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I am speaking with a recruiter who has proposed the following to me:

  • Get paid a yearly salary
  • Work on contract jobs
  • In between contracts you still get paid
  • Full benefits
  • Get a yearly bonus for each developer you bring on
  • Get a bonus for any contract leads you bring in

The pitch is that it's like working contract gigs, with a full time salary and the stability and dependency of full time work.

I had never heard of before, but I am also still relatively new to the field. Is this a common practice? Is there something I should be asking the recruiter to find out if this is a real deal, or if there's something awry?

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    Our better consulting firms operate this way, they want to keep the best people so they pay them if they are temporarily on the bench knowing the highly skilled will be in demand over time. – HLGEM Oct 13 '15 at 21:32
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    It's a thing. They charge the company contractor rates (typically £300-1000+ per day) and then pay you a salary (costing them more like £150-300 per day including all costs eg holiday, pension). Numbers are region, domain/specialism and experience dependant of course. They pocket the difference, but take the risks of having to find the contracting jobs, and having to pay you regardless. Essentially it's about economies of scale and the difference between salaries and contracting rates. They aggregate the risk and offer the work to people who may be capable but risk averse. – Jon Story Oct 13 '15 at 23:35
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    Obviously, random people on the internet can't tell you what some unknown company would do in a hypothetical situation. Eventually, they'd have to lay you off if they can't find work but it's entirely reasonable to expect that they'd keep a spectacular employee on the payroll as long as possible. One thing to be aware of, though, is overtime. One thing contractors often like is that they get paid extra when they do overtime. If you're salaried, you may not get overtime but you may end up working extra hours particularly if you are working for multiple clients simultaneously. – Justin Cave Oct 14 '15 at 1:28
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    Definitely a thing. Look at it this way; if you wanted to, you could go out and chase down those same contracts as a freelancer and charge rates in the ballpark of $200/hour. Instead you accept a salary that's probably worth ~30% of that (on an hour:hour basis) or less, and let your employer do all the chasing. They still book contract rates at ~$200/hour, pay you your salary, and pocket the remaining ~70%. There's enough in that ~70% for it to be worth paying your salary even if you're sitting idle 50% of the time. – aroth Oct 14 '15 at 4:29
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    I once worked for a company which combined both: I mostly delevoped our own product in-house, but when business was slow, I was "sold" as a contractor to work elsewhere for a few months (while keeping my regular contract). – sleske Oct 14 '15 at 7:41
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The business model is entirely reasonable (the company I work for does it this way). Particularly for higher end skill sets, it can easily be less expensive to pay someone their salary for a few weeks or even a few months between contracts than to replace people that get a different job if they sit on the bench unpaid for a while. The company expects to get a certain amount of work in the door and they staff for that level of work. They expect that people will spend some time on the bench and that those that spend a bit more time between contracts will end up subsidizing those that go directly from one contract to another.

One thing to be aware of is how the company handles overtime. One thing that contractors generally like is that they get paid overtime if they work more than 40 hours. If you are salaried, on the other hand, the company can bill the client for, say, 45 hours while you just get your regular salary. It's possible that you end up working extra hours without extra compensation (alternately, you can look at it as deferring your compensation to a point in the future where you're between contracts). Particularly when you're working on projects for multiple clients, you may find that you're being encouraged to work extra hours to keep everyone happy.

Obviously, whether this particular company is reputable is not something we can answer. You'd need to talk with former employees, look at glassdoor, etc. just as you would with any other company. It is possible that the company intends to lay people off rather than paying their salary while they are on the bench but that should be a rather self-destructuve thing to do since they'd quickly get a bad reputation.

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Ive come across a few companies that offer these kinds of setups (the ones I've dealt with are mostly based out of Texas.)

It's not the common arrangement, but it does exist. Just don't count on that "time between contracts".

Just make sure you don't pay in. If you pay them, you're getting scammed (like, if suddenly there is this great contract that will start your employment, but you need to do this certification we offer first...)

  • I'm glad to hear it's not unheard of. Would it be appropriate to try to negotiate a severance contract if going that route? – silencedmessage Oct 13 '15 at 21:25
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    Ya, probably a traditional contractor that ended up getting a lot of 1 week-1 month type of contacts, so it was cheaper and easier to just have a stable payroll than spend all those hours wrangling contractors. I mean, its a pretty sweet setup. I wouldn't push it so hard it breaks, but doesn't hurt to negotiate. – user2989297 Oct 13 '15 at 21:29
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It is not really a common practise, but companies do tend to pay full-time salary to people who they feel are working well; so that they don't lose out on them. (Sort of retention hack)

Even my company does it. So, I would answer your questions one by one:

Is there something I should be asking the recruiter to find out if this is a real deal, or if there's something awry?

Yes, you should ask the recruiter about that. I am pretty positive that it is for retention, but you might want to confirm that from the recruiter or your manager(if you have any).

I suppose my biggest concern is that if they can't find contract work for me, will they really continue to pay me or will I get laid off

NO They wouldn't continue to pay you if they can't find a contract for you for a long time. The full-time pay would only till they find contracts for you to work on with short intervals between them. Cause it wouldn't cost the company much, and they are retaining a nice candidate. So, a win-win for both. But, for a long-time? No. Even though you are a spectacular employee, they can't and wouldn't afford to give you full-time salary for nothing.

Would it be appropriate to try to negotiate a severance contract if going that route?

Yes, you would definitely want to. As I mentioned above, in case of a long gap, you might be laid off. So, do negotiate a severance contract forehand.

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