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Original poster

Any IT contractors?

14 replies

CountessDingDongDrac · 17/12/2004 22:11

I am currently a Business Analyst/Project Manager for a large accounting software house. I have been on secondment to a parter firm in the city for the past 3 months, this looks set to continue into next year. Basically they have indicated very strongly that they want me to join them and they are prepared to pay whatever it takes. (at the moment they have to pay £1400 a day to my company for my services so whatever they pay me it will be cheaper for them)

I had a very illuminating conversation with one of the directors last night at the xmas party and the figures he was mentioning for contracting work seemed pretty good.

I can't just leave and join them as there is a very restrictive non-poaching agreement between the two companies. So I was thinking of leaving, contracting for them for 6 months and then becoming employed.

Also it looks like dh may be made redundant soon and as it would almost double my salary to do this, I could really use the money at the moment.

They have already said I could work part time if I wanted which is something I am desparate to do.

The question for you contractors - are you a ltd company? How much of the money you get paid do you acutally see at the end of the day? What happens with NI contributions - do you still get pension credits etc?

And finally what are the up and downsides of contracting. Bear in mind that once this company gets someone they like, they will do anything to keep them by all accounts and they have work coming out of their ears so I am not worried about the job security aspect.

Thanks in advance for your help.

OP posts:

WideWebWitch · 18/12/2004 17:33

Hi Countess, won't the non poaching clause apply even if you're contracting for the co you're currently seconded to? Maybe not, but worth checking I'd have thought.

I'm not in IT but I am a contractor/interim and I really like it and the freedom it gives me.My intention is to get a 6 month (or shorter) contract early next year (my current contract ends next week) and then take 6 weeks off over the summer holidays to spend time with dp and children. So that for me is a huge upside, as is the fact that it pays better than if I were perm doing the same sort of work. Another upside is that IME you don't get involved in politics and neither are you expected to do anything for glory particularly - you're there to do a job and deliver, not to get a promotion/flatter the boss so they give you a pay rise next year.

The downsides are that you can be on short notice and of course, out of work, but this doesn't sound like an issue for you. I was given a months' notice on this contract but they didn't have to let me know then, they were only obliged to give me a week. I know a contractor who is on 3 months' notice although I wouldn't want to be tied to that. Another downside is the lack of holiday/sick pay/pension/car/other benefits but interims are usually paid more because of this lack of benefits. Personally, I can live with it because of the better pay and freedom.

I work through an agent so they deduct tax and NI etc so I can't advise on that aspect but there must be accountants here who can tell you more. Be aware that the Inland Revenue have criteria for self employment and so you might have to watch this were you to work for this company for years and years. But I'm no expert in this field at all, so I hope someone else sees this. Go for it!

MrsBigDrumsADrumming · 18/12/2004 17:48

countess I think the poaching agreement would mean that you'd have to do a job away from the company for a little while before restarting

As for how much you'd be getting back... dh used to contract and used to use legit 'umbrella' companies who somehow managed to wiggle it that he'd pay less tax etc so only lost 15% of the total as opposed to the normal 40%... their fee was I believe 2-3%. I'll check with him later (he's not around just now) for some contacts if you want

Furball · 18/12/2004 20:50

DH says - to get the idea of the money side have a look here here

popsycal · 18/12/2004 21:15

Freddiecat (another Mner and a mate of mine) was in a similar situation (i think) but then things changed. But i do think she looked into this whole scenario...
I will text her and see if she can get online in the next few days....

fruitful · 18/12/2004 21:30

See here for various contracting income calculators and an explanation of IR35 (an Inland Revenue rule which says that if you are basically "employed" by one company you have to pay all your earnings to yourself as salary). Scroll down to "Moving between contract/permanent".

And yes, you probably have to be a ltd company and pay for insurance in case you make a mistake and they sue you! Although I don't know that contracting / being a ltd company is going to get around your anti-poaching clause.

JJ · 18/12/2004 21:41

Not the same situation, but my husband was head-hunted away from his former job. You should ask the firm's lawyers what to do, how to do it. Write into your contract the means (ie more money) to deal with your tax issues (NI, etc). Think about what you want and make them write it into the contract. You have the upper hand here.. just ask them with your questions and make them answer them on paper or with more money. Hope it goes well.

MancMum · 18/12/2004 22:21

I work in IT and come across this a lot... I would check with an employment lawyer as sometimes these agreements can be illegal - something to do with restiction of freedom of movement in the work place - the company I work for has these in place but has never ever gone to court over them... and it is one of the biggest in the field...even so, contracting does sound very worthwhile!

SantaQuated · 18/12/2004 22:41

Dh is an IT contractor ----don't know anyhting about the poaching issue but
we are a Ltd company- first agency he worked for said he had to be. We are subject to IR35 so have to pay tax and NI on everythting.
Just asked DH (who is engrossed in the footie) if you have to be Ltd and he siad not; you can work for the agency, as someone has already said, and they deal with your PAYE. or you can be a 'sole trader'. i'll ask him more tomorrow, when i'm likely to get more sense as i too would like to know the advantages/disadvantages of Ltd versus sole trader.
if it helps we can take about 70% of the day rate in salary; that leaves enough to cover things like insurance, phone, equipment etc
hth

SantaQuated · 18/12/2004 22:42

the big down side to contacting is the lack of security. DH was without a contract for 7/8 months - altho' the market does seem to ahve picked up.

SenoraPostrophe · 18/12/2004 22:45

Rmember if you are a Ltd company you are your own employer so you have to pay employee's and employer's contributions.

SantaQuated · 18/12/2004 22:47

yes, it is a real pia
and because of IR35 there is no director's dividend; it all has to be taken as salary

SueW · 18/12/2004 23:26

For six months, I can't imagine it would be worth setting up a limited co tbh.

phatcat · 19/12/2004 00:09

re the IR35 issue this is a useful resource - there are means of drafting a contract which may help avoid the IR treating you as a 'disguised employee' and therefore avoid you having to take all income as salary.

Daddypops · 19/12/2004 00:32

Hi, I am an IT Recruitment Consultant for Hays IT and have been involved in contract recruitment for over 5 years. My advice would be .... if you are going to contract for just a short period of time (such as the 6 month period you suggest), then your best bet would probably be to use an Umbrella Company rather than go through the hassle of setting up your own Ltd Company (which you would later have to dissolve anyway). The Umbrella Companies act as your Ltd company and in return charge you a weekly or monthly fee. There are a number to choose from but the main ones we use are Parasol IT (www.parasolit.co.uk), Giant (www.giantgroup.co.uk) and JSA (www.jsagroup.co.uk). There are lots more and it's best to shop around as prices and services differ greatly. Giant and JSA will even assist you set up your own Ltd Company if you really want to go down that route. Each Umbrella Company will be able to give you all the info you need to know on how much of your money you will actually see. Also ask them if they will indemnify you against IR35 - some Umbrella companies will.

As for the ups and downsides of contracting - well the upside is that you generally earn a lot more money than your permanent counterparts but this is usually to balance the facts that contractors aren't entitled to sick pay and holiday pay if they take days off (you only get paid for days you actually work). Also, contracts are usually short-term. Once the work is done, people then have to find another contract so the higher pay is to help balance out the fact you could be faced with periods without work between contracts.

As for the non-poaching agreement, I am pretty sure that that will prevent you from working for the company who want to employ you for the duration of the 'exclusion clause' - sounds like the 6 months you mentioned. They are put in for exactly the reason you are stating.

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