Permanent Vs Contracting Job Offer

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  Diji1 on 08/11/2016 - 11:50

  +5

  Permanent unless he plans on working another job. Reason: steady income stream that has more protection in terms of industrial relations.

• 

  Clear on 08/11/2016 - 11:51

  A little bit different but I do contracting within my full time permanent job currently.

  Personally I would choose permanent for job security and the perks. Contracting for me incurs a lot of travel and stress. Without the perks of annual leave, sick leave etc from my job… it would be taking quite a toll.

• 

  k-rokfm on 08/11/2016 - 11:54

  +1

  perm:
  125k + 13k super (approx) = 4.8k per fortnight before tax (not inc super)
  includes sick leave and annual leave

  contractor
  800/d = 7.2k per fortnight before tax (not inc super)? (not 10,600 per month, do you have your sums mixed up?)
  no sick leave or annual leave..

  Based on those sums id go contractor any day. That would be almost 190k per year as a contractor + super… or -6 weeks for anon annual and s/l if they use it = 168k?

  have i got my sums mixed up?

  • 

    Cyberninja on 08/11/2016 - 12:41

    +1

    Sorry for the confusion. The monthly amount I mentioned is take home salary (after tax)

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  ItsMeAgro on 08/11/2016 - 12:21

  You have to do the sums, but contractor rates that sound way higher at first are often less than the permanent rates just by factoring in annual leave and sick leave.

  That's before you even get to the better job security, easier to get a home loan, and so on.

  • 

    OzFrugie on 08/11/2016 - 23:04

    Does it really impact the difficulty getting home loan if you're contracting even for PAYG contracting for 1+ years?

    • 

      ItsMeAgro on 08/11/2016 - 23:28

      Yes. At least, I had to get a letter from my boss saying they'd employed me for years, and would continue for the foreseeable future, and that it was really a permanent position that was just technically a contract to avoid doing payroll for a very small software company, etc.

• 

  stirlo on 08/11/2016 - 12:22

  +5

  Absolute no brainer. If you have a family go permanent, you never know where you're heading if you're a contractor and an economic downturn could ruin your whole family in an instant.

  Also to be honest the contractor rate seems way too low vs permanent. There are 249 working days in a year minus 20 for annual leave and say 4 for being sick gives you 225 you'll actually work. At $800 per day that's 180K you make with zero job security or benefits. I'd expect to make at least double to trade that all away especially with a young family.

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  altomic on 08/11/2016 - 12:36

  Permanent - on contract if you get sick then no pay. If His misses gets sick and he needs to look after her then no pay.

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  Olga on 08/11/2016 - 13:33

  The contract rate should include gst and usually it goes through a contracting company that takes a percentage but provide the contractor payments, super, public liability insurance…. so the $800 daily rate is reduced, need to take that into consideration……

  • 

    Cyberninja on 08/11/2016 - 14:22

    Thanks for your response.
    Already considered. $800 excludes the share of contracting company.

• 

  airzone on 08/11/2016 - 14:18

  +1

  Factor in around 220 working days per year with 4 weeks off, public holidays, and some sick leave.

  That said, I have done both. There's something comforting about taking annual leave and being paid for it. I used to feel guilty when I wasn't working when contracting, because the hours weren't paid.

  Of course the job security is nice, but that's a matter of the industry, your friend's reputation, and the availability of work.

• 

  whooah1979 on 08/11/2016 - 14:29

  Contract work all the way. Find a good cpa and your friend may be able to take home more net per month.

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  whooah1979 on 08/11/2016 - 14:32

  Job security can be managed with income protection.

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  alz on 08/11/2016 - 15:44

  Go for perm. I was a contractor for 12 months and while the money is good the job security was not that great. Also you don't get Annual, Sick, Maternity, Paternity, Rostered Days OFF and all the other types of leave that you normally get (depends if you work private of government).

• 

  niner on 08/11/2016 - 15:45

  +1

  I prefer contract work. I get bored really easily.

  I make more money doing projects 2-5 year projects for various companies too.

  If you hope to become nothing more than just a monkey for one company, then stick with the permanent job. I'm in research, so doing the same job everyday is a waste of time for me.

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  mchoodie on 08/11/2016 - 19:59

  Yeah. Permanent for sure. Security is very important

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  5hri on 09/11/2016 - 08:13

  I presume this is in IT??

  You should also factor in the perks and other monetary benefits of permanent and the likelihood of the contract position being extended (based on the project/company etc)

  I know many people in IT doing contracting for years and is very common. Banks do lend to contractors but they look at your past income and may choose to reduce your loan serviceability on your past income(if contract < 2 years).

  At the end it has to be based on your immediate and long term (5 years) plans.

• 

  thefreelunch on 09/11/2016 - 08:44

  A couple of other factors to think about:
  - The 'net' take home pay when contracting may be higher again depending on how the contractor is able to structure their finances (eg income splitting through a family trust)
  - Contracting has less security but the flip side is more flexibility. This may be important with a toddler.

• 

  pj29343 on 09/11/2016 - 09:16

  I've been contracting for the past 4 years at a good organisation.
  I've got good visibility for upcoming work.
  I've got a young family with 2 kids.

  Pros:

  Money is great. I made 175k average (quoting from the payment summary).
  Saved for a deposit quite quickly and bought a house.
  Was able to afford my wife taking off work while we had our second baby.
  All in all money is the biggest plus. I wouldn't be able to make the same amount of money working permanent.

  Cons:

  No sick / vacation days obviously.
  Have dragged my sorry a— into work on many a sick day.
  Have felt guilty about taking days off thinking about the money that I was missing out on.

  Future plan: I want to move into a permanent role pretty soon because of the cons. My wife has moved back into the workforce and hence the pressure is a little off for me in terms of the financials.

  Its upto your personal circumstance but its good to make money in the short term.
  Not viable in the long term but having said that I have colleagues who have been contracting for 10+ years. I guess its also a mental thing. They factor in being off work for a few months, taking sick and vacation days off in a year etc..

  If you don't have visibility on how long the contract is going to be for and if it doesn't keep getting extended then probably not worth it.

  Good luck!!

• 

  WT on 09/11/2016 - 12:14

  +1

  self employed here, not for everyone.

  Probably not enough info, but I would contract, since you are working for 30% more you can effectively work 30% less for the same amount as full time, which frees you up for other contracts and other stuff

  I would only take the permanent if I/wife got sick a lot (unlikely in 30's unless you have a condition) or if it leads to promotions that would exceed contract work.

  end of the day, it comes down to job security and willingness to find work. E.g work 9 months, get laid off and you have 3 months to find another contract and still be where you would be if permanent. Some people cant take that stress, others juggle multiple contracts and make good money. Economics also comes into play, if its a volatile industry etc

  On the other hand I know people who took a pay cut to work for the gov and are happy to just plod along

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  Cyberninja on 15/11/2016 - 12:39

  +1

  Thank you all for your advise. My friend has taken up the permanent role. Cheers.