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Ask HN: Why is my F500 employer okay with paying 5x to freelancers?
51–60 of 96 posts
Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?
#52There’s a whole world of unintuitive reasons for this kind of thing. Non-exhaustive list: - Freelancers are OpEx, FTEs are CapEx. They are usually separate budgets so departments split. - They want to maintain good relationships with the freelance companies in case they need to spin up staffing quickly with top talent in the future. - They don’t have to pay some benefits and taxes on freelancers. - Freelancers and co…
The OpEx vs CapEx thing is huge, by the way.
I've been in the position where I couldn't hire for long stretches of time, but was given ample budget for operating expenses. Of course we hired contractors and agencies, even if the rates seemed absurd compared to direct employees.
Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?
#53Depending on the juristiction (I'm not familiar with the Netherlands), there are many ways what you describe can become a very large legal liability for your employer. Most of these have to do with tax fraud, worker misclassification, etc, and no sane company needs that legal risk. They could easily face fines larger than what they could ever hope to gain from this arrangement.
Very likely this, as the Netherlands recently had some laws changed to put a stop to "contractors" (with giant quotation marks).
Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?
#54[flagged]
Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?
#55How did you calculate the 30 EUR per hour? Does this include paid holidays, sick leave, training, etc? Is it paid 12 times per year, or even 13, 14 or 15 times? A freelancer can actually only work around 10 months per year. 1-2 weeks are national holidays, 4-6 weeks is holiday, 1-2 weeks sick leave. Freelancers also only get paid when there is work to be done. There are gaps between projects that need to be included…
On top of that, the freelancer might provide their own equipment. They might get paid days, or months, later too.
I've never got paid time off as a freelancer. Sometimes I was allowed to join company paid trainings on my free time. But it's also a plus for the company, they hire a trainer and give the extra spots to their freelancers. No cost, just benefits (better trained freelancers).
Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?
#56Earlier quoted context omitted.
> Freelancers are OpEx, FTEs are CapEx I don’t think this is true unless simply make up your own definition of CapEx. “Examples of OpEx include employee salaries, rent, utilities, and property taxes.” https://www.investopedia.com/ask/answers/112814/whats-differ... (Yes there are some times when you may be able to capitalize some labor, but that would apply to freelancers as well and is very much the exception, not th…
This may be different per country and all sorts of fun things apply like “is this R&D” which definitely changes the calculus.
Sorry which countries is this different in?
And other than R&D, which other fun things apply that definitely change the calculus?
Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?
#57How did you calculate the 30 EUR per hour? Does this include paid holidays, sick leave, training, etc? Is it paid 12 times per year, or even 13, 14 or 15 times? A freelancer can actually only work around 10 months per year. 1-2 weeks are national holidays, 4-6 weeks is holiday, 1-2 weeks sick leave. Freelancers also only get paid when there is work to be done. There are gaps between projects that need to be included…
I get about 60K per year including a bonus, so that's an estimate. What I didn't factor in is vacation and sick leave. Vacation is 6 weeks. Sick leave, well it's the Netherlands so one could be sick for 2 years. If a freelancer would pay for an equivalent insurrance would cost about 500 euro's or a bit lower (so 6K per year). So to make it more equivalent, I'm assuming 2 weeks of being ill, 6 weeks of vacation, so 10…
60k sounds like a rather bad salary for a SW engineer in the Netherlands.
Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?
#58Quit and set your rate to €100.
You’re giving them a great discount.
That’s how it works.
Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?
#59Earlier quoted context omitted.
> - They don’t have to pay some benefits and taxes on freelancers. The employer-paid taxes and benefits on full time employees can be very large, depending on the country. Even in the United States people are surprised to learn that their employers pay taxes for employing them. You pay some taxes on your income and your employer also pays some taxes for employing you!
Well, and the employees often have to pay those taxes and benefits themselves, so that’s rolled into the amount the company needs to pay them.
Full-time employees do not pay those taxes and benefits themselves. It’s called a payroll tax because the company pays it for people on their payroll.
If someone is paying those taxes themself they are not an employee, they are a contractor.
This is one reason why contractor hourly rates are so much higher than salaried FTEs: They are paying higher taxes on the money that reaches their account.
Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?
#60Earlier quoted context omitted.
> - They don’t have to pay some benefits and taxes on freelancers. The employer-paid taxes and benefits on full time employees can be very large, depending on the country. Even in the United States people are surprised to learn that their employers pay taxes for employing them. You pay some taxes on your income and your employer also pays some taxes for employing you!
I explained to someone I supervise yesterday during a conversation that the company pays roughly equal taxes on our income as to what we ourselves pay on it, it blew her mind. The only reason I know about it is because I researched self employment taxes for my SO last year and was curious why hers were so high.
I think it surprises 80% of the people I talk to about it.
Many people don’t believe me or assume I’m wrong.
This is why payroll taxes are popular with politicians: They hide the real tax rate out of sight of the employee.