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Old 11.09.2013, 17:01
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S/W Engineer: Contractor vs Permanent salary

Hi guys,

I searched the forum a bit for my question I am about to ask but I didn't find anything, so I hope it's not a duplicate.

I am a s/w engineer, looking for a job in Switzerland. I already live here and I have been working for a company on a permanent basis but our mother company has decided to shut off our department.

My salary is 97.000CHF (gross) and through the ads I see that positions requiring my skills and experience compensate roughly to 100.000CHF. I also see that the same positions that target contractors, say on 6 month projects, compensate about to 700CHF per day. That means (6 months x 22 working days) the contractor is paid about 90000CHF.

My question is: Other than the safety of the permanent job, is there a reason for the almost double per day compensation? I understand that the contractor has to pay himself for his pension but again, is this a fact that justifies the difference?

Thanks!
Manos
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Old 11.09.2013, 17:26
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Re: S/W Engineer: Contractor vs Permanent salary

Contractors are not usually bothered about the permanent aspect of a job but are paid for skills relating to a specific project for a specific period of time. Most contractors I know prefer the in-out travel light aspect of this work. Also employers do not have to pay AVS or pension or insurances.
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Hi guys,

I searched the forum a bit for my question I am about to ask but I didn't find anything, so I hope it's not a duplicate.

I am a s/w engineer, looking for a job in Switzerland. I already live here and I have been working for a company on a permanent basis but our mother company has decided to shut off our department.

My salary is 97.000CHF (gross) and through the ads I see that positions requiring my skills and experience compensate roughly to 100.000CHF. I also see that the same positions that target contractors, say on 6 month projects, compensate about to 700CHF per day. That means (6 months x 22 working days) the contractor is paid about 90000CHF.

My question is: Other than the safety of the permanent job, is there a reason for the almost double per day compensation? I understand that the contractor has to pay himself for his pension but again, is this a fact that justifies the difference?

Thanks!
Manos
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Old 11.09.2013, 17:49
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Re: S/W Engineer: Contractor vs Permanent salary

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... Also employers do not have to pay AVS or pension or insurances.
Yes, I suppose AVS/pension/insurances have to be paid by the contractor. What I am trying to figure out is how these costs affect the contractor's gross salary.
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Old 11.09.2013, 18:25
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Re: S/W Engineer: Contractor vs Permanent salary

https://www.ch.ch/en/becoming-self-employed/

http://www.kmu.admin.ch/themen/00614...x.html?lang=en
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Old 12.09.2013, 04:32
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Re: S/W Engineer: Contractor vs Permanent salary

It's many years ago since I worked as a contractor, but since I'm unemployed at the moment I ran the figures recently and came to the conclusion that I'd need to get a minimum of 700 a day over a 10 month period to be in the same position as a permanent job offer and the salary was just your typical mid level software engineering position.

Now most people will come up with a much lower figure by using the the minimum fees for insurance, legal holiday entitlement had so... And in some cases ignore some of the benefits entirely. Put this is not typical of what employers offer.
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Old 12.09.2013, 08:54
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Re: S/W Engineer: Contractor vs Permanent salary

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Hi guys,

I searched the forum a bit for my question I am about to ask but I didn't find anything, so I hope it's not a duplicate.

I am a s/w engineer, looking for a job in Switzerland. I already live here and I have been working for a company on a permanent basis but our mother company has decided to shut off our department.

My salary is 97.000CHF (gross) and through the ads I see that positions requiring my skills and experience compensate roughly to 100.000CHF. I also see that the same positions that target contractors, say on 6 month projects, compensate about to 700CHF per day. That means (6 months x 22 working days) the contractor is paid about 90000CHF.

My question is: Other than the safety of the permanent job, is there a reason for the almost double per day compensation? I understand that the contractor has to pay himself for his pension but again, is this a fact that justifies the difference?

Thanks!
Manos
Well, as a contractor, remember what happens if you are sick and can't work? Or want to take a weeks holiday? No pay.....

Also, the employer has the luxury of being able to terminate you at very short notice and not have to pay you 2/3 months notice.
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Old 12.09.2013, 09:37
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Re: S/W Engineer: Contractor vs Permanent salary

If you’re deciding between 700 per day and 90k per year, take the contract. That is no brainer. Once you are in a position to have a larger salary (more experience/responsibility), you may rethink.
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Old 12.09.2013, 09:50
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Re: S/W Engineer: Contractor vs Permanent salary

Thanks for the responses guys.

Jim2007, I also noticed your reply on this thread Contract Vs Permanent? and it was quite enlightening

It seems my post is a duplicate after all.

Sash_ right now I have no offer yet, but I will accept the first one that lands. The problem is that my German knowledge is very basic and this limits the available positions.
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Old 12.09.2013, 11:28
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Re: S/W Engineer: Contractor vs Permanent salary

Business pays a lot more for contractor vs permanent because:
  • contractors are compensated entirely via the headline figure (eg 700/day), with no other benefits
  • the contract can usually be cancelled with a one month notice period (business place a high value on this)
The benefits that come with a permanent role are a fixed cost to the employer. But they have a variable value from employee to employee.

I much prefer to contract because the "extras" of a permanent role hold almost no value that is relevant to my lifestyle or preferences.
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Old 12.09.2013, 11:52
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Re: S/W Engineer: Contractor vs Permanent salary

Contract: Unless you provide for it yourself

No sick leave
No paid vacation
No security
No pension
No insurance cover
No training

And employers' social contribution comes from your fee. Roughly, a contractor would need to be in place for ~2 years before it would have been more cost-effective for them to be permanent.

I prefer to contract because:
No appraisals
No target setting
No/reduced politics
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Old 12.09.2013, 19:30
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Re: S/W Engineer: Contractor vs Permanent salary

I concur NAT. If you've been contracting for some time the Security aspect is not so dramatic anymore as you probably have saved a good amount of cash (you should - for all the virgin contractors out there). But the reduced or very little politics are so refreshing, I love to stay out of such discussions, rarely they are fruitful.
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Old 12.09.2013, 19:35
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Re: S/W Engineer: Contractor vs Permanent salary

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Business pays a lot more for contractor vs permanent because:
  • contractors are compensated entirely via the headline figure (eg 700/day), with no other benefits
  • the contract can usually be cancelled with a one month notice period (business place a high value on this)
The benefits that come with a permanent role are a fixed cost to the employer. But they have a variable value from employee to employee.

I much prefer to contract because the "extras" of a permanent role hold almost no value that is relevant to my lifestyle or preferences.

Do you mean things like "abwechslungsreiche und interessante Tätigkeit in einem dynamischen und aufgestellten Team sowie sehr attraktive Anstellungs- und Weiterbildungsmöglichkeiten"? Whenever I read that I have to lol.
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Old 12.09.2013, 19:47
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Re: S/W Engineer: Contractor vs Permanent salary

700 a day cost an employer about the same as 120k a year on the payroll assuming no sick days...........
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Old 12.09.2013, 23:40
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Re: S/W Engineer: Contractor vs Permanent salary

And let's not forget the tax advantages a contractor with a good accountant can benefit from. At least that's the way it works in the UK.
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Old 13.09.2013, 00:19
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Re: S/W Engineer: Contractor vs Permanent salary

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And let's not forget the tax advantages a contractor with a good accountant can benefit from. At least that's the way it works in the UK.
Yes but we are not in the UK now!
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Old 13.09.2013, 00:32
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Re: S/W Engineer: Contractor vs Permanent salary

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My salary is 97.000CHF (gross) and through the ads I see that positions requiring my skills and experience compensate roughly to 100.000CHF. I also see that the same positions that target contractors, say on 6 month projects, compensate about to 700CHF per day. That means (6 months x 22 working days) the contractor is paid about 90000CHF.
OK, so my back of a napkin calculation suggest that your 97K is about equal to about 530CHF per day, but only if you are 100% occupied. if you are 4 weeks out of contract it becomes 580CHF and if you are out 8 weeks 645CHF and so on...
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Old 13.09.2013, 00:42
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Re: S/W Engineer: Contractor vs Permanent salary

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OK, so my back of a napkin calculation suggest that your 97K is about equal to about 530CHF per day, but only if you are 100% occupied. if you are 4 weeks out of contract it becomes 580CHF and if you are out 8 weeks 645CHF and so on...

Your forgetting to take account of AHV, AI, NBAI plus pension about 13% holidays & free days another 15%
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Old 13.09.2013, 00:48
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Re: S/W Engineer: Contractor vs Permanent salary

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Yes but we are not in the UK now!
Good one. It's not Switzerland has historically been a destination of choice for wealthy individuals looking to save on their social investment or anything.
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Old 13.09.2013, 00:51
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Re: S/W Engineer: Contractor vs Permanent salary

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Good one. It's not Switzerland has historically been a destination of choice for wealthy individuals looking to save on their social investment or anything.
That's people who do tax deals who are retired, not people working.
The swiss will not accept a contractor as self employed, they are employees on short contracts, possibly lasting 1 day.
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Old 13.09.2013, 00:53
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Re: S/W Engineer: Contractor vs Permanent salary

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That's people who do tax deals who are retired, not people working.
The swiss will not accept a contractor as self employed, they are employees on short contracts, possibly lasting 1 day.
Nobody is self-employed as a contractor. You'd start a limited company and bill B2B.
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