The Pros and Cons of Day Rate Contracting in Ireland

Making a move from earning a yearly salary to becoming a day rate contractor can be daunting, but there are several benefits that come with numerous possibilities and challenges. In Ireland, you must conform to the Revenue Commissioners’ criteria of a self-employed contractor, meaning that you must have a registered business with the Revenue Commissioners.

Alternatively, you can use an umbrella company. There are several companies in Ireland which you can contract under making it easy and stress free to become a contractor. It’s now easier than ever to get set up under one of these companies who charge a small fee and manage all your paperwork and tax.?This will allow you to work as normal and get paid once a month without having to worry about paperwork and tax etc. A great benefit of these companies is that there is no commitment and you only need to use their services while you are working.

If you are thinking of becoming a day rate contractor in Ireland, here are the advantages and disadvantages you should know about.

?The benefits (pros):

1. Higher pay rate:

As a day rate contractor under a Limited Company or using an umbrella company, you earn higher gross rates of payment because companies who engage contractors on medium to short term projects highly value a proficient individual who can hit the ground running and get the job done.

The below is an example of a single person in Ireland expensing €250 per month and working 20 days in a month. If you are married you will pay less tax so you will earn more.

This gives you a good indication of the minimum you would earn in a month with 20 days. Some months will be a 5 week month which would mean you would earn more.

The easiest way to compare against a yearly base salary is to multiply the day rate by 230. This is the average amount of days a contractor works in 12 months which allows for 23 days off + 10 bank and public holidays eg. someone earning a day rate 350 euro per day could take 23 days off throughout the year plus the + 10 bank holidays off and earn €80,500 (230x€350) keep in mind this does not include any bonuses or additional benefits such as healthcare etc.

Although this wont include bonuses, pension and healthcare etc. you will still be able to set these up. A major advantage of working as a contractor is being able to expense things like your broadband and phone bill which you will get a 50% rebate on. There is also the opportunity to expense other costs like office equipment eg. chair and desk for your home office. Other expenses include Rent, Company car and Travel however however these depend on a lot of factors and how you are set up so best to speak with us or an umbrella provider so you can see what will be possible for you.

2. More control of your Money!

Another bit of flexibility contracting gives you is how you control your money and take home pay. There is so many options so you can tailor how you are paid to suit you best and maximize your take home pay.

3. Flexibility

Today in Ireland long term contracts and rolling contracts are very common so there are plenty of opportunities to stay with one company for years as a day rate contractor. Alternatively, if you like regular change you also have the option to only work short term contracts. Typically a C.V. showing someone moving between permanent positions multiple times in a short period is usually a negative, however a CV that shows someone who has worked in a multiple contract roles shows a seasoned professional who has gained lots of exposure to different companies and technologies with a genuine reason for moving companies.

Another bit of flexibility contracting gives you is how you control your money and take home pay. There is so many options so you can tailor how you are paid to suit you best and maximize your take home pay.

?4. Better control over your career path

Contractors are highly sought after based on their reputation and skill set. As such, they have better chances of picking companies that they are better suited for. Short term contracts give you a great chance of experiencing different companies and different technologies so you can find out what type of role and company suits you best.

The opportunity to work with different companies, new teams, and new technologies enable a contractor to gain experience in their industry and learn new trends. Adapting quickly to different working environments provides growth that may be limited in one workspace. As such, becoming a contractor gives you the opportunity to expand and improve in your career.

?6. Mortgage and Loans

People often believe that working as a contractor excludes them from getting a mortgage. This is however not true, Quite the opposite actually. As contracting is now very normal in Ireland banks are more than happy to work with contractors particularly in the IT industry as IT contractors are one of the most in demand resources in Ireland.

What was learned over the pandemic is that contractors are actually more secure in their jobs than permanent staff as they are counted as a paid for service rather than a PAYE employee. This means when cuts are made in a company the PAYE staff showing on balance sheets and permanent departments are more likely to be cut , Especially with large multinational companies.

Also as contractors usually earn more there is the opportunity to be able tp borrow more from the bank.

We can assist and put you in touch with one of the mortgage advisors we work with that helps contractors secure mortgages for contractors so you can understand fully before making the move into a contracting role.

The challenges (cons):

1. Uncertainty

Taking on a set term contract can be worrying for some and may not give you the peace of mind that a permanent position might. The only way to get through the uncertainty is better planning and management. Working with a dedicated contracting recruitment consultant is the best way to ensure you are constantly in work and have your next contract lined up for after your current one ends. Luckily more and more companies in Ireland are using day rate contractors which are in high demand so there has never been a better time to become a contractor.

2. Less job security

Although the world is moving towards a more flexible workforce, there is less job security as a contractor. As you grow, you secure returning clients and learn how to get long term contracts. It is now very common in Ireland for companies to use contractors on a long term basis and there are plenty of opportunities to contract with one company for many years.

In Ireland at the moment there is a massive shortage in the I.T. market and anyone with a few years of experience would never find themselves with out a contract.

3.?Fewer benefits

Becoming a contractor means losing privileges such as sick days, bonuses, paid holidays, etc. However, this is compensated with the higher pay rates that you earn as a contractor. Umbrella companies also offer a pension service.

4. Paperwork

Becoming a contractor means taking the reins on everything else aside from what you do. This means that you become responsible for tax deductions, invoices, bookkeeping, sourcing for jobs, etc.

I strongly suggest working with an umbrella company provider especially if you are starting off as a contractor as they will take care of all these things for you so you can concentrate on your job and get paid once a month as normal. Another great benefit of umbrella companies it that there is no commitment or contract when using their services so you don't need to worry about paying any fees if you are out of work or take time off.

Conclusion

There are plenty of benefits of becoming a day rate contractor in Ireland, and as it is rapidly becoming more common, any negatives have become much easier in the last few years.?As a result the benefits of day rate contracting heavily outweigh the challenges.

If you are thinking of becoming a contractor, have any questions on day rate contracting, umbrella companies or would like to see what open opportunities in day rate contracting may suit you then don’t hesitate in sending me a message on Linkedin. Alterniavely you can reach out to me directly using the below details.

You can also check out our contracting hub for more information and rate guides: https://www.berkley-group.com/contractor-hub/

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