alt.lawyers

Roy wrote:
> ZalekBloom@ wrote:
>> ...
>> He suspect that UBS knew that his job will be outsourced,
>> but they hire him as employee, because it cheaper then hiring
>> consultants.
>> ...
>
> Exactly the opposite is true. It costs more to hire an employee than a
> contractor. The employer has to pay unemployment insurance, disability,
> benefits, employment taxes, etc. Contractors get high per hour rates
> because they have to pay all those things themselves. Employment taxes
> alone are around 8%.

There are a lot of factors.
I generally work as a software engineer, either as an employee
of the place where I do the work, or as a W-2 contractor, that
is as a minimal-benefits employee of an agency. It used to be
(15 years ago) contracting was a lot more lucrative, even
counting in down time. Maybe in other geographic areas and
in other specialties it's different; I find that with a 40-hour
work week, 10 company holidays, sick time, and benefits it's
about a wash.

When hiring a contractor the employer doesn't have the cost
of benefits, but on the other hand he's got the cost of the
middleman agency's profit margin.

In any case, a point Roy made that seems to have been missed
is that a contract programmer might accept a lower rate,
either on the contract or as a direct (so-called "permanent")
employee in order to get steadier employment. Of course it's
all just stated intention (and OTOOH there are good-faith
requirements) but it seems that OP is saying that UBS enticed
his friend to come on board at permanent rates, knowing it
was going to treat him as a short-term temporary.
Roy's friend might have the (moral if not legal) case (<- ObLegal)
that if he'd understood that UBS was only going to be a
6-month assignment he would not have accepted so low a
salary, because he has to factor in the down-time associated
with next job search, or because he was turning down competing
offers.

(Me, I don't do so well as a contractor. I take what they're
giving 'cause I'm working for a living, and I find myself
comparing the contracting rate to what I'd get on Unemployment
Insurance. I know other software contractors whose normal
billing rate is more than five times what I get hourly on
a W-2, but they're out of work. I suppose that when I'm out
of work my billing rate is $500/hour too.) (In some perverse
markets, employees are laid off while contractors are retained
because it's so easy to terminate contractors if they ever
have to, or as the French say, it is the temporary which endures.)

--
- David Chesler reading on

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