Have I screwed myself over? Work related

[Carfeulyay]

Complicated context:

6 months ago I started working for a smallish business. I met the owner of the business in my previous job as we worked closely together as a kind of special agreement between his business and the business I was working in. I work in a service based industry and he would pay a day rate of around £650 to my boss for my services. (Pretty standard daily rate for my industry)

my old company was chaotic and was in financial difficulties so when new boss approached me to work for him under same conditions it was a no brainier.

initially he offered me a contract role but I insisted that I wanted employment status, he agreed and took me on at my existing salary, he has also paid £1000 for a training course that I wanted.

it works out I get paid 12.50 per hour but obviously get holiday pay etc. I am a pretty conscientious employee so will often work extra hours to get work done, but as I’m salary based I don’t really see any financial benefit in this.

My colleagues who are contract get paid £20 per hour and bill for the exact hours.

I worked out if I would have billed my boss at the exact hours i had worked for £20 an hour vs my £12.50 I would have and extra £1000 in my wage packet for last month.

My boss Is really lovely and this isn’t a stab at him as he is fantastic but I think I might have screwed myself by insisting on paye.

I know paye gets paid less due to the benefits of employment but I’m not sure I really get those benefits anyway (I.e I never take sick time, I just work extra hours in another part of the month, if I go on holiday no one will look after my clients so I end up doing more hours before and after my holiday etc)

Would I have been better off as a contractor? If so, how can I retrospectively approach my boss about it?

It doesn’t really sound like you would be a genuine contractor outside IR35 anyway. So no, I don’t see how a change would benefit you.

Agree - how would it work with IR35. You don’t sound like a true contractor, and IR35 is there to stop people who just want the financial benefits.

You either need to set boundaries to work your agreed hours & get more support, or speak to him about getting a salary increase.

You choose to work the additional hours and it’s a non issue that you “don’t take sick leave” - it’s there if you need it, not compulsory. Again, you choose to work the hours.

I think now that you’ve completed 6 months, you could ask for a pay review. I don’t understand how you undersold yourself in the first place. Your boss literally pilfered you, you’re that good.

Ah yes the ir35 thing, I could also contract a bit for other people - I get offered contract work almost weekly on LinkedIn which I turn down

Regardless of financially better off, the reason contractors are usually paid more is "danger money" - they have to factor in putting that £1000 away to cover sick / holiday / sudden contract loss when the company decides to trim staff levels so in my view it's not really comparable.

I'd like you have requested paye status and be working toward my 2 years employment for improved rights and the knowledge of sick pay and holiday pay being covered!

£650 a day!!!!

somethings gone wrong here or I don’t understand the post

either way £12.50 means I would be looking for another role

Because you are PAYE your boss is also paying employers NICS and likely pension contributions on top of your salary. So he's also disadvantaged cost wise, But the freelance rate is.a lot higher than what you are on - and maybe you should not be so open to putting in extra hours, maybe time for a chat.

I agree with others that it sounds as though you are on this ice IR35 wise.

a lot of the issues here are your attitude to work more than the fact you’re freelanced? At £12.50 an hour I wouldn’t be pulling in lots of unpaid overtime, especially not to cover your sickness or your holiday. I think you need to have a conversation with your boss, either you need to be able to claim paid overtime for extra hours or you need to be clear that sometimes you cannot do the work needed in the hours given and so he will have to contract some of the work out. Alternatively point out all the extra hours you are doing and try and negotiate a higher salary/ hourly wage to compensate.

That doesn’t mean you’d be outside IR35. Can you send a substitute and do you decide when, where and how to work. You’d need a contract that says this and proof you’ve done it.

I'm confused. If your services are worth £650 per day how on earth are you now in a role paying £12.50 per hour?!

I work with people on that day rate and they'd only consider moving to an employment contract for a hefty salary. Something seems wrong here!

At 20 quid an hour I suspect any contacting would be done via an umbrella company and so IR35 is irrelevant.

The 650 rate is also a bit of a red herring. My day rate as a contractor is around that, if I was working for a consulting company I'd be charged out at 1500 a day.

What pension benefits do you get as an employee. Remember pension is just deferred pay.

But you get sick/pension (I assume) and more security (hopefully). Remember, if that £20ph, your colleagues will have to pay tax and NI so won’t end up on much more than you anyway. Plus some months there might not be as much work. I’d go for security any day.

It may be because I'm old, but how does £12.50 per hour become £650 per day - even working ALL 24 hours, you're still about £350 short?

This.

It doesn’t
OP was charged put at that rate, it’s not what she herself got

Usually in my industry, you get paid about 1/3 of your charge out rate. If you divide £650 by 3 and then divide by 7.5 standard hours you should be charging around £28 an hour

Interesting, so in my industry the sales process can take a really long time (sometimes a year) so my work often offsets the cost of lead gen. There is also obviously business costs such as software etc that I use but I do agree it seems quite a markup!