This is a 5-part series where Matt and Kierra will be covering how to discuss compensation with a Recruiter. In this segment specifically, part 4, they discuss the pros and cons to both full-time and contract roles. Tune in to learn more!
Alright, so the next part of our series, we want to talk about full-time versus contract and what that looks like.
If you have been working full-time and you’re looking to get into a contract role, what does that entail? What does that look like as far as compensation goes? So Matt’s going to start us off by walking us through the difference between the two. Sure. Yeah. So a lot of people work full-time roles that get paid an annual salary and think to themselves if they’re open to contract positions, what that salary would convert to in an hourly rate.
So there’s a lot of things that go into that. So it’s not super simple, and I’ve been saying this throughout the series, is compensation’s more arts than it is science. And that definitely plays a piece of the full-time versus contract role compensation. So you have to think about full-time roles that have benefits.
So, usually that’s probably like around 30% on average that a company has a benefit burden for each full-time employee. And that benefit burden is a HR term essentially that includes everything that a company pays for outside of your salary. So that’s like taxes, social security, retirement funds, like 401ks, insurance, paid time off, travel expenses.
Expenses for outings and dinners, training and software licenses. So there’s a lot that goes into you being an employee full-time at a company outside of just what you’re getting paid every two weeks, for example. Right. So, usually like an easy way to do the conversion is take your salary and then divide that by 2000.
And that’s because people usually work 2000 hours in a year, assuming they have two weeks of paid time off. Yeah. Or they’re going to take two weeks of time off. But that doesn’t really account for that benefit burden that I talked about. So, you know, that’s not just like a hard and fast rule right.
And also there’s a misconception about contractors not getting benefits and working on a 1099. So Kierra, why don’t you explain how most of Hirewell’s consultants or contractors that are on W2’s get paid? Yeah. So how it works with our company is that when we hire a contractor, after a little bit of time, your benefits actually kick in through us.
So we have all of your benefits and we are in charge of your pay and all of that. Taxes get taken out too. Yep. Taxes get taken out, everything goes through us. So, that is one of the perks because I know benefits is a big thing and a large cost if you don’t have someone to kind of offer those.
So that’s something we offer. We also do corp to corp. So if you have your own LLC you can be in charge of your own taxes. We also do ask Corp. So you can send the invoice and the number of hours you work, and you can handle it that way as well. So there’s definitely a lot of perks there and, taxes won’t get taken out, but you’ll need to set aside obviously a considerable amount of pay for when you owe the government at the end of the year.
Yeah. So those are all things to keep in mind, but definitely a lot of benefits to contracting. Sure. Some being that it’s more flexible. You can get experience quickly at an industry that you haven’t really worked in before and have things to add to your resume.
But there’s also some people that do contract to hire. So if they really love a place that they’re at and the company really wants them to stay, they’ll hire them on full-time. So there’s just a lot of different opportunities that contracts do offer. And you’re not locked into work 40 hours a week. For an agreed period of time.
So there’s other benefits as well. Matt, can you think of any that I didn’t list? Yeah, so, you know, you mentioned contract to hire, so that’s a great way for companies to see if a worker is a good fit for a full-time role, but then also as a contractor, maybe you’re not ready to jump into a full-time position before you try it out.
So it’s kind of like a try it before you buy it model. And yeah like you said, it can give you exposure to new industries. A lot of times with these contract roles, they’re open because there might not be budget for a full-time employee, but there’s an immediate project need, and a lot of times those interview processes move quicker, have less steps, and you can find yourself with a job in a shorter amount of time than if you’re only considering full-time roles.
Yeah. And it’s also nice if you are one of those people that really wants to make the right decision for where you’re working so you can get a feel of the company, the culture, that sort of thing, and you’re, not locked into a full-time, contract with them so you can kind of explore the different opportunities that they provide and see if you like that industry, if you like the technology you’re working with, and the people. So yeah, I think it’s a great way to kind of test out different opportunities and companies and size of companies.
So there’s a lot of great benefits to working a contract or starting to work a contract role. Sure. And Hirewell mainly focuses on full-time roles and placements, but with this market being tough, especially in tech. We’ve definitely seen an uptick in the amount of clients that are hiring contractors versus full-time positions. So especially now in June, 2023. And you might want to open yourself up to some contract roles. Right, right.