£40 an hour contract or £38k pa permanent....what would you do ?

[bringmeashrubbery]

DP just been offered a contract position (12 months) at £40 per hour . He is currently in a stable permanent 'job for life' at around £38k pa. Should he take the contract position or what ? It's IT by the way...

does he have final salary pension with current job?

(I gave that up previously and kick myself every now and then since)

I convinced my DH to take a contract position which he did last september. He doubled his take home pay. He's in engineering which is on a fantastic cycle right now.

I'm sure IT will always have plenty of work around whether he decides to stay contract or go back to staff position at end of 12months.

We make sure that we budget for when we're on holidays throughout the year (as all is unpaid leave of course). He goes to work when he's sick, that's what grubby subby's do!

No sick pay or holiday pay. Job insecurity. No company pension contributions. Think I would stay where I was.

he can transfer his pension and pay the contributions privately if he wants to.

no brainer for me - when it comes to work the greenback always wins.

You can make provision to have your holiday and sick pay entitlement put into a mandatory savings account - there are firms out there who will manage your payroll for you for a nominal monthly fee.

There are very good insurance options (against redundancy and illness) available too.

He is going to find it hard to give up the job security, but...it will be more or less double his salary - that's an awful lot of holiday and sick pay ! I think we would live more or less as we currently budget for and stockpile the spare cash in case he ends up with a gap between contracts...I can see the $$$$ flashing before my eyes but we need to think it through rationally. Although as dejags says it's looking like a no brainer.

Contractors usually budget based on 200 working days a year, so assuming an 8 hour day, he'd be looking at £64k (jura - unrealistic to say 48 weeks a year, as that doesn't allow for bank holidays, sickness etc).

Are his skills transferable enough that when this contract ends, he would be able to continue to contract elsewhere?

If so, then I'd definitely take the contract.

(I used to be a contractor btw, and dh still is)

On the stockpiling cash thing - we have a flexible mortgage, so overpay when we are flush, which builds up a buffer should we ever need it due to lack of work.

My dh has done this
for us it was life changing
he has been contracting for 6 years now and has never been out of work

He pays an umbrella company to sort out his accounts etc

We have to be strict and save money for holidays and sickness

Deffo go for it!

Dh was contracting in IT a few years ago. TBH, I don't think that financially we were that much better off when you allowed for holidays, pension contributions, sickness. Also, can't remember how it works re NI contributions - could be worth checking out.
What kind of benefits does he have at the moment - holiday allowance, BUPA, pension contributions, gym membership, life assurance, permanent health insurance.....? You might find that his total package is worth more than you think, in which case the difference between contracting and permant employment may not look quite so attractive.
Also depends on which branch of IT your dh is in, as obviously some skills are much more in demand than others. How easily will he be able to pick up another contract when this one terminates?

There is no such thing as a 'job for life' any more!
Is the JFL the same-old-same-old? Maybe the contract add some new skills which will make his CV look even better.

Thanks all. He used to contract before we had children so is used to all it involves. I think he is more nervous now though as we have more to lose if it goes tits up. Having said that he reckons that his area of expertise is unlikely to become obsolete so I don't think there would be problems getting a new contract.

We are just taking a new mortgage out which will allow for overpayments anyway, so good idea Choco

Lucyju - re NI contributions - he will need to register as self employed, and will then pay about £10 per month plus a % of his earnings at the end of the year.

My DP used to contract in IT, now he's in a "permanent" job. He's on half his old contracting salary but he loves the short commute (10 minutes by bike), shorter flexible hours, and also he works part time so he's around loads to look after the children. For us that's worth a lot more than the higher salary, so I'd say check what changes it would make to your lifestyle if he took a contract, they often seem to involve a lot of work or travelling.

Consider the benefits of perm vs contract (sorry if anyone's said this, have only skimmed thread

so factor in

paid holidays
flexible hours/working arrangements
bupa
bonuses
pension
sick pay

etc.

My DP is a contractor and has been for over 10 years..he has only been without a job for 2 weeks at the very msot in this time. His payroll and tax are done via his accountants ( as he is a limited company) and he is still much better off than any of the perm jobs he is always being offered.

Congrats to your hubby!

Btw I would take the contract! And pay for things like holidays myself. He can always go back perm if he doesn't like it.

Well i work in IT and am looking at the possibility of redundancy in the next 6 months. And unfortunately I have allowed myself to get into a deadend route where there is not much new work available in my field of expertise. So job for life - no.

Not enough difference to justify the move, imo.

But if he's worth £38 - 40 an hour he doesn't need me to tell him that!

Good grief fortyplus - what would it take for you to move if a change from £38k to around £65k isn't enough?!

yeah fortyplus..what would you require?

DH is an IT contractor, yes the money's good but you should be prepared for the possibility of being 'between contracts' for a couple of months or more. For the past few years DH has gone straight from one contract to the next, with a pay rise each time, but it's not always like that. You can squeeze 240 working days out of the year if he doesn't take much holiday, and there's no such thing as throwing a sickie - he goes to work unless he's unable to get out of bed!
ContractorUK has a beginners guide to contracting, so does the PCG

Benefits of perm ? Well he works for a London Borough, so there's not much in terms of benefits apart from the pension, season ticket loan, sick pay. No BUPA or gym, lol ! He often has to work extra hours as well so it's not that great with regards to regular hours. Plus he has a 1.5-2 hr commute each way. It's looking pretty cut and dried even as I type this...

Go for it

• a fellow IT contractor