Global remote work has opened up two new models of engagement - be aware of the pros and cons of both before making the choice that’s right for youRegister for Opportunities
Salary or CTC (INR)
(50% as Contractor, standard like HRA, etc. as Employee)
Net Take Home
Effective Income Tax %
Even if the Company issues these to you as a direct contractor, these are legally not binding since you would have a contractor agreement in place - this could be an important consideration if in the future you want to apply to full-time roles at more traditional companies who would want proof of previous full-time employment along with regular salary slips
As an employee, you are considered for title promotions and periodic appraisals, and therefore have an equal opportunity as the rest of the company to grow in your career. Contractors seldom have these opportunities
Your LinkedIn, Resume, and even Payslips will mention the Company Name directly as an employee. Legal restrictions in the contractor model might prohibit these
As an employee, you are entitled to public holidays and PTOs of upto 3-4 weeks (varies by company) - if your contract does not provision for these, you have already wiped out the tax savings with a 4 week or effectively one month of 'extra' salary
As an employee, you get medical insurance for your entire family. As contractors, you are on your own to purchase retail insurance which might be costly and also restrictive in terms of coverage.
Gratuity and many such other benefits are typically missing in most contract arrangements - Gratuity alone for example can be upto 20% of your annual salary for continued employment (minimum 5 years per law but most companies have lower thresholds to reward retention)
As a contractor, a Company can terminate you instantly whereas most employment contracts would have a minimum term of one month notice (in some cases, upto 3 months) - not having such a provision and losing out on even one month out of a year due to abrupt termination for any reason again wipes out the tax savings mentioned above in the contractor model.
Any Company would always prioritize its own employees over contractors in cash-crunch situations (very common at start-ups), so do ensure you are protected on this front in your contract. In the employee model, there is a Security Deposit companies have to pay to ensure buffer for timely payroll
While filing under 44ADA, you are now classified as an independent professional and not a salaried employee - the ramifications extend to your credit history when seeking bank loans for a house or car - a salaried employee earning INR 35 Lakhs has a much better credit profile than an independent professional earning the same amount
Typical contractor agreements will ask you to indemnify (be liable to pay) the Company in case they receive claims including those for your own engagement's misclassification. Such claims are common, particularly in states like California which have stringent employment laws. Ensure to read these carefully to know what you're signing up for