How to Calculate Your Daily Rate as a Contractor in Ireland
More and more companies are turning towards contractors in 2020 to undertake specific projects and/or to provide extra qualified resources during busy periods. Contracting offers great opportunities for skills development, better pay, flexibility in how and when you work, and greater career control. As a recruiter, I work with both short-term temporary and contract positions and I can certainly verify that the demand for contractors is increasing year over year. The rise of the ‘gig economy’ has driven alot of this demand over the past number of years and I speak with professionals on a daily basis that are considering contracting for the first time.
The most asked question I often get is,”How do I convert my salary as a permanent employee to what I should earn as a daily rate contractor?”. The following method of calculation may help any professional thinking of contracting in Ireland
How to Calculate Your Daily Rate as a Contractor
Don’t be flustered when asked about your daily rate. The formula below will ensure that you correctly calculate your daily contract rate:
- Desired salary for permanent employment, e.g. €60,000 per annum
- Remember to include the monetary equivalent of any benefits that you receive and add to this sum
Contractors work on average 232 days per Irish calendar year. This accounts for weekends, holiday days and bank holidays. So, divide your permanent salary by 232.
E.g. €60,000 ÷ 232 = €258.62 per day
Contractors in general demand a higher salary due to the short-term nature of their work; Add between 15% – 20% to your baseline daily rate to account for this:
€258.62 x 120% = €310.34 (daily contractor rate)
Therefore €310.34 per day is the equivalent of €60,000 on an annual basis as a full time employee.
You can also request our Salary Survey Ireland to look at contract rates more specific to the sector and industry you specialise in.