Contractors vs permanent employees
TeamCalc lets you model both employment types and compare the true cost of each.
How costs differ
Permanent employees
- Base salary + employer NI + pension + benefits + equipment + office + recruitment + management overhead
- Higher upfront recruitment cost, but lower long-term rate
- NI and pension are significant (typically 20–25% on top of salary)
Contractors
- Day rate × working days per year
- No employer NI or pension (outside IR35)
- Optional agency margin
- No benefits or recruitment amortisation
- Higher day rate, but fewer hidden costs
Switching employment type
On any role card, toggle between Permanent and Contractor. The cost breakdown recalculates immediately.
For contractors, you'll enter a day rate instead of an annual salary. TeamCalc uses 230 working days by default (adjustable in assumptions).
IR35 considerations
If a contractor is inside IR35, the cost structure changes significantly — you'll effectively pay employer NI on top of the day rate. TeamCalc's contractor model assumes outside IR35 by default. For inside-IR35 modelling, use a permanent role with an equivalent salary.
When to use scenarios
The Scenarios feature is ideal for comparing contractor vs permanent options:
- Create your base team with permanent roles
- Generate or build a scenario with some roles switched to contractor
- Compare total costs on the Compare page
This shows the true cost difference over a year, accounting for all the hidden components.