Permanent to contractor pay conversion?

Question

I have the opportunity to go on a contract (hourly) pay rate from my company, instead of a permanent, annual salary. Is there a "typical" conversion rate for contractors in the UK? It needs to take into account loss of holiday pay, sick pay, the fact I will pay taxes myself, etc.

Thanks.

truecockney · Accepted Answer

There is, although it isn't a hard and fast rule.

Gross salary / 48 (weeks) / "standard hours per week" = hourly rate of pay

---------Edit----------

Unfortunately, that is the downside of working as a contractor.  You are not automatically entitled to any employee benefits (pension, gym membership, private health care, luncheon vouchers) that you would otherwise be entitled to as an employee and should not be used in any calculation.  As for sick leave, it is down to you to keep funds back for any leave you may take.

Holiday pay is taken into account (within the 48 weeks part of the formula) as even though, as a contractor, you are not automatically entitled to 28 days leave (20 days plus bank holidays under the working time directive), it is advisable to include that as it is easily calculable for any client and you will probably take it anyway.

? · Answer

Convert Contract Rate To Salary

Enough Trolls · Answer

Are they getting you on to contractor basis to avoid redundancy payment? 
Why do they want to do this and is it in your interest?

Permanent to contractor pay conversion?

3 Answers