In the occasional gaps that I have experienced between employments over the last twelve years or so I have always been able to fill the financial hole that opens up when regular income stops by obtaining some form of short-term work.
This takes the form of either “temping” or “contracting” and never (well not yet at any rate!) any sort of cash-in-hand, no-questions-asked casual work.
“And what’s the difference between temping and contracting?” I hear you ask.
“Prestige!” I reply.
In the spring and summer of 1999, when I had my first experience of changing jobs for 25 years, I acquired (as regular readers may recall) a position with the Norwich & Peterborough Building Society.
Surely you must recall my suggested advertising slogan? ”Norwich & Peterborough – we’re named after TWO crap football teams!”
And then in May 2010 I got a job doing data entry work in Huntingdon for a company that does all the water meter work for Anglian Water in this part of their domain.
These were both “temping” – that is to say I signed up for an agency, effectively became an employee of theirs and went where they told me. The agency paid the National Insurance Employers Contribution and deducted tax and NI Employees Contribution from my wages which were calculated at an agreed hourly rate (probably about half what they claimed off the people I was actually doing the work for).
If the job came to an end before I moved on then it was incumbent on the agency to find me something else as soon as possible.
Those jobs are “temping” to me because that is a somewhat derogatory term implying menial work and they don’t involve me doing what I regard as my REAL job!
My I.T. Support jobs do, however, involve me doing my REAL job but if I get one of those that is only short-term then that is “contracting”. A much more professional sounding term, don’t you agree?
There is rather more to it than that because most companies will not make a contract with you directly – which would be nice as you could probably ask for payment in cash and then omit to tell those government tax-wasters about it! But no, alas, they will (probably on the instructions of said government tax-wasters) only make payment to a bona fide limited company and that means you either have to become one or find one to get your money paid through.
For this purpose some enterprising soul has invented “umbrella companies”, often based in the offices of Chartered Accountants. These take the form of either a bunch of “paper” companies with only one or two people assigned to each or just one organisation having the payment of contractors as its main business.
I have used both methods but to keep things simple let’s consider the first mentioned scheme where a dummy company is allocated to the contractor.
You will, no doubt, have already appreciated that in this situation one is not only the sole employee of the company but is also the sole source of its income. Therefore, whatever you bring in to it from your contract has to fund both the Employer’s and Employee’s National Insurance contributions as well as the tax deducted under PAYE. And given that hourly rates in IT are often double those of ordinary temping THAT would tend to hit ones net pay very hard indeed.
Fortunately, however, some clever taxpayer-friendly accounting wizard has found a way around all that!
My actual salary from the company is calculated by reference to the Statutory Minimum Wage which means that while I do have to cough up both sorts of National Insurance it doesn’t amount to very much. Neither does the salary of course but then most of the balance of what I bring in is paid to me as “commission” which has tax deducted but not NIC! And finally, because my regular place of employment with the umbrella company is my home, my mileage for business travel (28 miles per day at 40p per mile) is tax deductible so the equivalent sum is paid to me gross. Clever, huh?
All in all I wind up with almost exactly the same net figure as when I was an employee on a similar gross salary. So I don’t feel I’m cheating anybody.
It can, however, get very confusing!
Take my current contract for example.
I am actually working in the Stamford, Lincolnshire IT office of a multi-national engineering company providing IT Support services to the computer users there BUT – being so big, they don’t employ contractors directly so I actually work for the Indian company that provides all of their contractors including their India-based helpdesk. HOWEVER, that company only actually employs the people working on the sub-continent and short-term contractors such as me are handled through an Anglo-Indian Employment Agency subsidiary – the people who actually rang me up and asked me if I wanted the work and to whom my timesheets are submitted.
Are you with me so far? Good!
You will recall from my earlier remarks that Contractors do not get the money pressed directly into their hot little hands and have to work for nominal umbrella companies. Well I do that and THEY lend me to the Agency at an agreed hourly rate!
My problem is that sometimes I meet or communicate online with friends and they ask me “Hey Alfie, who are you working for now?” expecting a short answer!
What the hell do I tell them?