I’m not a lawyer, but I have a vague idea about my rights and firing people to hire them as contractors instead is illegal in both jurisdictions I know, France and Norway.
Firing people to hire contractors instead is risky because you need a reason to fire people. The reason could be economical, but one could easily argue in court that if the company is hiring contractors instead, well, it was not the real reason.
The other reason could be personal. The employee is incompetent or toxic, for example, but if you get an offer as a contractor after, it sounds trivial to win a trial too.
I know the word is a bit a taboo, but I’m personally in a union, for scientists and engineers, and I would recommend people in USA to start considering thinking about perhaps potentially slowly improving their rights.
This is illegal in Portugal. It's also illegal to fire someone based on the termination of a specific company role (assuming the company can do it, but this is another discussion) and then next hire someone else, contractor or not, for that same, or similar, role.
It would be very surprising if you believe labor protections are the root cause of Portugal's economic woes. Can you share how you drew that conclusion?
In case you're actually curious to learn about thoughts in this direction, see the paper "Did the crisis permanently scar the
Portuguese labour market?
Evidence from a Markov-switching
Beveridge curve analysis" at https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp2043.en.pdf
From the introduction:
> For many years, a key distinguishing feature of the Portuguese labour market has been its persistently high employment and relatively low unemployment, despite the high level of employment protection ... The crisis has now seemingly brought about an end to this striking feature of the Portuguese labour
market: ... As a result, Portugal now [in 2017] has the third highest unemployment rate among OECD countries; ...
And the findings:
> The results show that the sharp outward shift in the Portuguese Beveridge curve was to a large extent driven by cyclical factors. However, it was compounded by some structural factors, namely, the relatively high level of employment protection together with the relatively high minimum wage ratio and the relatively generous unemployment benefit system.
This is really interesting. If I understand correctly, it's drawing conclusions about the unemployment rate since the financial crisis.
I'm under the impression that even before the financial crisis, Portugal was considered one of the "poorer" European economies, which is what I was getting at. But I see now the comment I was responding to may have been concerned with Portugal's _recovery_ since 2008.
I wonder if they ever figure out how to stop the emigration from the capitalist hell-hole that is the US to the socialist paradise of Cuba (or pick any South American country if you prefer, most of them are socialist).
In general, Europeans would prefer to not work and strongly support social safety nets. They "work to live" while we "live to work" with our protestant work ethic.
It's telling that America just gets richer and more powerful and Europe stagnates more and more.
Reap what you sow europoors. America shows you the power of the Protestant work ethic.
Are you sure about that? My understanding was that the role is made redundant, not the person; that you can't hire someone else to do what a made-redundant person was just doing (of course it pretty much happens, but on paper/in theory it needs to be different). I don't really see how it makes sense for both to be true.
And in your scenario, wouldn't voluntary redundancy get really weird? 'Denied - because you're qualified for a job in a different department. So keep doing your current one or resign.'
When a role is made redundant (in the UK) an employer has a series of steps they have to make. One of which is, if there is another role the employee could do then they have to be offered it. They can refuse of course. In your voluntary redundancy scenario the employee is waving their rights...voluntarily.
Have to be offered it, or just have to be considered for it? As in, if there's a better qualified person available at the same price (or for that matter you're making two roles redundant and either of those people could do this one other role you have open, but you don't need both) do you really have to give it to the otherwise redundant person?
Certainly industry dependent. OP is about 'big tech' though, not finance (proper fintech aside I suppose).
I think 'contractors are paid more' generally (and in fairness somewhat necessarily) ignores that it's to compensate for other employee benefits. But it's ultimately a kind of pointness/trivial truth - 'the value of holiday and sick leave and job security and life assurance and pension contributions and [...] is non-zero!' - yes, of course it would be.
It’s also true in general tech once you get to director or senior manager grade your short and long term incentive plans can be 50% of your BP and your BP isn’t going to be too shabby either.
Contractors do get paid more but they don’t earn more at least not anymore after IR35 since they have a tax rate that is over 50% as they are also liable for the 15.5% employer national insurance contributions now.
Overall contractors are far cheaper in the UK even at day rates of over £1000 and replacing people that earn high 5 to low six figures.
They aren’t paid any bonus, there is no pension contribution there are no benefits and there is no liability for redundancy.
Long term incentives are pretty much stock options plus a bonus “top up” where X% of your bonus for the current year is paid to you again after Y years (usually 2 or 3).
Stock options are usually available at most large traded companies, bonus top ups are usually for directors+ or senior managers in FAANG or other large US companies that tend to have more grades than UK ones.
Then there are ofc various retention bonuses and allowances, but these tend to be pretty much just a pay increase without the social contributions liabilities to the employer.
You can contract outside IR-35 still, no? At least there were some advertised on LinkedIn last time I looked. If the contract is outside IR-35 then you can still claim expenses and pay corporate tax instead of (most) income tax.
Almost no company will take on that risk these days. You can still claim expenses within IR35 too the only difference is that you have to use an umbrella company for PAYE to cover the NIC liability.
I haven’t seen any company that will take contractors outside of IR35 at least in London for more than a year now.
The risk falls completely on the company these days. IR35 is a very nasty piece of legislation it’s difficult to even hire remote contractors outside of the UK with it without going through an established firm.
Shorter than a year suits me. My goal with contracting is to have time off between contracts to have more energy and time to bootstrap some business ideas. It is a shame this legislation passed, I understand the concern about hidden employees/tax dodging but it seems they overshot a bit.
You aren’t getting outside of IR35 contracts in tech anymore even short fixed term ones (as short as 1-2 months), especially with any company that can afford to pay rates that make it worth while.
If HMRC catches you in violation of IR35 they can open the book and inspect any contracts over the past 10 years and retroactively penalize you. And by you I mean the “employer” in this case as in the company that hired you under contract.
I think it depends. Certainly as a banking PM what I earnt as a contractor (outside ir35) is more than I earn as a permanent employee, even with a bonus.
Employees have basically no rights at all in the US. We started the labor movement, and have completely given up all rights over the last 70 years. It's a shame really.
If you really don’t know about your rights as an employee, you should be aware that US workers have many rights guaranteed by law.
Not as much protection as west Europeans, maybe! But the other side of the coin is that it’s so much easier to get hired, or start a business in the US.
https://www.dol.gov/agencies/whd/workers
The question isn't whether there are rights guaranteed by law. It's whether or not those laws are actually applied. That's why it's national news that Amazon was found to have violated labor laws... in a single warehouse in New York.[1]
And that's before we get into intentional understaffing and industry capture of the US Department of Labor.
Well, now you’re moving the goalposts. I’m not arguing that workers are never mistreated. I would agree, sometimes they are, and that is bad! But it’s overly hyperbolic to say that US employees have no rights at all. They do, just not as many protections as a few other countries.
As an hourly, non-exempt employee, I had a legal right to overtime, paid breaks, and unpaid leave and other things. DOL signs were posted at the workplace, as is required, to inform workers about their rights. My employer (Best Buy) followed the law and I appreciated those legal protections, which the employer otherwise probably wouldn’t have given me. This is an anecdote, but is an example of a worker (me) having rights.
To be clear, that’s the specific argument I’m making. American workers have some rights, regardless of whether they’re perfect, or perfectly upheld. That’s obvious, isn’t it?
Not when it’s at-will employment. You don’t need a reason to fire anyone in most states in US. Only exceptions are protected things like because of gender or race etc - but that is even blurry to prove it.
Unions are the only protection but companies do everything to burst unions e.g Starbucks and Amazon.
In the US at the Federal level the IRS and DOL have specific tests for contractor vs employee. If you hire contractors that are really employees they will come after you for misclassification. This is independent of State laws.
Would depend on the province. Canada kinda sits between Europe and USA when it comes to worker rights.
You can always fire people without cause, but you would owe them termination and severance pay which positively correlates with (among other things) duration of employment and specialization.
This isn’t really true. Americans have more rights than they think.
It varies a lot, and can be confusing.
There’s an ongoing case about how venues like Madison Square Garden are using facial recognition to deny entry to employees of law firms suing them.
There are laws in place to protect theater critics. Those laws stem from an idea that it’s unlawful to prevent someone from earning a living/practicing their profession.
Many of those older laws are on the books.
There are strict anti blacklisting laws in many states.
Nothing you mentioned has any relevance to an employer firing an employee and rehiring them as a contractor, which is perfectly legal in the US.
This actually happened a lot after the ACA/Obamacare law went in effect a decade ago. Many employers were faced with the mandate to provide insurance for full-time employees and decided to fire/downsize those roles and hire independent contractors in their place (which did not need to have healthcare provided by the employer).
> There’s no way I want to go back ... making half the amount.
IMHO, if a company lays off an employee, and then wants them back as a contractor/consultant, the tasteful offer is that the money doubles, not halves.
I'd see this more at a company like Twitter than Microsoft, but trying to refill a role, especially with the same people after once firing them is often a sign that they fucked up and let go people that were critically needed.
That's the kind of conditions where the person comes back as a contractor, but paid significantly more.
This also happens a lot in small companies with stupid managers.
> Why would they double this person’s pay? This person no longer has a job and needs one!
Because he's contracting now. Contractors typically don't take jobs for salary level pay, let alone _less_ that salary level pay. The main reason we charge more is to cover costs for insurance, and all the other things a company would normally pay for — but it's also because we don't _need_ the job, _they_ need the job filled.
Because it’s only logical that if company realized it made a mistake it would be cheaper to just hire someone back for more pay who’s already ramped up? But you’re right that most management is too incompetent to realize this
The "and needs one" is the important part here. Not everyone has a need to always be employed. For those who have the option to sit out for a while, they can demand a premium. They might not get it, but if the employer wants to tempt them off the sidelines, insulting them with an offer of half pay isn't the way to go. But yes, for those desperate for income, the employer can sometimes get away with that type of behavior until the employee finds another option and leaves.
Assuming the person is a professional, they can find another full time job. In this case the company needs to pay more to compensate for the missing full time job perks (stability of income etc).
That's why hiring contractors is usually more expensive per hour than hiring full time staff.
There seems to be substantial and increasing sentiment among the general public that the current approach (capitalism/neoliberalism/etc) ain't working, and incidences of "negative social behavior" (theft, stabbings, etc) seem to be increasing as a consequence.
Granted, "extinction level event" is a bit of a stretch (at least on a collective basis, though individually it can be a very different story), but perhaps we could manifest a French Revolution type of thing with some coordination.
It’s funny how in Sweden it’s exactly the other way around: Coming back as a (self-employed) contractor is like hitting the jackpot, you typically double your pay. Companies here even have policies to prevent employees switching over to contracting (for the same company). You have to work for some other company for at least a year.
In Seattle going as contractor means making $150k instead of $300k. Does contracting in Sweden pay double? $600k? Or as a contractor you make half what Seattle contractor is making.
I'm not sure we're all using the same definition of contractor then? For the exact same type of work?
Contract work virtually always pays much more than full-time on an hourly basis, since now you've got to cover your own health care, social security, and so forth. And then on top of that you're charging more because there's no security.
The whole exchange you make for full-time employment is to be paid less than short-term contracts, in exchange for greater stability.
OK people are definitely talking about two different things in this thread then.
There's what you're talking about, W-2 contractors who work through a staffing agency which provides temporary work for lower-skill positions. They are often paid less than full-time but this is usually because they have less skill/experience. An equivalent full-time job often doesn't even exist at the company.
And then there are independent contractors (aka consultants) who legally function as their own company, and who do higher-skill contract work. They are paid much more than full-time.
W-2 contractors are the same people who were FTE before. They are not paid less because they have less experience. Please read the article before you comment.
I know people who got laid off at my company who are trying to stay tied into that company however they can.
If you're a contractor for now, fine. You still get to maintain and build new connections to try to get back into an FTE role later on, hopefully at the end of the day this being a minor speedbump in your career.
I can appreciate the thinking. I might actually choose that path if it happens to me.
Game company people probably, but also any company that has large but distinct initiatives that come and go over time. Boeing gathers and scatters people all the time. Each airplane is a different project. Seniority and longevity perks like extra vacation are cumulative.
when they phased out the pension plan you could still qualify if your original start date was before some arbitrary date, so there was some confusing stuff where new people were not eligible but some people were still getting into it.
But if you were laid off, it means the company didn't value you a lot. OK, maybe they didn't value you much because of their current needs--which may have changed since you were hired. But making a bet on staying in the company's orbit just in case they have a change of heart doesn't seem like an especially wise one in general even if it was a "no hard feelings, it's just business" breakup.
There are boomerangs where someone went to a startup for a few years and that sort of makes sense but that's different from being laid off.
Some folks I know are citizens and still trying to stay in the company orbit.
My company offers RSU's as a standard part of performance based comp after a certain level - and having talked to recruiters that is the thing which makes it hard to compete with. Huge tech companies just have higher TC than lesser tech companies as a result. I gather this is generally the case at FAANG companies.
Here is a possible silver lining, if you do go back and make half the wage, give yourself a time limit of putting in a quarter as much time as your previous full time role.
This gives your earning power per time a raise, and lets you take on multiple contract roles if you desire.
Yeah, if you have to actually go into the office then just arrive to work in the morning, take a poo, then wander around chatting with people before you leave for the day. (not being sarcastic)
Same thing happened to me in the early 2000's during the first dotcom crash. Except my contractor rate was nearly double my full time rate. It was rather dumb, but obviously they didn't bring _everyone_ back that they had laid off.
Exactly around the time the GP was laid off and brought back as a contractor.
I have a pension. It's guaranteed because it's a state government job and state governments in the USA are constitutionally forbidden from abrogating contracts (the Contract Clause, yeah, sure, there are exceptions, but this is unlikely to be one of them).
To fund it they spend 23% of my salary (some taken out of my salary, some additionally funded by them).
However if government pensions did go belly up you’d see the use of QE, which will cause inflation, at which point they are still giving you the promised thousands a month but they aren’t enough to live on, and fuck everyone else over at the same time.
Honestly, I don't think that this article is trying to do something from nothing.
From what I see - it's some recruiting agencies trying to cast wide nets to hire people for contracting jobs. By some random chance, fired people are getting offers for companies where they were worked previously.
It'd be different if people were targeted to offer job in the exact same team where they were laid off from, but I haven't seen this in article.
Personal anecdote: I was getting emails from Amazon recruiters while working at amazon.
Some places stipulates that if you return within some number of months after being laid off, you forfeit a prorated amount of your severance. This may make returning to the same company significantly less attractive.
Yeah, this happened to me (late 2021): was laid off, had at least one Sr. Director in an adjacent silo spinning up the process of lateral'ing me into his org, but HR confirmed that I would have to pro-rata repay severance should I resume FTE during the severance-paid interval (in my case, 6 months). I wasn't surprised as the last thing HR and bean counters want is to let an employee "double-dip", but assuming the interest of the Sr. Dir. in my case was genuine, it's a classic case of myopia on their part: it seems pretty likely that when a layoff is being planned, that there is nothing resembling pro sports' "waiver wire" where a list of all the employees initially chosen for layoff is circulated amongst all of management to see if other orgs want to (offer to) "claim" any of them (they presumably don't do this for secrecy reasons). I took the severance and didn't look back; their decision and process, their loss.
Will this count if you're returning to work for a contractor, which is reselling your time back to your former employer?
.. it's almost as if auctioning off our collective talent to the highest bidder to build their machines of dominance and then getting kicked out of that bubble back into the world that now isn't allowed to hold their own opinions was a bad idea after all ..
It don't want to sound insensitive, but same employer or not, being a contractor is different. For starters, your career is less subject to office politics. Or you feel far less pressure to take work home. Don't like to gig, look for something. You're hired to do a job. Do it. No more. No less. There is for some, comfort in that.
The one surprise from the article is that the gross pay is the same. Typically, contractor is more but you lose benefits like paid days off so it's a wash. But same? Maybe that's because supply is up and demand down?
Contractors are well paid (per day) when they are in a "short term consulting role" for a company that doesn't need a permanent position.
When the role is "a body for the shop when the workload is high enough", the contractor is the least valued class in the team, paid less with less benefits, and first to cut when load or funding drops.
It's more complicated than that. Many companies that aren't mainly in tech end up having strange ideas of what competitive pay is for FTEs, thanks to HR, but managers can spend capital project money with far fewer limitations. This leads to places where the contractors are very well paid, but there's no way to convert them to FTEs, just because the offers are never high enough. Add to that the fact that raises in those places are rarely competitive with the market, and you can see crazy situations where a contractor is doing so much better than an FTE that has been in the company for 5 years.
I've also seen layoffs where only full time employees get hit, while the contractors, just don't get hit. Just this month, I've just seen a 20% cut in FTEs , followed by the remaining employees having to spend a lot of time interviewing contractors to replace them. And the contractors are not going to be on-call, so support rotations shrink.
So yes, there are places where the long term contractor is the least desirable position available, but it's really hard to generalize.
This is the norm from my perspective over the last 25 years.
I was a contractor once and while I sat at a tiny desk in a hallway and wasn’t invited to the ice cream parties I know I was paid better than all the FTE as they tried recruiting me but their offers were far less that my hourly rate.
There are also many variations on the contractor relationship that are important. Some contractors are hired through staff augmentation companies while others work through their own company.
Working through your own company is a much better arrangement, but harder to get setup. You'll have more control over rates and have the opportunity to get more work.
This all depends on having a relationship with someone with some kind of budgetary control and relationship with procurement. If procurement can get a better deal working directly with your company then it's normally possible to work something out. This is a good reason to build relationships with the "highly political" people that technical-types normally eschew.
That‘s definitely not the case for most of Europe, where it‘s much more difficult to cut FTE‘s due to law compared to contractors. Can you give an example where something like that is happening?
Sadly, I've been seeing the opposite. My large company keeps hiring groups of contractors out of India. They are low-quality and low-paid and are there for minor feature conversions. However, we see the company keeping them over strong employees every round of layoffs. The levels of technical debt someone will have to deal with in the future is absurd.
It's like low-quality products from China. The Chinese companies are more than capable of producing high-quality products, but you get what you pay for. If you negotiate them down to the lowest price possible you get the lowest quality product possible that still meets your basic requirement.
There's a bunch of differentiation here that really needs different names for the roles. Personally and in observation I've seen it lead to way too much confusion and arguing at cross-purposes.
We've got people who own, or are, established independent businesses whose customers are other businesses. In white collar work these roles are generally called "consultants". In blue collar work they are often "contractors" or "sub-contractors".
We've got temp agencies who provide temporary or permatemp employees to other companies, where the temporary employee may or may not have any guarantee of long-term employment by the temp agency, but are almost guaranteed to have stretches of time in which they aren't compensated, even if they do. These roles are "temps" or "permatemps", but often get called "contractors", though the real "contractor" is the temp agency. The jobs described in the article fall in this bin.
We've got people who directly fill roles for spec pay. I guess these days these roles are called "gig work".
I think the word "contractor" should be reserved for talking about non-employee labor, or business-to-business labor, in general. Even then there are edge cases (like catering) that I'm not sure belong here, or belong in the non-contract business-to-customer category. The more specific terms should be used for the particular type of job (Consultant/Sub-contractor, temp/permatemp, gig worker).
Well if you are desperate for the job then go for it and just work bare minimum needed to keep your job. Don't go extra mile. enjoy some good family time. keep looking outside and dump them without notice once you get a better job.
Being a contractor can be freeing. Everything that normally matters stops mattering. Code quality, longterm issues, finishing whatever you are doing. You are there for a fixed length of time. Not getting access becomes someone elses worry. The project not working, the ceo is unhappy.. don't really matter
Going the extra mile is rarely worth it anyway. A worker has to rationally evaluate whether their investment will see a return. Everyman can't be king, and not every employee can go the extra mile, else there is no such thing as the extra mile. There is nothing wrong with simply doing your job adequately. Let your more talented peers rise to their level, take opportunities as they come, and leave the workhorse attitude behind.
I'm in the US. I'm looking around and seeing a lot of people barely making it by. Are there really more opportunities? Maybe for all the H1B workers I see, sure.
What opportunities were you referring to? Becoming an Uber driver?
I remember a story about a guy who was recruited for the same company he'd just been fired from. Since he had time on his hands, he actually showed up for the interview wearing a fake moustache.
Tldr: recruiters are trying to bait workers with contract work at the company they’ve just been laid off from, but then turn around and submit them to many other companies instead.
> Lawrence Dearth, the president of staffing company Insight Global, said the average recruiter is simply hoping to make contact with a talented individual. After the initial contact, they’ll ship the worker’s resume out to 10 to 15 different companies.
Or, Occam's and all, they're just doing keyword matching on resumes and - surprise - people laid off from a role most closely match the (now contract) role.
I worked in a factory for a few months as a temp and a bunch of my co-workers that had been with the company for years had this exact thing happen to them, a few years after the 2008 crash. I believe it was a little different in that people were asked to take the change in their classification or leave, rather than being let go and then hired back separately. I know engineers that work outside of software that had to take mandatory unpaid time for the same reasons. I guess we just need to hope we end up with that "soft-ish" landing the Fed was talking about instead of a big recession or we're going to hear a lot more stories like this.
Because you are an employee, but of the consulting firm.
I guarantee that the consulting firm is getting a lot more for your time, than they are paying you.
This is becoming a lot more common, these days.
In many cases, doing this, is a good way to enter as an FTE, because the employer does a "try before you buy." I have a couple of friends that landed great FTE jobs, this way.
However, that is only if you are going to a new company, that doesn't know you.
That would be true, if they were a consultant and workingnfor multiple companies. They say they are a contractor. Maybe they are even a contractor through an agency. That doesn't change anything related to potential shadow employee status.
I'll bet they are an employee, though. I know that my friends were actual W2 wage slaves.
There's no law that says they are entitled to benefits. I think that 1099s can apply to "always-there" employees (like Uber drivers).
I've heard stories about these contractor shops.
When they are stumping for the position, they bring in a few IIT/MIT/Oxford folks, then, once the ink is dry, they send over the low-achievers, and I suspect the law states that the company can't request specific folks, or that would make them "possible employees." They need to deal with whomever the contract shop sends over.
I once worked for Amazon as a contractor with Insight Global. While it wasn't a bad gig, the culture wasn't a fit so I left. Since then (almost a year), every week I have been mailed a return box for the equipment that I have already returned. I tried telling my former boss but the boxes keep coming. How much money have they wasted mailing me return boxes months on end for no reason?
That’s exactly my situation, while it wasn’t technically a “laid-off” but rather me leaving a toxic one, but when my previous boss -company CEO- knew I’m starting my own consultancy company, he got in touch about several big project coming in, part of me want to reject it for obvious reasons, and the other part to forget the past and use the opportunity to pivot that to build good portfolio.
My (personal) gut reaction would be that that CEO can fuck off.
That said, my advice would be to weigh whether or not the portfolio boost is worth dealing with any toxicity you may or may not experience. I suppose it's possible (not trying to assume, just that I don't know) that s/he doesn't know how toxic you felt the place was.
Back in October the company contracting me decided to terminate my contract. I then got picked up by a different contract, through the same agency, with the same company, just with a different role and at a different campus, with a pay bump. It's been a weird year.
would not be surprised if upper management in these tech firms are paid handsome kickbacks by these contractor companies (bodyshopping / staffing agencies) to re-hire staff as contractors.
Many such staffing agencies firms, esp with those fewer than 100 staff, are known to be 'benami companies' and pay handsome kickbacks to the client's mgmt based on headcount hired (and hence the revenue generated) through them. Often these are routed through hawala method, and final payments made in foreign (or their respective native) countries , so would be hard to track
Firing people to hire contractors instead is risky because you need a reason to fire people. The reason could be economical, but one could easily argue in court that if the company is hiring contractors instead, well, it was not the real reason.
The other reason could be personal. The employee is incompetent or toxic, for example, but if you get an offer as a contractor after, it sounds trivial to win a trial too.
I know the word is a bit a taboo, but I’m personally in a union, for scientists and engineers, and I would recommend people in USA to start considering thinking about perhaps potentially slowly improving their rights.