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

            • Donaldhump on 24/07/2020 - 16:18
              +2

              @[Deactivated]: How is being on 1k a day being overpaid. Some full time staff are paid 1k a day, it’s to do with your skill set, supply and demand etc. market determines your wage

              Please note someone getting paid more than you does not mean they are overpaid, it’s means they have superior skills and you are jealous.

              • [Deactivated] on 24/07/2020 - 20:21
                -2

                @Donaldhump: Haha dude I am not jealous and if i decided to work contract i can easily get over $1500 a day. You have no idea about corporate world. Even a business analyst gets approx 1k a day. I am definitely not jealous because I deal with contractors day in day out. They are paid the rate in absence of skill or long term budget. The risk is for them to take that option.

                • Donaldhump on 25/07/2020 - 03:33
                  -1

                  @[Deactivated]: You comments and response are nonsical. If they are paid in the absence of skill (assuming you mean others skills) this is what I have already said, so why are they overpaid (going from you initial comment)

                  And that’s great you could easily get 1500 a day. I call bullshit, as why would you not do this if you don’t already earn this, and then aren’t you calling yourself overpaid.

                  And yes I have no idea of the corporate world, curious what made you come to that conclusion, more nonsical comments.

                  The risk is for them to take what option. Nothing has been mentioned about risks in your dumb rant that makes no sense.

                  Working with contractors day in and day out would do nothing to stem your jealousy if you were earning 1/5th of their wage, so again another dumb as f comment.

                  Going off your whole argument that contractors are overpaid being a Karen and then saying you could easily earn 1500 a day makes me think you are bitter you earn no where near the 1k figure you wrote and this eats you up inside.

                  • [Deactivated] on 25/07/2020 - 23:11
                    -2

                    @Donaldhump: Dude I manage a team and always hire contractors on 6 months. They are paid that rate for a reason. The risk factor that contracts can be terminated at any spot. I don't contract because I like the security of a permanent role. $1500 a day in corporate world isnt hard. Even simple Agile specialists demand 700-800 a day and they are just project specialists.

                    • Donaldhump on 26/07/2020 - 10:18
                      -1

                      @[Deactivated]: ROFL you speak utter poo

                      "They are paid that rate for a reason"

                      what reason

                      according to you they are simply overpaid.

                      you initial argument makes no sense

                      "i can easily get over $1500 a day" and "I don't contract because I like the security of a permanent role"

                      if it is so easy why do you need job security. you make it sound like you the gods gift to the IT sector. surely you are wasting your time with such epic skills.

                      in reality i think your full of sh*t nd your initial arguement contractors are overpaid hasn't once had any reason or justification why you think this.

                      so here is my challenge to you, given how easy it is for you to go earn 1500 a day, go and do so. Why would you work in a full time role when you can easily get 40-50% more getting 1500 a day. seems like your wasting your self glorified skills.

                      • [Deactivated] on 26/07/2020 - 15:46

                        @Donaldhump: Dude educate yourself and learn how corporate life works. Permanent role allows me security and flexibility to be with my kids. I also get annual leaves which contractors dont get. This allows me to manage my leave during school break.

                        They are over paid because some of the simplest job the market rates are high for contractors. Learn about projects. Anyone can do a simple DEVOPS or Agile course and start demanding ridiculous amounts just because they are certified now.
                        My point is that a contractor cant expect to get the same rate when demanding permanent role. Don't have a sook when company decides to change their mind as that is the risk in contracting.

                        And no it wont be 40-50% more. Its more like 20-25% more.

                        You are saying I am full of sh*t yet you have zero clue about how corporate life works. Stick to your VB mate.

                        • Donaldhump on 26/07/2020 - 16:53

                          @[Deactivated]: "My point is that a contractor cant expect to get the same rate when demanding permanent role"

                          and when the **** did I say this? your whole post was "contrasctors are overpaid", no reason just a negligent statement.

                          "Don't have a sook when company decides to change their mind as that is the risk in contracting"

                          dont worry about me I'll be fine.

                          "They are over paid because some of the simplest job the market rates are high for contractors"

                          gibberish sentence, but you mentioned "market rate", so again not overpaid, its the market rate…. for someone who claims to be all that you have in 6 posts still not affirmed your arguement if why contractors are overpaid.

                          "Stick to your VB mate"

                          had a six pack today thanks for asking… oh if you mean im a VB programmer how insulting, ouch, you are full of burns.

                          "you have zero clue about how corporate life works."

                          yes i have no idea. no clue, just winged it my whole life.

                          btw you only earn 25% less than 1500 a day, so by my rought calcualtions you are on a fulltime wage of 290k a year. Quite a good wage for a manager of contractors, please tell me your company as I'd love a job there

                          • [Deactivated] on 26/07/2020 - 17:20

                            @Donaldhump: You wouldnt get a job there as you wouldnt qualify. Again stick to your VB beer.

                            Mate just look up on seek Agile contractors. Do a simple 3 day course, learn a methodology and target directors who are influenced by the agile movement. Earn big bucks without ever delivering. That is what happens in corporate. For those who want to achieve something outcomes, money isnt always the driver.

                            The most unqualified people pick up a project methodology and demand big bucks. While I am saying this isnt all contractors, what I am saying is that they are quite well paid and in many cases overpaid.

                            • Donaldhump on 26/07/2020 - 17:37
                              -1

                              @[Deactivated]: mate, what is your agruement to the statement "contractors are overpaid"

                              i dont give a rats ass about anything you just mentioned, i earn a very good wage and can look after myself

                              out of curiosity why would i not qualify for your work, and do you or do you noit earn 290k a year. lets get some facts here cause i find everything you say made up in your head. so question 1

                              what do you earn

                • Piranha2004 on 29/07/2020 - 13:50

                  @[Deactivated]: Can you please show me where these magical $1.5k/day contracts exist? Ive been contracting for the last 3+ years and have hardly seen any contracts go beyond $1k a day. Those that are that high demand a very niche role (i.e. Senior Program Managers or SAP). BTW, being a perm doesnt mean you have less risk as the place I work recently cut perm staff before they cut contractors. I also noticed that contractors have a significantly higher level of skill than perms although that could be specific to my workplace only.

  • eurodave on 22/07/2020 - 19:23
    +2

    I went from contracting to a rolling fixed term employee about 8 years ago, after over 10 years of contracting. My contracting work was really easy and flexible, but I have no regrets.

    I was a lazy contractor and didn't do many days per week, so it was easy to make up for the lower hourly rate by doing more work. If the company is good, feeling like a part of something can be really positive for how you feel about going to work each day too.

    Also, sick leave - I am currently going through some poor health and have been off for almost 8 weeks - after being committed for a long time my employer has been extremely understanding, and I have plenty of sick leave. The only thing I have to worry about is getting better, not paying the bills.

    Admittedly, I am really lucky with my employer and not all companies are so great - but just thought I'd throw in a few extra (not quite financial) things for you to consider in the decision.

  • [Deactivated] on 22/07/2020 - 20:08

    At the end of the day as other have mentioned it depends on T/C of your contract vs permanent position.

    How permanent a permanent job is depends on industry /employee.

  • melbornandbread on 22/07/2020 - 21:12
    +3

    You need to consider your life stage, lifestyle and whether you plan on starting a family.

    I was contracting for around 3 years between 2011 and 2014 when I took a significant pay cut (~30%) to start a new permanent role.

    The major benefits for me was the paid parental leave (12-16 weeks), flexible hours and sick leave that come in handy especially if you're thinking about starting a family.

    You may not take much sick leave now but if kids come along you'll be grateful to have it.

    6 years later now I've progressed into a more senior role and earning above what I was previously earning as a contractor.

    If I had stayed as a contractor I don't think the career progression opportunity would've been there and don't think there would've been much change in my daily rate.

    • strike1 on 23/07/2020 - 00:28

      Yes, career plan/progression!.. everyone seems to have missed that.

  • JetBombat on 22/07/2020 - 21:12
    +1

    What's the update OP? How did it go?

  • kaleidoscope on 22/07/2020 - 21:40

    Given these situation, take the offer. Pay will definitely be lower and if it bothers you, when things begin to improve; then look for other options.

  • Piranha2004 on 22/07/2020 - 22:22

    Im in the same situation come end of August. Given the current situation its a no brainer to take the perm position. I will keep looking for my next contract while in my role. Yes pay downgrade will suck but its better than 0.

  • Donaldhump on 22/07/2020 - 23:35
    +1

    Off topic

    Contractor breaks a leg on the weekend, but will be at work Monday regardless.
    Permanent has a headache, 2 days off sick.

    I went through this and took 15 percent cut taking super into account, but the attractive part was can work from home verse having to be in office. How dare a contractor work from home.

  • Dr-StrangeLove on 23/07/2020 - 09:31
    +8

    Not sure if people are still subscribed to the comments on this thread. I wanted to thank everyone here for their advise and comments and update as to what happened. I had a couple of meetings since this thing came up with my manager and it appears what I am being offered is significantly lower in terms of renumeration (~28% in apples to apples comparison). I tried to negotiate but they don't seem to budge from the original offer. That significantly reduces my take home pay so I will most likely take the risk and request for a contract extension if it is available. They may deny it but fingers crossed.

    • polarq on 23/07/2020 - 09:54

      All the best. Fingers crossed, you get the extension that you are after.

    • the4thzodiac on 23/07/2020 - 10:32

      if no contract extension is offered, do you have the recourse to take the perm offer? they might be hedging their bets you might.

    • duluxe2000 on 23/07/2020 - 11:32

      If your skills are on demand ( and you prefer money over holiday/sick leaves) then why not? I think you made a smart choice

      • dufflover on 23/07/2020 - 12:29

        Because it's very likely the "supply" side of the equation just went up.

    • Mrgreenz on 23/07/2020 - 22:37

      28% is a significant chunk.

      Can your current employer line you up in another job at a similar rate as to what you are on now? Maybe it's time to see what else is available.

      Taking a 28% cut on a 2.5yr long "contract" is steep. Maybe they are tryimg their luck.

    • duchy on 24/07/2020 - 09:31

      I also think you've made a good call (without knowing the specifics of your work). 28% is too big a cut. If it was 15%->20% (including holidays) then it would be worth considering. I can actually see the number of ads for IT work has increased in the past two weeks and wouldn't be too worried. But then again I tend to be always optimistic.

  • Orico on 23/07/2020 - 11:09
    -3

    Take the permanent job, take the permanent job, take the BLOODY JOB. You're getting more money because you've got casual loading. Derp…

  • mroarsome on 23/07/2020 - 11:52

    I have flicked between permanent and contracting in IT over the years. When negotiating pay, I used the website https://www.paycalculator.com.au.

    Put in your current contract daily rate and change the weeks to 46. (52 weeks minus 4 weeks annual leave and 10 days paid sick leave).

    This calculator will then spit out what the equivalent full time annual salary e.g.

    $500 daily rate = $83,000 annual salary
    $1000 daily rate = $148,000 annual salary.

    Companies will sometimes also offer supplementary Superannuation payments e.g. pay 11-15% instead of 9.5% and even pay bonuses so take this into consideration.

    If you are like me and contract for the flexibility, then also consider negotiating additional annual leave. E.g. I often negotiate for 5 weeks annual leave as its often easier for HR to accept this than a higher salary.

    And finally, if you do stay contracting and your contract comes up for extension, don't just automatically accept, say you will accept but will require an additional $10 an hour or $100 on top of your day rate. These minimal increases are easy for the company to accept and add up e.g. a $100 increase on day rate can be an additional $5-10k in your hand a year.

    • MacBH on 23/07/2020 - 18:26

      Day rates are generally quoted inclusive of super while annual salaries may or may not be.

      If you're earning $1k/day as a contractor, you're never sick, never between jobs and you take an average of 4 weeks holidays per year (in addition to 10 public holidays), then you're earning $230k/year inclusive of super, or $210k/year exclusive of (9.5% minimum) super.

      That's pre-tax. I believe the rates you're quoting above may be after tax.

      I would aim for the $230k (or whatever your equivalent is) as a starting point for negotiations, but realistically only expect $200-210k in a permanent role.

      If you're super worried about being unemployed maybe go down to $180k. But unless your employer is really struggling financially themselves, then offering you any less than that really wouldn't be very nice of them.

      The other thing to keep in mind is that if you don't take all your annual leave, your annual leave balance will be paid out to you at the end of your employment (by law not required to include super). So even if you currently take less than the 4 weeks holidays you'd get as a perm, it still makes some sense to calculate it based on 230 days (or 220 if you want to take sick leave).

  • dufflover on 23/07/2020 - 12:32

    Depending on the specific company, if it's a larger IT company with any sort of permanent workforce and outsourcing arrangements, contractors are first to go in tough times (and this definitely qualifies). And sometimes your skills then mean jack squat if it's a big enough company. Not because your skills can be easily replaced, but because usually directives come from upper management, "executives" and so on and basically issue directives of no contractors without some probably-hard-to-get exceptions - and that's if your immediate manager is bothered to do that.

  • MND on 23/07/2020 - 16:00

    If you live in Australia and see the situation that is going on with high unemployment rates; If your offered a permanent role then I would strongly think about it! There are perks to both types of employment and i'm sure you know about them.

    Also you must think; what makes you more successful than the next person whom applies for the same job as you; if by chance your contract expires? If you demand a higher paying job in an environment where many others are looking for jobs, chances are someone will be willing to work for less to become employed.

  • AG_ACT on 23/07/2020 - 16:36
    +3

    To each their own.

    I was in the federal public service for 11+ years and was always scared to branch out, and people kept telling me about all of the "benefits" of being in the public service 16.5% super, Long service leave, 20 days annual leave, 18 days sick leave, 11-13 days public holidays, guaranteed increases, job stability.

    I finally got the courage to resign July 2019 (and gave up on 178 sick leave - perfect use of benefits hey?) and I for one, can say I have never made a better decision in my life. I didn't get much of a package increase (in fact, I took a very slight notional cut, but I find that as a contractor, not only am I far more motivated to go to work, people appreciate the work you do a lot more, the benefits are yours to use as you see fit, and financially, you actually get paid for the time that you work… Where I was doing an average of 45 hours and getting paid for 37.5, I now do 40-42 and get paid for 40. Maybe I've just been lucky… but this is my experience.

    Long story short, if you think you will get another contract, I wouldn't take up the permanent role.

    • netjock on 24/07/2020 - 11:41

      Being in the public service is about either kicking back or having a side hustle.

      I worked for 2 years in an ex government organisation (privatised) and everyone had a side hustle. It is like their day job is funding their side business until that gets them rich.

  • big on 23/07/2020 - 17:04
    +1

    Having been in that situation myself a few notes.

    • Permanent is not any more secure than Contractor. As Contractor I had 4 weeks notice, now as permanent I have one week during the first 6 month and 4 weeks there after.
      If you follow the news a lot of permanents get laid off as well. At the end it depends how valuable/replaceable your are for the company.

    • The time where there were huge redundancy packages are over. New contracts have very little in there.

    • To gain the long service leave benefit you need to stay within a company for at least 7 years. Not too many people do this these days.

    • Dependent on how you set yourself up as a contractor (Sole Trader of Pty Ltd), you might have various tax benefits and flexibility.

    • In line with the previous poster: As a contractor when asked to work 7 days a week, I was paid for 7 days a week as I had a daily rate.
      Now as a permanent, I'm not getting paid anymore for weekend work - something else to consider.

    In the end I took the permanent role as I really liked the project I was on and the company offered a very good package that was not too far off.
    The alternative would have been to move on. When the project ends, I can always decide at that stage.

    • frugal investigator on 24/07/2020 - 19:52

      Permanent definitely has more security, it is an ongoing role without an end date.

      Also permanency has a lot of conditions where a contract usually doesn’t have the same protections or the same performance evaluations.

      A lot of contractors loose their work by simply not getting renewed (although you should never expect that as a contractor but a lot seem to).

  • Seraphin7 on 23/07/2020 - 18:41

    Speaking entirely financially in the very near term and narrow sense, the direct equivalent annual salary is your daily rate multiplied by 231.

    There are 365 days in the year. Without getting into all possible permutations, you don't get paid for 104 weekend days, 20 days annual leave and 10 public holidays so that's 134 days you're not getting paid as a contractor (i.e. 365 - 134 = 231).

    So, to keep the numbers easy, the equivalent of $1,000 a day is $231,000 a year. If you were to include sick leave, the equivalent salary reduces by another 10 days/$10k. Note, these numbers are the same whether they are inclusive or exclusive of super.

    After that, you need to value the intangibles/maybes including job security, bonus potential, career progression, etc. Only an individual can value those based on their own preferences.

    Personally and based on the above, I would suggest that $1,000 a day is equivalent to $200k and obviously scaled from there (i.e. take a daily rate and multiple by 200).

  • sarahlump on 23/07/2020 - 19:43
    -2

    Ask for a company car! and sell it!

  • locknuts on 24/07/2020 - 06:10

    As a contractor, do you get to write off your expenses before filling out a BAS every quarter? Having standard PAYG withholding and waiting upwards of 12 months to get the money back (if you can) is a big financial disadvantage.

    • kiitos on 24/07/2020 - 08:42

      Yes, in that if you're in a job covered by the personal services income rules (like IT), you should be passing the income your company (if you have that structure) receives to you personally as wages, and that income passed on is what's left after the deductions you can claim for that month or quarter.

      • locknuts on 24/07/2020 - 11:36

        In that case, I'd want some serious incentives to go full time rather than just 'job security'.

        • od810 on 25/07/2020 - 01:18

          PSI is quite restrictive on what you can claim as expenses

          • kiitos on 25/07/2020 - 07:44

            @od810: Yes, generally similar to those an employee can claim.

            • locknuts on 25/07/2020 - 12:03

              @kiitos: If that's the case, then I'd go full time for sure, but if my company or trust could pay me, then I'd take that option.

  • dufflover on 24/07/2020 - 07:49

    https://mobile.abc.net.au/news/2020-07-24/dfat-axes-contract…

    I've had a friend through his contracting career before he went permanent also face this "no contractor directive" like I mentioned before when the company was with decided they needed to cut costs.

    Maybe OP just falsely thinks they are irreplaceable?
    No one is.
    What happens if they were the ones who really did a lot of unique skilled work? The company just ends up shifting the goalposts in their final product or service.

    • netjock on 24/07/2020 - 11:46
      +1

      c30% cut just means either they figured out they paid you too much to begin with or they figured out your are not worth the money after you got settled.

      Annual leave 4 weeks / 52 weeks is worth 7.7%
      Sick leave 2 weeks a year is worth 3.8%
      Long service about 2%
      Public holiday (assume 10 days) another 3.8%
      Payroll tax (say) 6%

      Total of above about 23%.

  • Dubsys on 24/07/2020 - 22:55
    +1

    They're probably only offering it as an attempt to lower their own costs, if you don't accept they'll be looking to ditch you as soon as the contract is over to pick up somebody permanent for the lower cost.

  • Roddi on 25/07/2020 - 01:02

    I've switched from IT contracting to perm - at a lower rate - because of corona.
    All the recruiters I've spoken to said it's the sensible things to do given the market.
    I'll put in a couple of years and give them a good result and perhaps return to contracting.

    IT contracting is pretty sweet because it's overpaid. More money for not working any harder than a perm. I was sad to leave it too. But remember it is overpaid.
    Your problem is that you won't continue to be overpaid during a massive economic downturn.
    Not being exempt from reality isn't a problem. It's just unrealistic.

    • mini2 on 31/07/2020 - 11:46

      There's a incentive for them to try sell you a permie role, make sure you stay there for about 6 months then you realised this pay cut blow goats then wanders back to the contracting market. By then they've already got paid and went beyond the warranty period so they're there for the kill…second time round should the employer still utilise their service and found a suitable candidate.

  • reactor-au on 25/07/2020 - 11:04

    Being a contractor I miss the ability to carry over leave days, I used to have 8 weeks leave accrued when I was permanent. The other things I miss are performance bonus, and not having to worry about a contract being renewed every year. The single biggest thing I miss is the job security, when you're permanent you can almost always argue unfair dismissal but as a contactor they just have to give you 4 weeks notice and tell you your services are no longer required.

  • Jammar on 25/07/2020 - 14:49

    Never ever trust the sick leave annual leave benefit, if you are on the ladder none of those is available, taking sick leave or annual leave doesn't align with career objective, they are for the weak.

  • mrdevil on 25/07/2020 - 15:44
    +1

    I'll put my two cents in - although my career has been in government, so wage conditions etc are set standard. If I was in your shoes, had an OK or better relationship with management, and were happy with the role, I'd take the offer of permanency - it may result in lower pay upfront, but the additional job security and leave benefits are worth it, plus it makes it more difficult for them to get rid of you should things sour or they find the need to all of a sudden.

    I've just left a contract position within a government department - the position was a permanent position for 15+ years, but when there was a restructure 4+ years ago, the person in it put their hand up for a package, and the position was abolished (which they were more than happy to do as the person was quite toxic). I was then fortunate enough to be put in the "same" position on a contract basis - had a great relationship with management, customers, colleagues, and was quite happy with my life. A change of management changed all that and turned the place into a living hell for many - another restructure, where most of the long term permanent staff were told "take a package or your position will be abolished" - so most took the package and left… and were ultimately replaced by mates of mates in contract positions which are renewed every 12 months.

    As the restructure only applied to permanent employees, those on contracts weren't eligible - but generally if management have an issue or don't like YOU, they just wait until the contract ends then don't renew you. After 4 years, my role was abolished / contract wasn't renewed, with the excuse what I did wasn't needed any more - although this couldn't be further from the truth. Management didn't like the fact I wouldn't stroke their egos, and put our customers first, so I had a target on my back (and wasn't the only one in this situation, as quite a few contractors who kept their heads down and worked hard, but didn't suck up to management received the same treatment). I got the union involved, and fought it, but at the end of the day, it was a contract role so they can do what they like. I'm kind of glad I'm out of there now - plus have the satisfaction of knowing they've told the union my specialised role duties would be seen to by existing ongoing staff - and I wasn't even gone one day before shit started hitting the fan as no-one left had the skills or knowledge to do what I used to do.

    At the end of the day, if you're happy with the role and job, permanency should generally work in your favour … and should you think "bugger this time to leave", you still can albeit it most likely with a bit more notice / conditions attached.

    • Piranha2004 on 29/07/2020 - 13:53

      This is one of the benefits of contracting too! The political BS is quite taxing a perm sometimes. Not to mention the dreaded "performance reviews" every year.

  • mini2 on 31/07/2020 - 11:44

    Ask about probation if it still applies to you. Could be a roundabout way to extract all info outta ya then send you on your merry way before probation is done and dusted.

  • Vote for Pedro on 02/08/2020 - 10:09

    So where are you at. What happened

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