Showing posts with label leaves. Show all posts
Showing posts with label leaves. Show all posts

Saturday, December 1, 2012

H-1B Work Visa–Contract Types–Pros and Cons

 

There are two frequently used Contract Types that you can have with your H-1B Sponsor, they are:

Employment Contract

Consultant Contract

(Fixed) Per Month (Variable) Per Hour
Include Paid Annual Leaves No Paid Annual Leaves – Number of Hours worked will be paid
Low Risk – Will be paid fully or some fixed % of the salary even if not deployed on a Project or Client High Risk – If No Project or Client then No Salary
Comparatively low rates Comparatively higher rates

In order to understand the compensation difference and risk involved, let us consider two simple cases:

NOTE – I will discuss compensation/salary rates, rate differences, break-up, sponsor-share, taxation, etc. in detail in another post.

Case 1 – Variable # of days in a month – For example consider the month of January (31 days) and February (28 days)

Employment Contract

Consultant Contract

Example – US$ 3,500 per month Example – US$ 30 per hour
Irrespective of how many days a month might have, you will get a fix salary at the end of each month. Easier for monthly budgeting and expense allocation.

You will be impacted by the variance in # of days in a month. So, if you get paid for 23 days in January (8 days of weekend holidays), you will be paid for only 20 days in February.

January Salary = US$ 3,500
February Salary = US$ 3,500

January Salary
23 (days) x 8 (hours per day) x 30 ($ per hour) = US$ 5,520

February Salary
20 (days) x 8 (hours per day) x 30 ($ per hour) = US$ 4,800

Do note that there’s no loss or gain, because net salary for the year will always be the same, no matter if you get less salary in one month and more in another. Because total number of hours for a year will more or less be the same.


Case 2 – Leaves (Sick/Casual/etc.) – For example if you have taken 2 leaves in the month of March and your compensation is the same as mentioned in Case 1 above then:

Employment Contract

Consultant Contract

(Without leaves) March Salary = US$ 3,500

(With leaves) March Salary = US$ 3,500 (provided you have not consumed all your annual leaves)

(Without leaves) March Salary
23 (days) x 8 (hours per day) x 30 ($ per hour) = US$ 5,520

(With leaves) March Salary
[ 23 (days) – 2 (leaves) ] x 8 (hours per day) x 30 ($ per hour) = 5,040

You loose US$ 240 per day if you take a leave (based on compensation mentioned in case 1 above)


Case 3 – Gazette Holidays – For example consider the month of November. There is a Veterans Day holiday on 11th. A Thanksgiving Day holiday on fourth Thursday. A Black Friday holiday following the Thanksgiving Day. In total, there are 3 holidays during the month of November.

Employment Contract

Consultant Contract

(Without holidays) March Salary = US$ 3,500

(With holidays) March Salary = US$ 3,500

(Without holidays) November Salary
22 (days) x 8 (hours per day) x 30 ($ per hour) = US$ 5,280

(With holidays) November Salary
[ 22 (days) – 2 (holidays) ] x 8 (hours per day) x 30 ($ per hour) = 4,800

You loose US$ 240 per holiday (bases on the compensation mentioned in case 1 above)


Case 4 – Bench Period – Time period when you are not deployed on any project or client.

Employment Contract

Consultant Contract

Based on your contract with your employer you will either getting:

1. Full salary

OR

2. Partial/Base salary - a % (usually more than 50%) of your full salary

No salary during bench period