You probably know me through my personal numbers or my contributions here and there. I’ve previously focused on my expenses and I commit to doing so every year in this forum. Not it’s time to not only put my pants down, but directly take them off. Let’s talk income!
I live in Lausanne but work in Geneva since 2020. I “enjoyed” the covid times thanks to work from home but my company is giving all employees who wish it 2 days of WFH so I’m quite okay with the commute 3x a week. Plus I don’t live far from the train station in Lausanne.
I work for Company D where I have:
145k fixed salary paid in 12 equal instalments
Bonus for an amount to be seen, should be 5-15k, but no idea
4% of company contribution to the 2nd pillar (after having deducted 25k to the annual salary)
Private accident insurance offered by my employer
Time off (25 days)
No willingness to relocate closer to Geneva.
A somewhat disappointing role. I am however good in office politics and I’m working on my reputation, getting noticed and doing a good job so that I can shape my future at this company and probably get better conditions at some point. Salary raise next year or more bonus?
This last point is important because I got offered a consulting job where I would basically be freelancing. The package would look as follows:
770 CHF per worked day at the customer (so 770x240 = 185k/year?)
No time off or sick days: for every day not worked the 770 CHF are not billed
Minimum LPP contributions
Basic SUVA mandatory accident insurance
No other bonuses, perks, expenses, nothing
Workplace in Geneva, no possibility of remote working (or maybe 1 day/week)
Likely to have to wear a costume
The interest of the position itself is more or less the same of the current one. Only there is no possibility for career progression as I would be “just” a consultant. However, the guy who pitched me the mission told me that most consultats are hired by the end client at some point through “an offer they cannot refuse”.
Sometimes I consider already that I am paid very much for what I do but hey, if the market is willing to pay for it why should I keep them from doing just that.
So my question to you is twofold:
Does it make financial / career sense to take this risk? My reputation at the current company would take a hit, it hasn’t even been a year.
If I do this, should I buy into my 2nd pilar so that I can take the überobligatorisch part to a place like finpension?
Btw curious why do you multiply the day rate by 140 only?
That’s like 28 worked weeks and 24 weeks off?
Just saw that part - for that much ‘holiday’ it might be worth it.
Last time I checked a regular work year has roughly 220 worked days. However that only gives me 169k/year… consulting should be closer to 200-250k/year to be worthwhile. Ask the proposer what‘s the invoiced rate to the customer.
You’re both right. First, there was a typo, I meant 240. Second, I used the 240 days I use in my tax return, but taking time off it should be sometime between 210-220, so more along the lines of 162k170k. When I look at that number yeah, less worth it.
What I did not like about the proposer is that he wants to go very fast. Usually whenever a seller uses that technique on me my reaction is “no”.
I’ve always been against being a consultant. I guess I enjoy the security of employment as internal staff.
Thanks for helping me put things in perspective. I’ve been blinded by the numbers, they guy even sent me a sample salary slip where he put 22 worked days, of course… Nevertheless, as you say, it can be worth if if they do better.
Something that you haven’t mentioned yet is job security.
Where are you more likely to be able to sustain your desired income for acceptable work?
(I imagine both working at a company and consulting for companies possibly having benefits in this regard, depending on the specifics.)
I actually took that into my account but under the assumption that working for the company is more secure. As per the offer’s contract, if there is no mission anymore there is no salary. While they contribute to Assurance Chômage, it is a bigger risk that is probably not offset by the higher salary.
It is also true that you can be fired from any job any time…
I agree with @MrCheese: consulting should pay at least 200k minimum. I think I even mentioned it in another thread, that I would at least multiply the current income with factor 1.5
Personally, I would not even think one second about the offer, unless they increase the salary by a lot.
BIG red flag. I know this from UK recruiters (the most pesky ones of all), but it could be a Swiss recruiter as well.
Next red flag. They are trying to fool you.
You didn’t mention your profession, but judging from your normal salary it could be IT-related. 770 CHF is not a good rate, from my humble point of view. That’s less than 100 CHF per hour.
Also, 240 days per year is unrealistic. 365 - 52 Saturdays - 52 Sundays = 261 days (without bank holidays)
That’s another factor you should consider. Yes, Pillar 2 doesn’t have favorable rates, but it’s deducted from your gross income.
Summary
unless they pay you above 200k per year (which is roughly 900 CHF per day for 220 working days), I would not spend one more thought about it.
PS: I’m freelancing, but I have my own company. Just fyi
Thanks for your input! Clearly the opinion is unanimous. And yes, the guy is British… Another red flag I’ll congratulate him for being an excellent salesman and ask him to do better. Otherwise I will keep enjoying my insured time off at a 100% rate if I have an accident (which has already happened)
Exactly. I am already at a high tax bracket because of my investment income as well and well, Vaud. Since my plan is to take this money out either to buy RE or when/if I move abroad, I like the idea to have some money in a tax-deferred account. I can buy back up to 90k right now, but I was waiting until my salary was higher so that the tax advantage is even greater.
To be honest, I didn’t check buy backs for Pillar 2. Just know that the buy back is from your net income, even though it can save you taxes in your annual tax statement. I don’t remember exactly, but I think someone did a calculation or even a Google/Excel sheet in this forum. You would have to check how much money you would save in taxes compared to the less favorable return in P2 (compared to stocks)
For me, it’s a different story, because I’m already contributing more from the gross income (I have a higher percentage than usual P2). This way, I can lower the profit taxes for the company, while still getting a good return compared to stocks. So the calculation is: saved profit taxes for the company + saved personal taxes because P2 contribution is taken from the gross salary. Which, for me, is almost 30% taxes saved compared to investing with net money in stocks. I can live with lower return in P2 using this approach.
If you factor in the additional risks, insurances like AHV/IV/ALV, paying 100% of your BVG contribution yourself and all that stuff I think you are far better off with your current role.
Perhaps tell him it sounds interesting but it doesn’t make financial sense for you and see if he can offer a higher rate.
I did this gig once for lower pay. My situation sounded different because I was bored at my old employer where I had been for years. I left during a restructuring so was able to get a separation package
Advantages
exposure to new business, grow network (I was eventually hired by client)
no performance reviews = joy
Got paid a high rate for doing stuff I performed 2 levels lower in my prior job
Low stress - no need to be working beyond 8 hours per day doing extra stuff for the cleint
Could take out 2nd pillar and put in Valuepension / Viac
Travel and meal allowances
In Geneva and Vaud we have marginal tax /soc sec of >40% so take home pay not that different
Learned a lot about consulting and customer service that can be applied to be being an internal employee
Disadvantages
You have to accept what the supervising manager at client who approves your contract says even if you don’t agree with him or her, up to a limit. Tendency to get the lowest level jobs noone else wants
poor 2nd pillar scheme paying 0.2% with high fees (I avoided transferring mine and left in vested benefit plan, person working at 3rd party company adminstering the 2nd pillar plan told me he wasn’t going to ask too many questions)
boredom would have set in after a while
less job security, less flexbility to work from home
Yes, unless you plan to take out the money in 3-ish years, in which case it makes sense to just take the tax advantage from the net income and then cash it out. But agreed that the calculation is not that simple because of the opportunity cost.
Thanks, indeed. However the setup is that they would pay 770 per billed day every month and then apply the usual deductions and contributions as if I were an employee with fixed salary (AHV, unemployment, LPP, accident). So they would still be contributing to BVG a bit and to AHV themselves.
That is what I was thinking. It is difficult to price job security and working from home, but all in all the difference seems to be at around 800/month net more per month which does not cover the additional risk incurred in my opinion.
Thanks you all, there is A LOT of value in this community!
This is their selling point, I like the client and I know they pay well, but that’s just an hypothesis.
That was exactly my situation, that is why I took this other job at the new company although it is more boring than expected… I’ve been here less than a year.
I can give you my perspective from the “client” side, since I’ve hired dozens of freelancers in multiple countries (not as a recruiter, but to augment my internal teams).
It’s a bit difficult to give a clear indication, without knowing your industry and background, about your current total comp. vs. market, but generally speaking I’d suggest to look at it on relative terms and use the 1.5x baseline suggested by @FIREstarter.
A few of the things to consider, from what I’ve seen happen over the years:
Recruiters lie (a lot)
Check who your end customer really is, sometimes it’s not the company advertised but one of their suppliers (so you would be twice-removed from the prospect employer)
Ask your recruiter for existing non-competing agreements, they may or may not be enforceable but it makes things difficult nonetheless; also check what their policies and fees are to their customer for future absorption of one of their freelancers (you), and if there is a minimum tenure they need, i.e commissions, before passing over the resource
To do business in Switzerland they need to have local payroll (either directly through their branch or affiliate, or perhaps they will ask you to use a payroll company) and likely a license, ask for both info and the to-be setup
Standard questions to root out superficial searches: by when does the client need an answer, how long have they been searching, which other profiles are there open for search with this client, is it a project or replacement, do they work long time with them, how many people did they place, how many candidates did they interview, who interviews, who is the buyer, how long before an answer from the client after interview, start date and contract duration, how many people in the team, average tenure of contractors, etc. etc.
Payroll
What happens if the client does not pay or is late with payments? Many a times this has nothing to do with solvency but rather with administration and bureaucratic processes that hold suppliers’ payments - will the recruiter back-to-back hold your salary? Do they advance pay you nonetheless (usually though for a % fee)? Are they paying mid-month in case of delay or you have to wait till next month? You can certainly stop working till they pay but that will impact your billable days, so you’re at a disadvantage here
As you have already seen there are a bunch of tricks used such as overly optimistic payslip simulations, nr. of working days per year, etc. - in my experience the payroll teams of recruiters/middlemen is under high turnover and given the nature of the employees constantly changing is more unreliable. Oftentimes I had freelancers complain on missing child benefits or other items impacting their taxes and contributions (not that I could do anything about it other than informing their new employer)
Don’t overvalue money vs. free time, when planning holidays with the family your thought process now is “can I afford this expense”, and tomorrow will be more like: “can I afford to miss both my income and the holiday expense” with potentially some “can I arrange my leave at all with the client”… no HR to complain to in there.
Companies flip-flop
Frequently happens that dept. heads / middle managers believe they need desperately someone for that great project of theirs, but suddenly the budget does not arrive in full, or gets cut mid-project, or cash-out is limited for the next quarter and whatnot. They may misrepresent their urgency and need to the recruiter. They may overpromise the length of the assignment. They may be utterly inexperienced in evaluating profiles match to the actual job. When that happens, you would just be given a handful of days of notice and a pat on the back, if that.
Albeit it’s true that Switzerland is very liberal with hire&fire, in my experience companies think thrice before firing employees (without cause, ofc) but have no qualms in cutting equally-skilled externals. “Orders from the top”, they said.
Agreeing to most of what @Barto writes, I have to say that “low stress” is very circumstantial, in general I have seen contractors having less negotiating levers regarding overtime (paid or not) or unrealistic deadlines. You have to suck it up. Gotta ask sometimes why they need a contractor in the first place .
Other than that, I agree with the red flags highlighted by the community above. UK recruiters operating in Switzerland “remotely” are for the most part high-volume low-quality and their only interest is to close the placement and get that commission asap. You know, monthly targets and all that .
Sorry for the long downer post, I thought it good to show the common pitfalls. Depending on your situation / age / risk tolerance / etc., freelancing is extremely profitable and also fulfilling if you have skills that are niche and/or high-demand, in which case you can choose your, your customers and projects (and your recruiter too), which does not seem to be the case here.
Why apologize when this kind of reply was exaclty what I was hoping for?
I work in IT for a financial institution, however I am an IT generalist: programme manager with enough knowledge to understand 95% of what the sysadmins or developpers are telling me and I also understand what finance people say. Most of what I do is people’s and organization skills. I also do a lot of testing because no one else wants to and it needs to be done. As already mentioned, current comp for this is 145 + 5-15 bonus + some other small perks.
In fact I usually worry about my skills becoming too obsolete or too generic or too easy to get offshore.
Just for your curiosity I asked this. The consulting company bills the client at a certain rate for a number of days. And then, regardless of they pay in time or not, they pay out 770 CHF for the number of days worked in that month. That amount is considered the salary for the month out of which they take out the usual deductions. So yes, they do payroll the Swiss way as if it was a salary with the strict minimum benefits and insurances.
I was thinking about this. With a FIRE mindset (I don’t see myself retiring early though) with a developped sense of budgeting I think I might find myself thinking "oh well, this day off is costing me this many hundreds Swiss francs. And also: having to go to the office implies also spending more time commuting and therefore less time off during a regular workday.
So it’s settled and I have told them so: if they offer 950 or more, I’ll consider it. Otherwise, I’ll enjoy my confortable position for a bit longer.
Keep in mind the opposite is also true: these additionnal 950 CHF are going to cost you 1 day of your life. Money is fungible, time is often not. The purpose of FIRE is to not have to take money into account when deciding how we want to use our time.
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I’ll congratulate him for being an excellent salesman and ask him to do better. Otherwise I will keep enjoying my insured time off at a 100% rate if I have an accident (which has already happened)
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