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Ask HN: Why is my F500 employer okay with paying 5x to freelancers?

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81–90 of 96 posts

Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?

#81
I feel your frustration, but please read up on Dutch corporate taxation.

Basically put, your 30€/h (I assume came from 60.000€/year salary), is factually 110,000-140,000 €/year cost for your employer. It does not take into the account the financial risks you pose to the company (long time sickness, social financial obligations, ..). Second thing, the 150€/h you quote, is not going into the pocket of the freelancer. Unlike you, they’re taxed similarly to your employer, hence -21% VAT, corporate taxation, - business costs and expenses (from office rent, lawyer and accountant fees to the public transport that your employer reimburses you, simple insurances will add up to ~1-2k/month..), - social security tax and lastly the income tax. As a self employed, you are in a different pension system (read: minimal). You’d need to save that money yourself. You’re not always employed, nor paid when you’re ill, and government won’t pay you a dime if you get laid off.

If you do the math right a 70k/year salary translates to a 100€/h (excl VAT) zzp position and 130-ish €/H BV construction. Yes, it seems unfair to you, but that’s a choice you can make for yourself.

Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?

#82
post #57

Earlier quoted context omitted.

60k sounds like a rather bad salary for a SW engineer in the Netherlands.

According to [1] it sounds about right actually. I actually make a bit above of what I should be making with 4 years of experience and a computer science master. [1] https://www.nationalevacaturebank.nl/salariswijzer

You’re making very rooking mistake of thinking that your salary = expense to the employer. Employer already pays at least 40% over your salary for “social” taxes. Excluding all the stuff you mentioned earlier, you can safely assume that you cost 60€/h excluding all the benefits, holidays, extra pension contributions etc.

Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?

#84
post #22

Earlier quoted context omitted.

When times get tough they shouldnt hire freelancers in the first place... If they have ongoing hires they pay 3 times as much on a freelancer as they do on an employee... this logic doesn't check out at all

No, the logic is right. If you have full-time employees you have to fire them when times get tough. In some countries it’s very hard to fire people and it requires months of notice. These laws encourage companies to choose contractors so they don’t get stuck with employees they can’t fire during tough times. If you have freelancers you can more flexibly pause, delay, or reduce hours and then resume them again when yo…

In some EU countries like Portugal you are also required to pay quite handsome severance based on years worked. Between 15 and 45 days of base salary for each year of service, with a minimum of three months’ salary.

Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?

#85

I feel your frustration, but please read up on Dutch corporate taxation. Basically put, your 30€/h (I assume came from 60.000€/year salary), is factually 110,000-140,000 €/year cost for your employer. It does not take into the account the financial risks you pose to the company (long time sickness, social financial obligations, ..). Second thing, the 150€/h you quote, is not going into the pocket of the freelancer. U…

VAT is out of equation as it is goes down the flow and is actually paid by end customer only, not the business, not the contractor.

Also there are multiple ways to decrease taxation, to write down expenses as cost of business, etc.

To be contractor is much better, unless you don't want to do any work, just to attend the office.

Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?

#86
post #30
post #25

If you’re upset, quit and become a freelancer. You’ll figure it out pretty quickly, I suspect. As a general life rule, if it ever seems like somebody else is doing better than you, instead of bitching about it, do what they are doing.

I fully agree with that statement. But keep in mind that the grass is always greener on the other side. Freelancing has it's own challenges. Especially in economically uncertain times, freelancers are the first ones who lose their jobs, if the company needs to save money.

> But keep in mind that the grass is always greener on the other side.

I think you meant "isn't"?

Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?

#87
What I found crazy is the worker is screwed anyway. Fee years ago there was a choose to be a direct employee of the bank or through the famous body-leasing company. From my perspective both offered employment contract covered by labor law, both offered the same workplace (office of the bank) and both offered similar salary (average for the location).

However, bank paid to lease engineers roughly double of the costs of keeping them as internals.

At that time it was like this: $8000 bank paid to the body shop. $1000 body shop paid in payroll taxes. $3000 was a salary in employment contract. $2000 employee received after all taxes, social contributions and fees.

Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?

#88

I feel your frustration, but please read up on Dutch corporate taxation. Basically put, your 30€/h (I assume came from 60.000€/year salary), is factually 110,000-140,000 €/year cost for your employer. It does not take into the account the financial risks you pose to the company (long time sickness, social financial obligations, ..). Second thing, the 150€/h you quote, is not going into the pocket of the freelancer. U…

VAT is out of equation as it is goes down the flow and is actually paid by end customer only, not the business, not the contractor. Also there are multiple ways to decrease taxation, to write down expenses as cost of business, etc. To be contractor is much better, unless you don't want to do any work, just to attend the office.

The contractor is at the end of the chain, hence is the one paying the VAT.

You’re right that there’re measures to reduce the tax load. At the end of the day, any company expense will also cut into the profit/ margin of the contractor. There’re various laws in place to tax anything company acquired that can be used personally. Great example is the car and real estate taxation.

The largest component of the equation is the pension/retirement finances. This is tricky to get right

Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?

#89
post #30

Earlier quoted context omitted.

I fully agree with that statement. But keep in mind that the grass is always greener on the other side. Freelancing has it's own challenges. Especially in economically uncertain times, freelancers are the first ones who lose their jobs, if the company needs to save money.

> But keep in mind that the grass is always greener on the other side. I think you meant "isn't"?

Not GP, but that is the correct saying. Basically, it'll always look greener from where you're at but that isn't always true necessarily.

Re: Ask HN: Why is my F500 employer okay with paying 5x to freelancers?

#90
post #75
post #37

Earlier quoted context omitted.

I work as a contractor and am managing a small team. I easily do the work at least two people in my team, in addition to managing ("babysitting") the team. While my pay is not 5 times their pay, it is most certainly higher than theirs. But my most attractive trait is not that I work harder, it is that they can fire me at any point, without giving any reason or any notice. On top of it, they don't have to deal with an…

> it is that they can fire me at any point, without giving any reason or any notice. Isn't this true for an US non-union employee?

If they live in an at-will employment state, yes.
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