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Old 23.05.2012, 14:59
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Switching from Permie to Contract

Hi all,

I am pretty unhappy at my current employer and am thinking of moving on. I have the possibility of a contract and I want to ensure that if i take it I am not financially worse off. I know I will become liable to pay pension contribution and all holidays will be unpaid but other than that I have no idea about how much this costs or what the tax implications are. Anyone know what I should be asking for to match my current permie salary of 120,00chf??

Cheers
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Old 23.05.2012, 15:51
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Re: Switching from Permie to Contract

When I was working as a contractor in the UK I used a basic rule of thumb that for all the hours I invoiced after I had put the VAT to one side, I would set aside 40% to 45% to cover things like pension, NI and income tax. It also covered things end of year accounts, annual returns etc.

So look at what you're taking home now net, work out how many hours you half to work at half the hourly rate to get the same, it's very rough and ready and errs on the side of caution but will give you an idea as to how close you can get.

The best advice I can give you is to find a good accountant they will know how best to maximise your income, in the UK I a couple of years ago I was paying around £1600 in total a year for an accountant, very worthwhile this allowed me to ask questions and not incur extra charges and included my tax return.

Also might be worth getting in touch with the Swiss branch of the British Chamber of Commerce for some advice or at least finding the right people to talk to.

Unfortunately all this is based on my UK experience, I have no knowledge of what it is like in Switzerland, but I know I was better off as a contractor
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Old 23.05.2012, 15:59
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Re: Switching from Permie to Contract

Hi,
it depends little bit on where you live, how would work be organized (going through payroll-umbrella company? or doing it really on your own). Is it temporary or long term? Do You want to end up in higher numbers per year compared to permanent employment? Etc. Calculations can be done for example via http://www.lohncomputer.ch/ .
Generally, I would say that 120k equals maybe to something like 700 CHF/MD brutto, in case You don't have huge vacations, don't get sick often etc. But if anytime you can loose job, and have larger break before finding another (usual consultant's bread) then aim higher, because days you don't work you just loose money.
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Old 23.05.2012, 16:26
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Re: Switching from Permie to Contract

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Hi all,

I am pretty unhappy at my current employer and am thinking of moving on. I have the possibility of a contract and I want to ensure that if i take it I am not financially worse off. I know I will become liable to pay pension contribution and all holidays will be unpaid but other than that I have no idea about how much this costs or what the tax implications are. Anyone know what I should be asking for to match my current permie salary of 120,00chf??

Cheers
I used to be a contractor and my wife has been for the last couple of years, so our rule of thumb is based on moving in both directions, although of course individual circumstances vary. We reckon that a 20-25% premium offsets the additional costs and risks of being a contractor, as long as you're looking at a long-term placement. For 6 months or less you ought to be looking at a bit more than that, and if it's really short term then bang it up by at least 50%, if you can. In both cases we're comparing with a quite attractive benefits package for the permie role, and of course we're looking at toal earnings including bonus, not just the base salary.

Of course, this will all vary tremendously with your area of expertise and the size of the market - for really specialist stuff you may be able to ask a lot more, which of course would be be needed to offset against the potential difficulty of finding the next contract when this one expires. If you're confident of staying in work without major downtime between contracts then you may feel happy asking less.

Tax-wise there should be no real difference, although if it shifts you from deductions at source to an annual return then that may make some differences, depending on where you are. Fairly sure a search will find lots of info on that.
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Old 23.05.2012, 16:30
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Re: Switching from Permie to Contract

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When I was working as a contractor in the UK I used a basic rule of thumb that for all the hours I invoiced after I had put the VAT to one side, I would set aside 40% to 45% to cover things like pension, NI and income tax. It also covered things end of year accounts, annual returns etc.

Unfortunately all this is based on my UK experience, I have no knowledge of what it is like in Switzerland, but I know I was better off as a contractor
Glad you added that last bit, as I was going to point it out. In practice contracting here is very different from the UK. It's very unusual for individuals to set up their own company as was normal in the UK back in the day, so mostly you're actually an employee of the agency, who take care of statutory deductions and arrange the mechanics of the contract, invoicing etc. VAT doesn't come into the equation.
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Old 23.05.2012, 18:27
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Re: Switching from Permie to Contract

My rule of thumb based here in the UK is salary pa divide by 100 for a daily rate.
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Old 23.05.2012, 20:40
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Re: Switching from Permie to Contract

The magic number is CHF 105 / Per Hour and assumes that the following hold:
  • 42h week
  • 5 weeks annual leave
  • 1 week training course
  • 14% employers pension contribution - 7% employee contribution
  • Payment of all employer payroll taxes and levies
  • Fully employed for the year
  • Accounting and admin fees
  • Compensation for employee type perks, such as restaurant discounts etc...
  • Excludes employee bonuses etc...

It's about six years ago since I sat down and worked all this out, so use it with care.
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Old 23.05.2012, 21:38
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Re: Switching from Permie to Contract

If you say 120kchf, I am guessing you are an executive office worker.

I would add say about 50-100% on top of that, to be comfortable and divide it by 220 days or 200 days per calendar year.
That would be your daily "wish" rate.

Now what your employer gives you, can be anything inbetween.

Some of my ex-colleagues became their own consultants, asking for 1500-2000chf per day. But they have specialised IT skills.


Does this help?
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Old 20.06.2012, 16:30
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Re: Switching from Permie to Contract

Hi,

Sorry for the huge delay and thanks to all respondents so far.

Quote:
Glad you added that last bit, as I was going to point it out. In practice contracting here is very different from the UK. It's very unusual for individuals to set up their own company as was normal in the UK back in the day, so mostly you're actually an employee of the agency, who take care of statutory deductions and arrange the mechanics of the contract, invoicing etc. VAT doesn't come into the equation.
I have just been to see Federation des Entreprises Romandes - there's a fair bit to take in... and they don't even offer accountancy so I am very interested in any agency names you can give me. The line of work I am looking at is IT consultancy in Geneva (first contract already lined up)

Cheers
Duncan
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Old 21.06.2012, 12:26
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Re: Switching from Permie to Contract

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If you say 120kchf, I am guessing you are an executive office worker.

I would add say about 50-100% on top of that, to be comfortable and divide it by 220 days or 200 days per calendar year.
That would be your daily "wish" rate.

Now what your employer gives you, can be anything inbetween.

Some of my ex-colleagues became their own consultants, asking for 1500-2000chf per day. But they have specialised IT skills.


Does this help?
No, I am a developer, sadly either being ripped off or not as specialist as your mates:-)
My current permie rate is for a position in Lausanne, I have heard salaries are higher in Geneva. I am thinking of using a employer umbrella company that charges like 35chf a day. I figure I can actually get them to do some projections for me, but yeah, your input does help so thanks.
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Old 21.06.2012, 19:35
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Re: Switching from Permie to Contract

As per my current client IT Packagers are sought after in Switzerland at the moment. The last rate they were paying was 2000CHF, which was a shocker to be honest. Didnt expect it to be that high, but maybe thats just the current market.
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Old 21.06.2012, 20:50
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Re: Switching from Permie to Contract

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As per my current client IT Packagers are sought after in Switzerland at the moment. The last rate they were paying was 2000CHF, which was a shocker to be honest. Didnt expect it to be that high, but maybe thats just the current market.

Really depends on the role, but rates at the moment to agency seem to be from 90 - 150chf per hour on the rate card, knock off about 25-35% of that for the agency cut as a permanant employee of the agency and thats what you get before tax. On CHF100 ph to you expect to take home CHF 70-80 depending where you are after deductions.

Hope this late afternoon semi hazed post helps.
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Old 21.06.2012, 20:52
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Re: Switching from Permie to Contract

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Really depends on the role, but rates at the moment to agency seem to be from 90 - 150chf per hour on the rate card, knock off about 25-35% of that for the agency cut as a permanant employee of the agency and thats what you get before tax. On CHF100 ph to you expect to take home CHF 70-80 depending where you are after deductions.

Hope this late afternoon semi hazed post helps.
Also as a really really rough rul of thumb, the #1000's per year should equal #CHFs per hour to get about the same standard of living, so rate to agency should be 120 per hour to get a 120k standard of living. (Really Really rough calculation)
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