Re: how do you structure a temp-to-perm contract?

[Jan Henning <henning -at- r-l -dot- de>]

>=> How would you structure the terms of this contract,
>where the deliverables are so unclear, so that both
>sides have clear and mutually satisfactory
>expectations about what work will be accomplished?

One way to do it would be to specify an initial period (one to two weeks,
say) where you work out what you will do and when you will do it. This
documentation plan will be the basis for your further work after having
been approved by both sides. You can put something to that effect in the
contract.

>=> How do you convert from a salary into an hourly
>contracting rate. Eg: if normally I would earn
>$50K/year for this job as a FTE, what hourly rate do I
>charge as a contractor?

Take the yearly salary before taxes. Add all employer-payable health and
social security benefits. Optionally, add the expected outlay for any
training you will get (seminary cost, travel, etc.) Add the expected
value of any stock options that would be part of your salary. Add the
monetary value of any other benefits such as a company car (yeah, right).
Call the sum the Total Salary (TS).

Calculate the total working days per year, making sure to deduct all
public holidays. Deduct your vacation days. Deduct any sick days you have
a right to take. (I never figured out that part of the US labor system,
so there may be no such days.) Multiply this sum by the number of working
hours per day. Deduct any time you expect to spend on trainings. Call the
result the Net Working Time (NWT).

You have now two value: TS is the amount of money the company will spend
on you as an employee. NWT is the time of billable-equivalent work they
will get for this sum. Now you simply divide TS by NWT to arrive at the
hourly rate.

Note: The details of your calculation may vary, but the above should give
you an idea of how to arrive at a rate. In particular, if you are
expected to provide your own equipment as a temp, mae sure to add that
cost to your hourly rate.

>=> What do you do about stock options? If I later get
>hired as a FTE, presumably I will get stock options.
>Should I be penalized now for the fact that they're
>not ready to commit to FT, or can I write terms into
>the contract, such as, if I do get hired, the vesting
>period for any options is the start date of the
>contracting period, OR should I ask for pro-rated
>options now?

It would probably look funny to grant a temp stock options, so IMHO you
should not ask to get some before they hire you. But it seems reasonable
in your case to backdate the vesting period.

Regards
Jan Henning

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Jan Henning
ROSEMANN & LAURIDSEN GMBH
Am Schlossberg 14, D-82547 Eurasburg, Germany

Phone: +49 700 0200 0700, Fax: +49 81 79 93 07 12
E-Mail: henning -at- r-l -dot- de, Web: www.r-l.de
Handelsregister: München HRB 99345
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