Cos NHS nurses are darn cheap labour compared to the private sector.

Oh! And the £18.50 jobs don't get filled, I have been head hunted more times than I can remember, start a new job next month via that method

Don't forget going up to the higher tax bracket if you are earning more than £18.50, you will be paying 40% income tax.

Some random thoughts in addition to the other points raised...

Will they sign you up for a month? A rolling month? A year? Might give an indication of how they are thinking. How and when will your holidays be factored in - and extra days you might need to go to the accountant etc? A month contract you'd want to be charging more for.

Also if they Want to pay you an hourly rate then will you actually be able to claim for all the hours you do? Or is it the sort of job where you are expected to work extended hous if needed but will be expected to just claim for 8 hours?

Likewise, will they expect you to go home if things aren't busy rather than just be in the office, so they don't have to pay you for those hours?

And what is the smallest unit of time you will be able to charge for? Will you be expected to account for every 5 minutes or can you charge for a full hour even if you only work 10 minutes?

Lunch time - is it the sort of place you get an hour for lunch or that you ear a sandwich from home at your desk? If it is the latter will you still be able to charge for working, or again is thee an expectation that you will charge a straight 8 hours regardless?

These calculators might be helpful:
www.pcg.org.uk/freelance-calculators

It may be easier to renegotiate if you can show them some calculations - less personal, more "oh dear, I think this isn't quite correct according to ...".

I think a lot of people, even those hiring, can be pretty ignorant about the costs of self-employment and what that means for daily rate. With those arrangements there's no way you can argue you're not under IR35.

Whoops, was actually this page I was thinking of
www.contractorcalculator.co.uk/Calculators.aspx

Using the permie salary to contracting rate calculator:

www.contractorcalculator.co.uk/PermanentToContractingSummary.aspx?uid=0&logon=False&psalary=35000&div=1&status=OutsideIR35&pyt=LimitedCompany&expenses=3000&other=0&pension=0&tc=944L&age=30&salary=8000&rate=25&rt=Hourly&rt2=Hourly&weeks=44&dwpw=5&dwpw2=5&hours=37.5&dni=4000&tty=2013&rate2=25&weeks2=44&hours2=37.5&status2=OutsideIR35&psalary2=50000&mir=0.05&ma=200000&mp=25&cid=0&vat=1&vi=False&ar=1&gs1=0&gs2=0&gs3=0&gs4=0&nd=1&pbt=1&dpo=19-Dec-2013&dop=01-Jan-0001&inv=1&hpd=11&me=150&vt=Car&mpw=0&mpc=0&pt=Monthly&ace=500&mt=Parasol&wl=InsideLondon&uds=Basic&Host=LOCAL

" On a salary of £35,000, net income per month is £2,218

To earn the same contracting, outside of IR35, you would need a rate of £21 per hour (£160 per day).

To earn the same contracting, inside of IR35, you would need a rate of £27 per hour (£207 per day)."

So they need to up the rate. Possibly change conditions of employment significantly, if they don't want to pay the inside IR35 rate because having another business won't help if you're working like an employee for them.

I would approach as if they've just made an error in calcs, initially, rather than a renegotiation.

I agree - don't think hmrc don't accept you can be self employed contractor if you work full time for same company.

You can have a job self employed and be PAYE at the same time, so that argument of theirs doesn't work at all. What job security do you have with them? None from the sound of it.

You definitely need to add in all the costs such and National insurance, holiday pay and sick pay. What about the fact that you will have to travel the same amount as if you were working fulltime so is this going to be say 3 'full days' per week or the equivalent of 3 days spread over a week. Its a lot more expensive to work half days rather than full day blocks.

The firm are just trying to get you on the cheap and save their employer costs (e.g. employer NI and perhaps some office space) and on top of that have absolutely no commitment to you so they can get rid of you easily if the business turns down.

Flexible employees with recognised skills prepared to work part time to fit exactly the hours a firm wants that can be made redundant at no cost and with no employment rights come at a premium per hour - not a discount.

Incidentally, I work part time, literally at an hours notice for a few hours at a time and at the beck and call of my employer but I am treated as an employee with a contract and they pay the N and deal with paperwork, etc so my tax return will be very easy - just normal PAYE.

I would say that you have checked the rules, you don't think HMRc will accept you as self employed for this work, and you are very keen not to get into trouble with them as it would ruin your other business, so awfully sorry but we will need to use a standard employment contract .

As I think it is highly dodgy to call you self employed on the facts here (your childminding business sounds ok) I wouldn't even both going down the higher rate track.

When you set up as self employed you have to state the nature of your business, so if you set up your self employment for childminding, can you you can also do office work?

I became self employed and did work for my previous employer but had to have other clients as well otherwise it isn't allowed.

All the contractors I know get a much higher hourly rate

If you are doing regular hours, and you have to turn up and can't pick and choose your hours, you are using their office equipment then you are likely to be employed. They don't get to decide, it is HMRC that decide. If HMRC say that you are employed then they can go back over all the time you have been there and "gross up" your pay I.e. say that what you have been paid is net and demand the employers and employees taxes on top. It is the employer who will have to pay this, so they are unwise to fiddle this. Lots of useful info on the HMRC website to say if you should be employed or self employed.

I'm an employee (in IT) on 45k and to be a contractor I'd want £350 really

Hmm... that could explain why DH is overrun with work offers. He's only charging £250/day (very experienced web developer). But he prefers local work so can't charge London-Cambridge rates to get it. Some of the main people chasing him are London-based, mind, but nice people he's worked with before.

I've got 20 yrs work experience and I'm only getting £11/hour.

You are in a stronger position at this stage to negotiate with them then if you have accepted. If they want you, they'll reach an agreement with you. You should have a contract if you accept the self-employed arrangement which sets out the obligations of both parties. Something else to consider - if you accept on a self-employed basis, make sure you can bill them for all the time you work for them. No unpaid overtime!

Contractors do not do unpaid overtime. My rule is if my fingers are touching keyboard or a phone or my eyes are looking at the screen or a document I am working and billing.

I charge half rate for travel hours as I usually do something on the train.

I think you should definitely negotiate. They must surely realise there's a good chance you'll come back to them about this. Express surprise as you thought it had all been sorted out before, and say what you'd need for it to be as worthwhile as what had previously been decided. Don't be apologetic, they'd obviously like you to work for them and will respect you for speaking up.

I agree. I had this. Asking me to be self employed. It's just a con, by a company trying to get you on the cheap.
Others have listed the criteria for self employment. You aren't self employed because you are only working for them.
I am so sorry. Because you started off all excited but now you see them in a slightly different light: tight , money pinching, dodgey, scouting the rules toe-rags. Shame.

Just wanted to reply and say thank you to everyone for all the great advice on this thread. I had a long discussion with DH about what to do - on the one hand, this is a chance to get back into the industry from a career break - on the other, the offer was not good.

I decided to negotiate for a higher hourly rate and got what I asked for, which made me think I should have asked for more!

I also asked for clarification on why they were not offering an employee position. To be fair, my boss wasn't clear on it either, and went higher up the chain - so my bosses boss said that they would be interested in employing me if I were to work more hours (currently 2 days a week). My boss said he got the impression that bosses boss was not keen on part-timers. Uhhhh.... right.....

Anyway I have accepted it on a six month contract. I think I should be employed (both legally and because I want the various benefits that I don't think I'm being paid enough for hourly) and will be asking at the end for a an employee contract or leaving. However having got back into the career, it will be a lot easier to look for new jobs after this initial period.

Thanks again, good to know my initial instincts on the offer were right.