Employer Wants to Convert My Employment Type from Contractor to a Permanent Position - What Kind of Things Should I Ask/Know?

Dr-StrangeLove on 20/07/2020 - 16:46
Last edited 20/07/2020 - 16:51

I have been a IT contractor from over 2.5 yrs in Sydney and my employer now wants to convert me to a perm. I was hoping for another 1-2 yr extension and that is what I had asked when my contract was renewed last time.

I am not sure now that if I should go ahead with it? I haven't got any offer yet and got a meeting tomorrow morning to discuss what will be offered. I am getting a bit anxious and was looking for some suggestions and general advice as to what kind of things I should know or ask.

Considering the current situation with Covid-19, I am leaning towards accepting the perm job. But at the same time, I feel permanent doesn't really mean job security (I might be wrong). So I had told my manager that I am open to anything and they will now get back with what they are going to offer. I am pretty sure my pay would significantly lower if I accept a perm job which I am not very happy about

Thanks in advance.

Poll Options

  • 340
    Take permanent positon
  • 6
    Say no and ask for a contract extension if it is available
  • 85
    Wait for what the manager has to say and decide based on that
Education & Work

Comments

  • xuqi on 20/07/2020 - 16:56
    +25

    "What Kind of Things Should I Ask"

    Where do I sign?

    "I am pretty sure my pay would significantly lower if I accept a perm job which I am not very happy about"

    They can always let your contract lapse…..

    "I had told my manager that I am open to anything and they will now get back with what they are going to offer."

    This is the best course of action. Wouldn't hurt to decide on what you'd like raise/discuss (Pay, entitlements, etc.) during the meeting. Write things down and take them in to the meeting with you. Take notes during the meeting, don't rely on memory.

    • Dr-StrangeLove on 20/07/2020 - 19:39
      +2

      Thank you for taking the time. I am taking a lot of good points from this thread to the meeting tomorrow. I am mostly concerned about the pay and don't want to settle for too less but considering the current economic situation I don't want to give away that I would sign to whatever I'd be offered.

      • cameldownunder on 22/07/2020 - 11:38
        +8

        You need to consider Paid Holidays, Bonus, GST, Super, maybe Health Insurance by company, maybe salary continuation offered by company, sick leave and maybe training if the company offers …

        If you were on a Hourly Contract I think you can expect a reduction from 20% to 30%.

        My guess is you do not have to sign there and then. Take it home, sleep ( or not ) over it and see how you feel the next day.

        • Telcius on 22/07/2020 - 13:06
          +8

          Full time employees have a lot of entitlements contractors don't, but that is why contractors get the bigger pay cheques. A pay decrease of 20-30% seems accurate in my experience. Are the entitlements + job security worth it?

          • whiskeyjack89 on 24/07/2020 - 10:10

            @Telcius: Depends on the entitlements and the person. I was a contractor at my current work and pushed them to make me a perm as the job security and long term benefits were higher value to me than earning the extra $$ - turned out to be a good idea as all other contractors were cut back in March. Others may already feel they have the job security anyway and prefer to be flexible/take the extra dosh. Essentially YMMV

      • johnwinds on 22/07/2020 - 18:31
        +3

        Even if you're not thrilled about the reduction in pay, you could always sign on as a permanent employee and then quit this job later (after you've found another job). That way you'll be protected in case you can't find anything else in the current climate.

      • Leeroy Jenkins on 23/07/2020 - 09:50
        +1

        I was a contractor not long ago as well. Took a 25% reduction in pay doing exactly the same thing every day.

        I've calculated every bit of benefit I get, and yeah the benefits I get weigh less than that 25% pay reduction, but hey, if I really want a contractor job again, I'll go look for one when the time is right. Right now, I think the stability is more important cuz I'm the sole earner in the family at the moment.

        I'm not complaining. At least I'm still getting paid my agreed salary during such a harsh time. I'm grateful.

        EDIT

        • Tambani on 23/07/2020 - 14:18
          +3

          You need to consider the POTENTIAL benefits included in the permanent role.

          I had a major illness a couple of years ago and my enterprise agreement supported me financially through 6 months of slow, debilitating rehab.

          There is no way I'd have received that much in pay for the hours I worked if I was casual.

        • jkim on 24/07/2020 - 19:10

          How do you calculate 25%?
          Contracts are usually day rate inc super, perm is annual + super.
          Did you calculate it as: ((dayrate x 220) / 1.095) * (1 - decrease) = perm salary?

          So when you said 25% decrease, would the following hold true?
          ((dayrate x 220)/1.095) * 0.75 = perm salary?

    • ItsMeAgro on 22/07/2020 - 14:43
      +7

      I am pretty sure my pay would significantly lower if I accept a perm job

      Make sure you are comparing Apples to Apples. Count up the number of hours gained by the annual leave, sick leave, etc and factor that into your hourly rate comparison.

      I was shocked when I did this early in my IT career and found out I was learning less than full-time people on a much lower-sounding rate.

      You may find the perm sound way lower but is actually more, even before you factor in the extra worker's rights and job security etc.

      • gromit on 22/07/2020 - 19:32
        +3

        You may find the perm sound way lower but is actually more, even before you factor in the extra worker's rights and job security etc.

        ^this, so many contractors think they are getting a much better deal than they really are and conversely many permanents think incorrectly they would be better off as a contractor. One of my mates is a public servant, he would constantly complain he should be a contractor (I was a contractor at the time), so I sat down with him and walked him through the maths and he was shocked to see he was actually earning slightly more than a lot of the contractors on an hourly basis.

        • johndoh89 on 22/07/2020 - 20:54
          +1

          Sick days and holiday rack up fast.

          Worked casual (teacher) for a while and took no leave, made a mint compared to normal. If I'd gotten sick and missed days it would've turned nasty pretty quick, especially if it hit near a holiday period.

        • Hangryuman on 23/07/2020 - 09:33

          workers compensation is nice too - I had a motorbike accident on the way to work, and was off for 6 weeks (limbs in plaster) on full pay

          I suspect contractors don't get workers comp, sick leave, holiday pay, paid holidays, etc.

          • gromit on 23/07/2020 - 09:54

            @Hangryuman: depends, some places do provide workers compensation insurance for contractors too. But yes all of those things are items you need to subtract from your hourly wage as a contractor to do a like for like comparison. In addition to those their is also long service leave, overtime and flex, training etc etc.

            • [Deactivated] on 23/07/2020 - 11:04

              @gromit: Even after you factor in all those stuff, contractor should still be able to earn more. This is because there is no ceiling limit on contractor wage, but there is on permanent wage.

              The view that perm position is more secure may not be true. Especially in current circumstances.

              When you just started as perm, your lsl is $0, and your redundancy is also $0 during probation. Even if you have done 1 year perm, your lsl is only 3-4 days, and redundancy at about 4-7 weeks.

              So if 12 months from now you are made redundant, as a contractor you would have had more saving until you find a new job.

              In current situation, if you are not competent enough, taking too much sick leave, taking insurance, surely you will be first choice for redundancy.

              Best way is to stop looking at ozbargain and start looking on seek and LinkedIn.

              In the meantime, just accept their offer and give them the bird when you got a new job.

              • gromit on 23/07/2020 - 12:34

                @[Deactivated]: The first people to get the axe in the current climate is contractors, permies by comparison are far safer (though no one is completely safe at the moment). I know the first thing several companies I work with did was offload all their contractors.

                You are describing a niche scenario where in theory yes a contractor may be better off than a person that was sacked after a year from a permanent position, if you are that bad an employee you will probably be ditched even sooner as a contractor. there absolutely IS a ceiling on contractor rates, each company or project will have limits they are willing to pay before they decide it is just not worth having a contractor for that, I deal with that every day as I staff projects with a mix of inhouse and contractor staff, in that respect it is no different to a permanent, each has a pay ceiling, incidentally ALL our permies are on higher rates than the contractors.

              • bender000 on 23/07/2020 - 20:03

                @[Deactivated]: This, except maybe not give them the bird lol.

                The above poster is right though, as a permie (assuming you survive probation lol) the only advantage is that they'll go after contractors first, and then they have to pay you redundancy, which will be SFA as you haven't been there long. But there's no downside to taking the job, and then hopping to something better if you can find it.

                You can fiddle around here if you want to know the true figures

                https://www.bigdream.com.au/en/salary-compare

              • [Deactivated] on 25/07/2020 - 15:34

                @[Deactivated]: Depending on the state you're in you may not be eligible for any LSL if made redundant before 7 years / 10 years and nothing if leaving within 10 years. It's extremely variable depending on your state.

                As for redundancy:

                Period of continuous service Redundancy pay
                At least 1 year but less than 2 years 4 weeks
                At least 2 years but less than 3 years 6 weeks
                At least 3 years but less than 4 years 7 weeks
                At least 4 years but less than 5 years 8 weeks
                At least 5 years but less than 6 years 10 weeks
                At least 6 years but less than 7 years 11 weeks
                At least 7 years but less than 8 years 13 weeks
                At least 8 years but less than 9 years 14 weeks
                At least 9 years but less than 10 years 16 weeks
                At least 10 years 12 weeks

                Though often you'll get gardening leave for your 4 weeks notice once if made redundant off probation as well.

          • sarahlump on 23/07/2020 - 19:42

            @Hangryuman: Did you loose much skin?

          • Gunther on 24/07/2020 - 08:26

            @Hangryuman: Workers Comp is mandatory for all types of employment.

            Workplace personal injury insurance. The Workers' Compensation and Rehabilitation Act 2003 (the Act) states that employers must insure their workers with WorkCover Queensland under an Accident Insurance Policy

  • JIMB0 on 20/07/2020 - 16:58
    +4

    Ask for your own office and personal assistant.

    • xuqi on 20/07/2020 - 17:00
      +1

      **Corner office with a view.

      • 87percent on 20/07/2020 - 17:02
        +4

        And BMW, equity in company, mansion by Sydney harbour

        • [Deactivated] on 25/07/2020 - 19:45

          Should've asked for a high yielding Mercedes instead…

      • elgrande on 20/07/2020 - 18:57
        +11

        ** a personal loo with a view

    • Dr-StrangeLove on 20/07/2020 - 19:45
      +1

      haha I wish

  • trustnoone on 20/07/2020 - 17:02
    +6

    I think it depends on the place, but typically you take less pay, but you get rec/sick and public holiday pay still, so it kind of depends whether time or money is more important for you. You might also get more specific things depending on your work place that contractors don't.

    Usually it comes with more security, they need to give you time if they want to fire you, or they may need to create a plan to prove issues at quality of work before they do so. So definitely worth checking the contract.

    Usually in this job market, contractors are first to go because they're the most expensive and easiest to get rid of. You might also find yourself more likely to grow in some companies/provided more training as you're an employee they're likely to keep while a contractor typically moves from job to job based on need.

    To be honest it kind of sounds like you've been paid contractor amounts but had a pretty good stability thats closer to permanents, which is typically the best place to be for a contractor.

    If they're asking you to be a permanent though, I'm guessing it means the companies trying to reduce contractor numbers (and assumed costs) and they'd prefer to keep you, it also means though that if you don't take it, they may have to follow their directive to reduce numbers.

    • Dr-StrangeLove on 20/07/2020 - 19:45
      +1

      Thank you for taking the time. I currently need to take 4 weeks of yearly mandatory leaves (3 weeks over the Christmas period and they have sneaked in an additional 1 week this year that I have to take before the Christmas holidays start). So all I'd be losing would be the 2 weeks sick leaves. I don't take a lot of those even if I was permanent (not zero but very minimal).

      I just feel that I need to take a chance and try for another year extension but considering I am in the same company for over 2 years, there is a policy that I need to be transitioned to a permanent role. I know that this is not a hardcore rule as there are quite a few people I know are contracting in other teams for over 10 years now. I don't want to be contracting for that long but a few more years would really help me financially.

      Yeah, I am paid daily and I am thinking the at least 20%-30% reduction in my yearly salary if I take the permanent position. I don't know if it is worth it considering the current job market. I am sort of optimistic about it but I have been wrong before.

      I think I'll wait for what they have to say in terms of remuneration and other entitlements. I would also need to subtly check if they would consider extending.

      Thanks again for taking time to provide your thoughts on my situation.

      • trustnoone on 20/07/2020 - 19:53
        +5

        I currently need to take 4 weeks of yearly mandatory leaves (3 weeks over the Christmas period and they have sneaked in an additional 1 week this year that I have to take before the Christmas holidays start). So all I'd be losing would be the 2 weeks sick leaves.

        I think you're mixing it up? As a permanent employee you're paid for those 4 weeks, or it comes out of your recreation but even if you are taking recreation leave, you're still getting paid while on leave (and accumulating recreation leave). So you don't lose that leave, you get paid during it, while a contractor wouldn't?

        Still though, as you said it all depends on how much the reduction is, what entitlements there are, and how important they want to keep you, you could get yourself a good deal, maybe close to current pay that it could be worth it. Or not, and not knowing how the market is, you could come out badly or super well. So I think you're doing the right thing checking first, and all the best mate!

        • Dr-StrangeLove on 20/07/2020 - 20:00

          Thanks, yeah no pay for the 4 weeks. I was comparing the leaves bit for a perm vs contractor from a wellbeing point of view. Sorry, I did not mention/imply that bit in my comment. Even with that # of days off, the pay is significantly higher I feel but I guess I'll wait and see what they have to say. Thanks again.

          • Chandler on 22/07/2020 - 13:09
            +3

            @Dr-StrangeLove: You'd need to do the math on both the financial side of things and also the environmental side (management, potential for advancement, likelihood of termination, work/life balance)

            Looking at the financial side, typical benefits of permanent vs contract could include:

            • (paid) Sick Leave (typically 10 days)
            • (paid) Recreation Leave (typically 4 weeks)
            • Long Service Leave
            • Notice of Termination (typically 4 weeks)
            • Termination Payment
            • Redundancy Payment
            • Superannuation

            Other potential benefits which could decrease your own costs, although you'd lose any tax benefits from not doing it yourself:

            • Insurances (health, income protection)
            • Training
            • Equipment (computer, phone, etc)
            • Vehicle (car, servicing, petrol, tolls)
            • (potentially) simpler Taxation
          • aboogee on 22/07/2020 - 13:41

            @Dr-StrangeLove: if you're saying that under contract you still earn more after factoring in the 20 day no-pay annual leave as well as 10 day sick leave, then yup why dont u push hard to stay on contract?

            And even if you became a permanent employee, that doesnt mean that you have to stay with the company forever - you can still resign and leave.

            Maybe your company paid you a "premium" for the uncertainty you take at the end of contract (they may not extend) and now you're losing this premium… up to you, depends on how quickly you think you can find a job if you stay on contract and they decide to not extend

          • spook290 on 22/07/2020 - 16:48

            @Dr-StrangeLove: Even if you don't take the annual leave…. you still accumulate those days, makes for a handy pay out when you eventually leave or a buffer in case something happens.

            Don't forget to factor in career progression, much harder to progress in an org as a contractor.

            a 30% paycut is pretty normal between day rates and perm, but as others have highlighted, factor in sick days, public holidays, annual leave and the gap becomes a lot less.

            On your point around job security, contractors are usually always the first to go, if you go as a permanent, at least you get a redundancy.

            I work in internal tech recruitment (also been agency side) and have these sort of conversations regularly.

  • [Deactivated] on 20/07/2020 - 17:13
    +11

    Good problem to have.

    • Dr-StrangeLove on 20/07/2020 - 19:46
      -2

      Well, it's a double-edged sword from the way I see it.

      • [Deactivated] on 20/07/2020 - 20:10
        +2

        Both arrangements have their pros and cons.

        Contractor is the way to go if you are entrepreneurial. From your decision criteria, I think it would be in your favour to be employed vs contracted.

        Unless you're looking to subcontract or delegate, being a contractor as a direct and linear alternative to employment is really just sham contracting. It never works in your favour.

  • PissLUR on 20/07/2020 - 17:13
    +5

    Congrats mate

  • netjock on 20/07/2020 - 17:16

    Didn't you have enough time already to figure out what a perm person would be making. Generally pay reduction would only be 10% because the additional benefits which might come with it (redundancy pay, long service leave).

    • Dr-StrangeLove on 20/07/2020 - 19:48

      I highly doubt it would be 10%. I am thinking of at least 20-25% reduction.

      Well, I guess those are good benefits and I am sure my manager would be bringing those up in the meeting tomorrow. I am just more inclined to hope to get higher pay for now but it will always be risky

      • thanatos350 on 22/07/2020 - 12:52
        +1

        The contractor rate at my last employer was approx. 3x more than the average employee hourly rate and they carried much less stress. However, it is an entirely different industry.

        It really depends on the organisation. Are the perm staff happy? Do management micromanage perm more than contractors?

    • adn on 22/07/2020 - 18:38

      Most company I have worked for would expect at least a 40 percent reduction. It not just about leave, there is training, risk, not being treated second class, car allowance, laptop, phone and so forth.

      10 percent, sign me up!

      • netjock on 22/07/2020 - 21:21

        Most company I have worked for would expect at least a 40 percent reduction. It not just about leave, there is training, risk, not being treated second class, car allowance, laptop, phone and so forth.

        If you are getting paid 40% higher than permanent employee then you're probably living a first class life. You're going second class going permanent.

        Car allowance is cash, I have no idea why you exclude car allowance and say it is part of a 40% reduction.

        Unless you work in construction or manual job otherwise the company would give you a laptop. Unless you get a desktop that you have to find a powerpoint and extension cord everywhere you go.

        Phone? Desk phone or you talking about a mobile? Most of the companies I have worked in for the last 10 years don't have a desk phone. We are all on IP phones.

  • mbck on 20/07/2020 - 17:17

    Nice work. Well done.

  • try2bhelpful on 20/07/2020 - 17:40
    +1

    Had something similar many moons ago. I asked for a $5 per hour increase on my contract and they, finally, said “nup”. However, they then offered me a permanent job, at similar pay, and added the extras on top, so it probably cost them more in the long run. Particularly as that included long service leave and redundancy pay. Give your accountant a quick ring and find out if the tax advantages either way.

    • Dr-StrangeLove on 20/07/2020 - 19:51

      Did you take it? My tax stuff is not too complicated and I am just comparing what my role would currently get in the market as perm vs what I am getting as a contractor annually

      • try2bhelpful on 20/07/2020 - 22:51
        +3

        I took it. I only worked for one employer through a contracting house so it didn’t make much difference from a tax claim perspective. The perks were reasonable and both the long service leave, and redundancy pay, came in handy; in the long run. As others have said you need to calculate the total package not just the hourly rate. Companies also tend to ditch the contractors before their permanents. At the moment I would burrow in hard, it doesn’t look pretty out there.

  • thatonethere on 20/07/2020 - 17:43

    Other people have mentioned you need to factor in sick leave and rec leave to compare it to the raw rate of the contract.

    You can also see if they are offering stuff like mobile phone, car, mobile plan, home internet, training and certification etc.

    Be careful about total remuneration packages - ie is super annuation on top or include in their offer.

    • Dr-StrangeLove on 20/07/2020 - 19:53

      Thank you for taking the time. Yeah from my calculations additional 2 weeks of sick leave is the one benefit that I can avail in the near future. Yeah, long service leave is good I guess I don't know.

      My manager did mention about providing a mobile phone, an iPhone XR or some shit but not too keen on that. Training and certifications- yes good point. They do offer that I think and it would be good for a career path.

      • Vote for Pedro on 22/07/2020 - 16:55
        +3

        Seems you are really negative about being an employee. Reject the offer.

  • [Deactivated] on 20/07/2020 - 17:52
    +1

    Its one of those keep your eyes open things.

    They could be starting a new whatever, and youre the only person who knows what to actually do, but youre reporting to a know-nothing-know-it-all and you may have to train up the same.

    Just make sure youre not training up replacements, only to be then 'managed out'

    • Zephyrus on 22/07/2020 - 11:21
      +2

      You'd keep them as a contractor if you wanted them to train replacements. If anything, they're the replacement. They might be caning this guys manager and making this guy responsible for that thing.

    • Kangal on 22/07/2020 - 15:25
      +1

      I wonder if there are legal ramifications for something like that?

      For instance, a business needs your expertise and they hire you as a sub/contractor for say $100k/yr as what you offer is unique to the industry. And then they ask you to sign-on as a Perm/FT employee, making it look like if you don't then they will stop using you as a contractor. You sign-on (let's say for the same $100k salary plus benefits) and the first 6-months are fine. Then the last 6-months they start having you train some technicians, and they rationalize it as in-case you get sick and/or take holidays. You reluctantly agree. You train up two technicians and show them the intricacies of the work, both are low-level $50k technicians. You're also tasked of making documents and training manuals. Things go okay for a couple more months as the techs start getting more confident. Then out of the blue, the manager arranges a meeting and/or performance review. Then they make your role redundant, and offer you only low-pay position ($50k/yr). You decline, and hence you are fired. The business continues on going now that they have acquired the know-how from you for a low-amount. However, the work you were contracted on doing for $100k/yr is still being done by those low-pay technicians, and they are also tasked to train other technicians to retain that expertise.

      In such an occurrence, is that illegal? And if yes/not, can the professional actually complain to Fair Work or sue the business for their expertise (or "intellectual property") ?

      • gmail92 on 24/07/2020 - 23:21

        Complain to fair work RE: Unfair dismissal probably; I'm sure any IP you make for them whilst working for them is their IP, so the latter probably not.

        • Kangal on 25/07/2020 - 00:31

          That's just it, the IP wasn't created during work, nor was it made by the business. As the IP was present before the employment. To me it seems more like IP-Theft in a weird unethical gray-zone. But maybe legally it's a roadblock. Really have no clue about such a scenario.

  • tsunamisurfer on 20/07/2020 - 18:06

    The main thing OP is that the money will reduce. If you are used to a certain amount and cannot adjust, then you may need a different strategy.

    I have been contracting for 13 years and its been great, in fact I dread the talks about switching to permie.

    I am seldom ill therefore seldom take sick leave.

    As for security, yes, contractors are typically the first to be shown the door, but I have seen entire teams gutted permies and contractors, so its not exactly 100% safe either.

    • Dr-StrangeLove on 20/07/2020 - 19:56

      Thank you for taking the time. Yeah, I am pretty much in the same boat as you but just that I haven't done contracting for that long. I have seen that as well in my current and previous work. It is not that contractors would be first gutted. There is no guarantee which is what made me start contracting in the first place. I just want to stick it to the same principle but with the current economic situation with covid-19, I am just not too sure if that would be the right decision. I'll just see what is being presented and hoping to take it if it is satisfactory but I kind of like contracting as there is not too much obligation with the employer.

  • cimrak on 20/07/2020 - 18:14
    +4

    Put your contractor salary into Salary Compare and it will show you the equivalent full-time wage. This lets you understand a like-for-like comparison as it includes things like annual leave, sick days et as well as Super.

    Then negotiate from that point with your manager. If they cant make a pure monetary offer that suits you, ask if they have any room to move on other things like;
    - can they offer 5-6 weeks paid leave instead of the usual 4 weeks
    - reimbursement for training courses (say, up to $10k per year)
    - 1x guaranteed national/international conference trip each year of your choice once covid-19 is over (e.g. flights+accom to VMworld or MS Ignite)

    and always, ALWAYS, get those things put in writing :D

    • Dr-StrangeLove on 20/07/2020 - 20:04

      Thank you for taking the time. Not too keen on taking 5-6 weeks paid leaves. But others are good points. I am also considering asking if they can increase the superannuation from 9.5% to 12.5%. I'll wait for what my manager has to say first and I am thinking they might bring some of the things mentioned here already. Thanks again.

    • Bargain80 on 22/07/2020 - 17:03

      don't forget any allowances you can claim from government or centrelink (e.g. private insurance rebate, Child care subsidy, etc.)

  • awaddell on 20/07/2020 - 18:18
    +1

    Depends on what you mean by contractor, as in a true contractor relationship you have no employer, some people mix this up with casual employment.

    Permanency bestows guarentees of Annual Leave, Sick Leave, Superannuation payments, Long Service Leave and Public Holidays. It also raises the bar for the justification required for a termination.

    The down side is that it comes a financial cost, in terms of lower renumeration (normally).

    There are also tax implications, as a contractor you are responsible for your own tax payments and you are also eligible for many deductions. A PAYE employee has very limited deductions available.

    I think as many others in this thread are suggesting it is less about what questions and more about what your spreadsheet calculates.

    • Dr-StrangeLove on 20/07/2020 - 20:06
      +1

      Mine's casual employment. I am employed with a client through an agency who maintains the payroll etc.

      Yeah, monetary benefits are something on top of my priorities when dealing with this situation but considering the current economic situation it feels sometimes to play safe and take what I am offered but will see

      • Cheapskate Paul on 21/07/2020 - 16:40

        "I am employed with a client through an agency who maintains the payroll etc.

        I think your employer is trying to avoid the not insignificant costs of the agency as they have decided you are good enough for a permanent role. If the offered salary is within 10% - 15% of your current salary (taking Super into account), I think you will be in front with the permanent position.

      • Fluffmeister on 22/07/2020 - 12:04
        +7

        Thats kind of an important point. Up until now everyone just assumed you were on a fixed term contract with the employer

        If their goal is to bypass the middle man who are taking a margin and adding no value, its very possible you can come out of this no worse off and they can potential generate some savings as well.

        A win win.

  • Hardlyworkin on 20/07/2020 - 18:50
    +2

    You might have 99 problems but this certainly shouldn't be one of them!

    • Dr-StrangeLove on 20/07/2020 - 20:06

      Sorry, what are you referring to by this?

  • JimmyF on 20/07/2020 - 19:02
    +4

    I am pretty sure my pay would significantly lower if I accept a perm job which I am not very happy about

    Make sure you 'understand' your yearly contractor pay though. Its not your day rate x 5 x 52 weeks.

    In any given year you have the following

    4 weeks 'leave'
    2 weeks 'sick leave'
    2 weeks public holidays.

    So there is 8 weeks of unpaid leave as a contractor, that would be paid as a perm.

    So you're real contractor yearly pay is day rate x 5 x 44 weeks.

  • 1mmy1mmy on 20/07/2020 - 20:39

    Hey I was wondering if you had contacted your union or maybe the fair work info line?

    My friend's corporate job recently ask for volunteers to get a pay cut… Basically in the end she volunteered and then found out that anyone with a good narrative/story didn't take the pay cut. She went back with her story ready and her pay was reinstated… So maybe prepare your story for why a giant pay cut is not going to work for you?

    I'd have in the back of my mind that permanent employees can be stood down too… Or forced to use up their leave entitlements due to covid so you may not actually be gaining all that much…. But you might be keeping a job, which would be good!

    Best of luck tomorrow

    • TheBilly on 20/07/2020 - 22:47
      +1

      My friend's corporate job recently ask for volunteers to get a pay cut… Basically in the end she volunteered and then found out that anyone with a good narrative/story didn't take the pay cut.

      LOL wut???

      • 1mmy1mmy on 21/07/2020 - 06:40
        +1

        That's what I said but I'm a public servant so I thought it might be more common in business?!

  • TheBilly on 20/07/2020 - 22:46
    +1

    How did you dodge the rulings associated with personal services income as a contractor? because technically if you fall under that you should have no real tax benefit as a contractor versus employee.

    • Ozpit on 21/07/2020 - 09:24
      +1

      Don’t forget to factor in the employer’s superannuation contribution. That’s a BIG plus for a salaried worker.

  • Snoozer on 21/07/2020 - 10:41
    +1

    I would ask about professional development and training opportunities, and also what would be your redundancy entitlements if they were to let you go. Some companies and govt departments offer better redundancy payouts that the bare minimum required by law, which is ideally what you want in order to give you that extra feeling of security.

    As other people have mentioned, make sure you clarify if their salary offer is inclusive or exclusive of super. I've seen so many people get bitten by this.

  • dasvenson on 21/07/2020 - 12:17
    +2

    I would expect the same. 20-25% reduction of yearly take home pay assuming 46 weeks per year working as contractor.

    When I was contracting I basically only assumed I was working 46 weeks a year. That assumed 4 weeks leave plus 10 days public holidays. Any sick leave is on-top of that. I had a year where I had to take two weeks sick leave which (profanity) sucked and had me stressed.

    I moved to a permanent position now and the peace of mind about being able to take sick leave when I need it and not having to worry is not to be underestimated. I was lucky enough to get a slightly more senior position which made up most of the difference in contractor pay but I do have more responsibilities.

    It really depends on where you are up to in your life and the job market. I wish I did a lot more contracting when I was younger and less responsibility but now that I have a mortgage stable employment is my priority.

    Either way if you decide to leave or stay with permanent - accept the permanent position!! Don't feel bad about going perm and continuing to job search for that contract role. Definitely don't tell your employer if you think that's the case. It may feel like a dick move but you need to look out for yourself.

  • SlickMick on 21/07/2020 - 12:47
    +1

    I think it's pretty easy to calculate financially whether their offer is worth it. I calculate contracting rates at 44 weeks per year since don't get compensated for annual leave, sick leave, or public holidays. But permanent perks might include employee share scheme, gym membership, training, bonuses etc.
    Other things to consider:
    1) How valuable are you? If it would cost them too much to lose you, the ball is in your court - require that the offer is at least financially equivalent;
    2) What's the company like? As a contractor, it's easier to not get frustrated (there's a light at the end of the tunnel). Committing to a permanent role will rob you of that.

    I dread being put in a similar situation. I'm on a good rate for entry-level work, but it's 1/2 what I'd be earning if I could find a job in my actual field. The company is terrible, though people I work with are great and the work is good. But if I was to take responsibility for anything, I'd be frustrated by end of first day. I don't think I could make that commitment, even if it meant being unemployed again.

  • unicorse on 21/07/2020 - 14:49
    +10

    Having been in a simiar predicament to you in a past life (good problem to have these days btw), ask for the following in order of necessity:

    1. zero probation period - this is a no-brainer.

    2. backdate your service start date to when you started contracting with them - this will help with long service leave and any redundancy (tocuh wood) down the track.

    3. parental and personal/sick/carers leave entitlements - agree on a starting balance that isn't zero, but one that recognises your length of service (and ignores that they've already paid you for this)

    4. annual leave accrual - again, agree on a starting balance that isn't zero, but one that recognises your length of service (and ignores that they've already paid you for this)

    The last two might seem a bit… brave, but they are asking you to join them because you are valuable to them. Think of it as a sign-on bonus. It's been done before.

    • Donaldhump on 22/07/2020 - 23:28

      Zero probation is irrelevant, you can be terminated for no reason in first 6 months I believe, regardless of what probation period says, and I doubt they would backdate the dates, if that’s even legally possible.

      I may be wrong.

      I doubt 2,3, and 4 will fly unless your shit hot at your job, and have them by the balls. imagine getting a starting sick balance of ten, blazing through them and resigning.

      • macfudd on 23/07/2020 - 14:44

        Not the case about 6 months. Employers can choose to set whatever length of probation they want - up to a maximum. The Fair Work act sets the maximum length at 6 months for large employers and 12 months for small employers. So OP's employer can definitely choose to waive it, there is no legal requirement to even have one, and in this case, it's definitely worth asking for as there has already been plenty of time for both parties to assess each other.

        As for 2, 3, and 4, they would be something that I would use as negotiating points if the salary doesn't fall where you want and they won't budge. A company is far more likely to say yes to a couple of annual & personal days.

        • Donaldhump on 23/07/2020 - 14:55

          employer sets probation to 1 day, but says good bye after 4 months as they no longer want you. You don't have any rights for unfair dismal, so probation being set at 1 day or 6 months makes zero difference. that's how i understand it

          • macfudd on 23/07/2020 - 15:40

            @Donaldhump: Sorry, yeah, I misunderstood your first post, that is correct, your rights to sue for unfair dismissal don't kick in until you've been there 6 months.

  • kiitos on 21/07/2020 - 22:41
    +1

    I was going to say that the costs of contacting like invoicing, company accounting, insurance, filling, etc are significant but it looks like you go through a recruiter. If you can find out the margin you'd have a great chance of negotiating a package that is very beneficial to both sides.

    Good luck, if you can't get the $$$ you want look for alternatives like training, flexible time, etc.

  • Keiting on 22/07/2020 - 00:56
    +3

    I can personally share that the perception that permies are more "stable" than contractors have been grossly disproved.

    I work for a financial institution in Melbourne and with the new CEO having recently come on board and a ruthless chief people officer (ya I know, ironic)… the new structure has resulted in some permies being let go, as their roles no longer exist in the new structure. However, contractors stay, as they are still required to do their work.

    Total BS.

    So… it really is no long completely true that permies means more stability. The contractors have it easy, no need to go through BS training that the chiefs now say everyone has to go through and spend hours and hours of your personal time to do it, no need to set goals, no need to do additional extra curricular nonsense but yet get paid more.

    • Keiting on 22/07/2020 - 00:59
      +1

      For what it's worth, I know contractors who have turned perms and took a 10% cut from their contracting money (based on annual package vs 44 contracting weeks).

  • Mattylicious on 22/07/2020 - 11:54

    I was in a similar position couple months ago. My annual salary dropped a bit but if you take into account all the permanent role benefits the company offered (annual leave, sick leave, long service leave, health insurance etc..), it works out to be more than the contractor position so it was an easy decision for me especially during COVID times.

  • de9299 on 22/07/2020 - 11:58

    I can add some perspective. I switched jobs from contracting ( 1.5 years) at Company A to permie at Company B in November last year.

    Company A was a fantastic place to keep banking in the $$$, the staff and management were great and none of the contractors or permies had pay/job cuts during the pandemic. However, the projects at company A were boring and I couldn't find myself growing. I had received 3 extensions and was due for a 4th.

    I decided to take a paycut ( 30%) and move on to Company B which has a great reputation on paper. I thought the role would give me a long term career growth, networking opportunities and more. I also thought having a perm role would help while looking for a home loan. The initial projects were great to begin with.

    Fast forward to today (pandemic), Company B has handed everyone a paycut ( 20%) and let go of a lot of staff. The good projects have dried up and we are just doing random work to invoice clients.

    It isn't really a good time to have an upper hand in negotiations now, unless you have a rare skill that is in heavy demand. Ask yourself this question : "Can i get another contracting gig during 'rona if I lose this one? " If you have to think about the answer, go perm and push for more benefits if your boss is nice/batting for you.

    • mungas on 22/07/2020 - 20:48

      Welcome to the DTT crew?

  • Miss B on 22/07/2020 - 12:20

    Has your pay gone up at all since you started working there? I had only been working for my employer a few months when I applied for and got a permanent position, there was a negligible decrease in pay, but the smaller difference was probably mostly because it was through an agency. It was about 2 years ago and my base pay is now about 10% higher than when I became permanent. Plus in non-COVID years I get a bonus around 10%-15% of my income.

    If you haven't had a payrise you could try to negotiate a similar income to what you're on now, or you said you think it will be 20-25% less, try to negotiate 10% less instead of the full amount. It probably depends a bit on how the business is doing in this climate. If they're stuggling, maybe take what they offer and be glad you're being offered permanency.

  • TheBird on 22/07/2020 - 12:26

    There's a wide variance between IT contractors.

    I haven't seen this mentioned in the thread. Take a look at the current job market to gauge how it's going. Some areas of IT are booming and those wages are going up, others not so much. See where you fit into the whole scheme of it before you make a decision. If it's going down, consider taking the full time position.

    If it's going up, then you have a little more wiggle room. You can make the decision that suits you better, whether you prefer to stay contracting, go full time or look for a pay bump in greener pastures.

  • trapper on 22/07/2020 - 13:45

    You have a good argument to keep the same remuneration over all, I mean why should this change result in a pay cut?

    I'd account for the holiday entitlements and go from there. So if its four weeks annual and eight public holidays, then 28 / 260 = ~10.8% pay cut will keep you where you are at now.

    If they bring up sick leave entitlements you should look how much sick leave you have taken in the past and work something based on that.

    edit: Also super contributions! so that's another 9.5%, so now your looking at ~20% cut to keep the same total remuneration. Although super is locked away so there is that to consider too.

  • Balmaino on 22/07/2020 - 15:19
    +1

    i've done the math on this before in similar situation- my end figure was that if its 19% reduction in hourly rate or less it's a net win in pure $ terms

    if they're proposing a flat 25% reduction it may still be a positive move in terms of redundancy payouts, or other employee only benefits they may offer e.g. free Employee Assistance Programs, salary sacrifice opportunities, etc (ask what they have)

  • od810 on 22/07/2020 - 15:21

    You would expect to get 20-30% lower at least. If you are on 800-1000/day, you will get about 140-180k + super.

    When i did contract, to convert contract rate to perm rate, you multiply your day rate with 46 ( 4 weeks annual leave + 2 weeks public holiday) sickie is another added bonus but it doesn't have immediate monetary value unless you are sick.

    I don't know which company you are working for, but a lot of large corporates are converting contractors to perms. Unless the team is super critical, it will be take it or leave it. Last march, my company had to terminate all contractors and vendors (70 - 100) people. Permies doesn't mean security, but you need to consider your positions. There are army of contractors on the market in the coming months

  • Nalar on 22/07/2020 - 15:50
    +1

    As said above, be careful of TEC (Total Employment Contracts) as you'll be paying super from your overall salary figure. I fell into this with my job, $75K/year isn't on a TEC.

    Also ensure if your going to be salary that there are provisions if your doing extra hours/OT. Nothing like a company expecting all nighters for free.

  • megaalc on 22/07/2020 - 16:02

    what is your area of expertise ? plenty of contactor type jobs for devops and others ..
    PS I just taken the similar step and accepted perm after being contactor for my current employer for last 11 months
    on a positive side - now i have so many different internal opportunities to upskill and get into diff areas ( all around Azure cloud tho)

  • HeWhoKnows on 22/07/2020 - 16:57

    Be happy for this and all the benefits that go with it.
    Most employers are shifting towards Contract.

  • lainey13 on 22/07/2020 - 18:29

    You need to wait for the offer first. You never know. You could get offered a perm role in line with what you get as a contractor. Happened to me so of course I took it. The only downsides were a very minor dip in total renum, some of it is in bonus which there is a risk of under 100% but also risk of 100+% and having to now do performance reviews and quarterly objectives. But overall I am a lot better off so it can happen.

  • [Deactivated] on 22/07/2020 - 18:50
    -4

    Take the perm job and stop being greedy. The company obviously acknowledges your role is required but cant afford contractors anymore.

    • eurodave on 22/07/2020 - 19:17
      +3

      As an employee its hardly greedy to want to make sure you're making the wisest decision for yourself. An employee who feels satisfied with their employment situation is better for the company too - they're more likely to be happy, to do a good job and to be committed.

      • [Deactivated] on 23/07/2020 - 19:25
        -4

        Do you even realise how overpaid contractors are? The company can easily void his contract.

        • Ghost47 on 23/07/2020 - 20:08

          I personally can't believe the amount some contractors are paid, especially for the work that I hear they do (like data entry). It's actually mind boggling how much money some companies must waste on contractors. Then they cut permanent staff to make financials look better in rough times, smh.

        • Donaldhump on 23/07/2020 - 22:25
          +2

          How are they overpaid? It’s supply and demand, they are paid what they are worth,

          • [Deactivated] on 24/07/2020 - 08:57
            -3

            @Donaldhump: Ofcourse they are. Some of them are on over $1k a day. The reason the company is opting against is because during this economic conditions they cant afford rate like that. I can never understand why a contractor can think they can get the same pay when they are permanent. If you want to contract, great. Good way to make money but dont have a whinge when the company wants to terminate the contract.

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