Hard to get my head around job decision - any help much appreciated!

[mischathepuppy]

Hello,

I have two job offers on the go. Im having a hard time which one to commit to that would be more beneficial financially.

Job A: Standard employment. $40/hr, 45 hr week. Vehicle, phone, laptop provided. Extra benefit of a starter health insurance plan with Southern Cross.

Job B: Contract work. $50/hr + GST and what should be 40 hour week. Vehicle, Phone and laptop provided as well. Basic costs I would need to cover is Liability insurance ~ $1000 annually; ACC ~ $1500 annually; Xero $430 and Accountant fee $840 both annually.

Im just having a hard time comparing apples with apples in terms of matching up standard employee benefits like A/L, S/L and Kiwisaver etc.

If any one has any advice to share or has an easy way to calculate these types of comparisons I would be so grateful

 

[manuele]

@mischathepuppy Take job A, Contract rates need to be significantly higher for it to be worth it. For my industry it’s common to not bother with contracts unless they’re are closer to double your hourly rate.

You give up a lot of things outside of the immediate benefits when you go contracting that may not be applicable to everyone and all industries but some of those include, job security, career growth(up skilling is 100% on you) and most of the time company culture/social events.

I’d also factor in bossiness development as well, How do you secure they next contract? That costs time and therefore money

 

[swordoflight]

@mischathepuppy These hourly rates are not apples to apples comparison. As an employee, you get paid for public holidays + annual leave + other types of leave, so your pay for an hour actually worked is higher.

With that in mind, option A looks much more attractive.

 

[txfinds]

@mischathepuppy A is way better. $10 extra per hour to be a contractor is not worth it.

 

[charlyrich]

@mischathepuppy The old rule of thumb was contract rate needs to be 25% more to just cover leave etc you don't get, let alone costs.

$50 isn't enough to get ahead as a contractor there, and much easier to let you go.

The need to increase more

 

[christianbeliever_14]

@mischathepuppy No sick leave and annual leave with contract work. You don’t work, you don’t get paid.

 

[jere7722]

@mischathepuppy Yeah I'll echo the other statements already made on this one. That contract rate on job B isn't even close to being competitive with job A. Assuming non-financial factors being similar between the two roles, I'd take option A.

 

[ondistantshores]

@mischathepuppy What's your annual salary for job A? I.e is it $40 X 45 X 52 weeks? Or is it just for the house you work?

For job B I would calculate an annual equivalent salary to be $50 X 8 hours X 220 days.

 

[mischathepuppy]

@ondistantshores I haven't had confirmation of those details from Job A. I'm assuming it's $40 x 45 for 52. Would that be how you would normally work it out?

For job B what do the 220 days account for?

Thanks for your reply

 

[adamsk]

@mischathepuppy It’s building in an allowance for time off - sick, holiday, public holidays, bereavement etc. It’s an estimate but those days would be paid as an employee, but not as a contractor

 

[resjudicata]

@mischathepuppy It's not 50 X 8 X 220, though!

It's that MINUS all the opex you outlined which comes to -$3770. And believe me, there WILL be more you haven't accounted for.

Being a contractor/sole-trader is much closer to running a small business than it is to being an employee. There is so much invisible non-billable work. When they tell you the job is 8 hours a day, what they mean is that they expect 8 hours of billable work from you. You need to allow for another hour of admin/non-billable work every day, minimum. Two hours is likely more realistic.

And we haven't even glanced at leave, health, and KS benefits yet!

OP, take it from a contractor -- offer B absolutely sucks.

 

[ondistantshores]

@mischathepuppy There is 52 weeks a year X 5 days a week = 260 days
Less 20 annual leave days, 10 sick days and another 10 days for training/non chargeable days etc and there is your 220 days.

 

[resjudicata]

@ondistantshores There’s 11 statutory holidays as well, so take them off too.

 

[ondistantshores]

@resjudicata Yes! I knew I was missing another variable.

 

[clingingtolife]

@mischathepuppy I did a year and a half as a contractor, recently switched back to being an employee and I’m really glad!!
So Job A is my vote

 

[resjudicata]

@mischathepuppy That contract rate seems way too low, you also need to consider that a contractor can be given notice without a reason so you might want to factor in the possibility of having to find work at short notice (out have funds to carry things until you get more work).

 

[phillipunion]

@mischathepuppy Agreed with everyone else. Option A is better. Option B works out to be just about the same as Option A once you factor in all those additional costs you incur as a contractor.