Contractors: IR35 & general discussion
Discussion
Blown2CV said:
some companies do in fact use contractors because their people aren't good enough... but that definitely isn't very common.
Companies use contractors to get skills that their HR department won't pay the correct permanent wages for. They may have job openings open for years...If a person there gains the skills, they jump ship to get paid properly. Or go contracting!
So an incoming contractor sees people who aren't good enough.. Pay peanuts....
Blame HR.
Bluedot said:
I'd have to agree with that as well. When HMRC changed tack and started proceedings to target the clients, the amount of contractors I knew who only had the vaguest understanding or awareness of IR35 was quite startling.
You do surprise me.However, now that I think of it, I seldom find myself discussing IR35 with other contractors, so maybe you are both correct and I have just assumed that they are as clued up as I am.
cwis said:
Blown2CV said:
some companies do in fact use contractors because their people aren't good enough... but that definitely isn't very common.
Companies use contractors to get skills that their HR department won't pay the correct permanent wages for. They may have job openings open for years...If a person there gains the skills, they jump ship to get paid properly. Or go contracting!
So an incoming contractor sees people who aren't good enough.. Pay peanuts....
Blame HR.
Clockwork Cupcake said:
Bluedot said:
I'd have to agree with that as well. When HMRC changed tack and started proceedings to target the clients, the amount of contractors I knew who only had the vaguest understanding or awareness of IR35 was quite startling.
You do surprise me.However, now that I think of it, I seldom find myself discussing IR35 with other contractors, so maybe you are both correct and I have just assumed that they are as clued up as I am.
Countdown said:
cwis said:
Blown2CV said:
some companies do in fact use contractors because their people aren't good enough... but that definitely isn't very common.
Companies use contractors to get skills that their HR department won't pay the correct permanent wages for. They may have job openings open for years...If a person there gains the skills, they jump ship to get paid properly. Or go contracting!
So an incoming contractor sees people who aren't good enough.. Pay peanuts....
Blame HR.
To cwis's point i saw a scenario where in a particular public body a Network Manager was deemed to be of a certain grade, that grade translated in to a salary band that was way out of line with market conditions for perm Network Managers. So they employed a contractor on probably £600+ a day. That went on for several years.
Conversely i've seen - as you have - people brought in with certain skills to set up a system, then hand over to a BAU team who probably look after several other systems also. Not only is it about the specific skills of the contractor its also that the perm BAU team members dont have the 40 hours a week to commit to the project over what is often a year minimum.
A lot of the time I get brought in because the client has a short term need for my skills and they would have to make a perm redundant again within the year. The underlying reasons vary but it all comes down to a short-term need for someone who can hit the ground running and doesn't expect the first month or two of the job to be "coming up to speed" and training and the like.
For example, with my most recent client, they were in crunch with a hard deadline which they knew they simply couldn't meet, so they engaged 6 freelancers (me being 1) with an explicit understanding there would be long hours (on a decent hourly rate). and little chance of renewal.
We came, we helped, we met the deadline, we left again. Everyone was happy.
For example, with my most recent client, they were in crunch with a hard deadline which they knew they simply couldn't meet, so they engaged 6 freelancers (me being 1) with an explicit understanding there would be long hours (on a decent hourly rate). and little chance of renewal.
We came, we helped, we met the deadline, we left again. Everyone was happy.
Deep Thought said:
I think both scenarios exist.
To cwis's point i saw a scenario where in a particular public body a Network Manager was deemed to be of a certain grade, that grade translated in to a salary band that was way out of line with market conditions for perm Network Managers. So they employed a contractor on probably £600+ a day. That went on for several years.
Conversely i've seen - as you have - people brought in with certain skills to set up a system, then hand over to a BAU team who probably look after several other systems also. Not only is it about the specific skills of the contractor its also that the perm BAU team members dont have the 40 hours a week to commit to the project over what is often a year minimum.
Both scenarios do exist. I've been the permie that jumped ship, I've been the contractor that worked with the dregs and/or rapidly uptraining and leaving disgruntled underpaid competent staff. This is how you get the contracts that drag on for many years -the permtractors - HR departments that are slow on the uptake.To cwis's point i saw a scenario where in a particular public body a Network Manager was deemed to be of a certain grade, that grade translated in to a salary band that was way out of line with market conditions for perm Network Managers. So they employed a contractor on probably £600+ a day. That went on for several years.
Conversely i've seen - as you have - people brought in with certain skills to set up a system, then hand over to a BAU team who probably look after several other systems also. Not only is it about the specific skills of the contractor its also that the perm BAU team members dont have the 40 hours a week to commit to the project over what is often a year minimum.
I've also been dropped in to get a project done ASAP. That would be what I would term "proper" contracting. In my limited and simplistic opinion as a permie, obvs.
I think the first scenario is sometimes used to juggle finances - can you book to capex a "project" with a contractor (even a permtractor) on? Even if the "project" is never completed? Surely a permie would always be Opex - does the former have a tax upside or something?
But what do I know? I stopped being a contractor before IR35 kicked in (2000 or 2001 I think) and went back to being permie..
I didn't think the uplift in day-rate back then was worth the additional hassle etc of running a LTD, finding new contracts periodically, paying a pension etc etc... My opinion hasn't changed since.
Countdown said:
Blown2CV said:
some companies do in fact use contractors because their people aren't good enough... but that definitely isn't very common.
Agreed - if perm staff were rubbish why wouldn't we we'd get rid of them and get other perm staff? 
Why do people assume it's so hard to get rid of permanent staff?
Corvid-2020 said:
Countdown said:
Blown2CV said:
some companies do in fact use contractors because their people aren't good enough... but that definitely isn't very common.
Agreed - if perm staff were rubbish why wouldn't we we'd get rid of them and get other perm staff? Why do people assume it's so hard to get rid of permanent staff?
Blown2CV said:
it's a great option, for those relatively few companies who are able and willing to offer a perm salary sufficient to tempt a contractor in from the cold...
Yeah, I see a lot of offers. I've only seen a couple take it through circumstance and neither stayed more than a year.Corvid-2020 said:
We use contractors to "test people out" before we make them staff. Strangely, most of the ones that "don't make it" end up at the public body equivalent of what we do (we pick up outsourced contracts), as staff.
Do you mean PSC contractors? If so that's quite a terrible idea for them from an IR35 standpoint.Olivera said:
Corvid-2020 said:
We use contractors to "test people out" before we make them staff. Strangely, most of the ones that "don't make it" end up at the public body equivalent of what we do (we pick up outsourced contracts), as staff.
Do you mean PSC contractors? If so that's quite a terrible idea for them from an IR35 standpoint.Edit: Also, if an engagement is advertised as contract-to-perm then I won't even apply for it.
Edited by Clockwork Cupcake on Tuesday 8th December 20:22
Olivera said:
Corvid-2020 said:
We use contractors to "test people out" before we make them staff. Strangely, most of the ones that "don't make it" end up at the public body equivalent of what we do (we pick up outsourced contracts), as staff.
Do you mean PSC contractors? If so that's quite a terrible idea for them from an IR35 standpoint.Clockwork Cupcake said:
Can't see many genuine contractors agreeing to contract-to-perm. I've been offered it a number of times over the years but have politely declined each time. I mean, it's very flattering and all that, especially the one where the CTO took me out to lunch to pitch it and the package included share options, but if I had wanted to go perm then I would have applied for perm jobs.
Edit: Also, if an engagement is advertised as contract-to-perm then I won't even apply for it.
I always find it slightly amusing when an agent mentions that a contract might have an option to go permanent at the end of it. Like some sort of carrot on a stick. Almost like you're contracting because you cannot get a permanent job but maybe, just maybe this might be the one!Edit: Also, if an engagement is advertised as contract-to-perm then I won't even apply for it.
Edited by Clockwork Cupcake on Tuesday 8th December 20:22
I had a slightly 'amusing' contract a few weeks ago. Client wasn't sure how long I would be needed as they had a very specific problem to solve and they neither had the knowledge to fix it themselves or to determine how long it would take. I didn't have anything better on so I took it on. Got it finished in under 30 hours. Less than a week. Maybe some more work will come from it at some point but I bet the agent was a bit pissed off after hours of vetting candidates and interviews etc. I imagine they'll have only got about £150 in commission.
Gazzab said:
Olivera said:
Corvid-2020 said:
We use contractors to "test people out" before we make them staff. Strangely, most of the ones that "don't make it" end up at the public body equivalent of what we do (we pick up outsourced contracts), as staff.
Do you mean PSC contractors? If so that's quite a terrible idea for them from an IR35 standpoint.And the hourly rate is about the same, plus all the staff benefits of leave, insurance, pension, sick pay, contractors are defo not the top dog here, but it is the way most of our competitors run as well. go back 20 years and then contracting was lucrative, so much so each week yu'd have another set of contractors as last weeks have moved on to a competitor for £x/hr more!
TTmonkey said:
Having been a contractor for a number of years, and now a perm in charge of over two hundred perm and contractors I can clearly say there is no indicator that contractors are better than perms or vice versa.
This old ‘if you were any good you’d be your own boss’ twaddle spouted by some loud mouth contractors is exactly that. Most of the best people I’ve dealt with are perms, and most of the ‘all mouth no trousers’ types have been contractors, good at only pulling the wool over team leaders and service mangers eyes.
I’ve known some great contractors. But probably more committed and talented perms, on balance. The contractors will rarely do more than they are paid for, and you can’t assume for a minute that they will give that extra when needed without a prior understanding or agreement.
It galls next having to give a perm a paltry recognition award for something the contractor sat next to him probably billed £600 for doing the same or less.
I’ve been in my current role 7 years and can think of only one perm Ive had to get rid of. Yes far easier to get rid of a contractor that’s oversold their skills. Most of my current contractors are worth their day rate, but you have to build that part of the team by being proactive with the ones that don’t meet the day rate.
It is all well and good looking at this from a "bottom up" approach. Yes have to agree there are some good and very good perms. Unfortunately if you look at it from a top down approach that is where you see the real failings. These good perms do not have the clout or ability to make serious changes to the IT infrastructure; work flow or process management. The "above my paygrade" adage usually kicks in and because their salary is not significant they are not taken seriously even though they have a very valid point.This old ‘if you were any good you’d be your own boss’ twaddle spouted by some loud mouth contractors is exactly that. Most of the best people I’ve dealt with are perms, and most of the ‘all mouth no trousers’ types have been contractors, good at only pulling the wool over team leaders and service mangers eyes.
I’ve known some great contractors. But probably more committed and talented perms, on balance. The contractors will rarely do more than they are paid for, and you can’t assume for a minute that they will give that extra when needed without a prior understanding or agreement.
It galls next having to give a perm a paltry recognition award for something the contractor sat next to him probably billed £600 for doing the same or less.
I’ve been in my current role 7 years and can think of only one perm Ive had to get rid of. Yes far easier to get rid of a contractor that’s oversold their skills. Most of my current contractors are worth their day rate, but you have to build that part of the team by being proactive with the ones that don’t meet the day rate.
These sorts of situations permeate for many months and years and the perms still are good or very good but the actual IT infrastructure; workflow or process management goes from bad to worse and those good or very good perms spend more and more time battling the sh*te rather than doing what they are good at.
From personal experience it is those clients that come across as anally retentive especially around the areas of IT security; procedural paperwork; culpability (CYA) that I am most wary of. When I dig deeper into these areas I find that things aren't good at all. As a contractor it is my duty to highlight these things and help to make it better. By working for different clients I can draw on my experiences to demonstrate to the current client that it can be better. I have no axe to grind. There is no office politics. Its up to the client whether they do something about it or not. Either way I still get paid.
Corvid-2020 said:
Gazzab said:
Olivera said:
Corvid-2020 said:
We use contractors to "test people out" before we make them staff. Strangely, most of the ones that "don't make it" end up at the public body equivalent of what we do (we pick up outsourced contracts), as staff.
Do you mean PSC contractors? If so that's quite a terrible idea for them from an IR35 standpoint.And the hourly rate is about the same, plus all the staff benefits of leave, insurance, pension, sick pay, contractors are defo not the top dog here, but it is the way most of our competitors run as well. go back 20 years and then contracting was lucrative, so much so each week yu'd have another set of contractors as last weeks have moved on to a competitor for £x/hr more!
You need the "Temps: toast" thread
zippy3x said:
Corvid-2020 said:
Gazzab said:
Olivera said:
Corvid-2020 said:
We use contractors to "test people out" before we make them staff. Strangely, most of the ones that "don't make it" end up at the public body equivalent of what we do (we pick up outsourced contracts), as staff.
Do you mean PSC contractors? If so that's quite a terrible idea for them from an IR35 standpoint.And the hourly rate is about the same, plus all the staff benefits of leave, insurance, pension, sick pay, contractors are defo not the top dog here, but it is the way most of our competitors run as well. go back 20 years and then contracting was lucrative, so much so each week yu'd have another set of contractors as last weeks have moved on to a competitor for £x/hr more!
You need the "Temps: toast" thread
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