Quick answer
- A day rate is not the same as a salary because it normally has to cover unpaid holidays, admin time, project gaps and business costs.
- A salary comparison should separate billed turnover from personal take-home planning.
- Employer benefits such as paid leave, sick pay, pension contribution and job security are not automatically included in contract income.
- Use a calculator comparison as a pricing guide, not as a final tax or contract decision.
Contractor Day Rate Calculator
Open this Irish calculator to test your own numbers and compare the result with the guide.
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Why a simple salary divide can underprice you
A common mistake is to divide a target salary by the number of working days in a year. That ignores days you cannot bill, unpaid administration, training, client calls, insurance, accounting, software, pension planning and gaps between projects.
| Salary-style item | Employee role | Contractor role |
|---|---|---|
| Paid holidays | Usually paid by employer | Usually funded through your rate |
| Admin time | Often paid working time | Often unpaid or indirectly priced |
| Tools and insurance | Often employer-provided | Often your own cost |
| Project gaps | Less direct impact on monthly pay | Can reduce annual turnover |
| Tax handling | PAYE deducted through payroll | Often self-assessment or company accounting |
A practical comparison method
- Choose a realistic number of billable days.
- Add annual business costs and pension planning assumptions.
- Decide whether your target is gross contractor income or personal take-home.
- Use a tax set-aside estimate before deciding whether the rate is viable.
- Compare the result against the salary, benefits and security you would be giving up.
Worked comparison: €500 a day is not a €110,000 salary
At €500 per day for 220 billed days, annual turnover is €110,000. If the contractor has €8,000 of business costs, the amount before personal tax and pension planning is €102,000. That still is not directly comparable with a €102,000 employee salary because the employee package may include paid leave, employer pension, sick pay, insurance, bonus and greater income continuity.
| Step | Contractor example | Employee comparison question |
|---|---|---|
| Headline amount | €500 × 220 = €110,000 turnover | What is the gross salary? |
| Business costs | Less €8,000 | Which work costs does the employer pay? |
| Unpaid time | Already reflected in 220 billed days | How much paid leave is included? |
| Benefits | Funded separately | What is employer pension, bonus and cover worth? |
| Tax | Self-assessment-style estimate | PAYE deductions and credits |
Benefits and protections to value separately
- Employer pension contribution and any matching.
- Paid annual leave, public holidays and sick leave.
- Bonus, commission, shares or health insurance.
- Equipment, software, training and professional subscriptions.
- Notice period, redundancy rights and continuity between projects.
- Time spent on invoicing, accounts, compliance and finding the next engagement.
Do not force every item into one precise euro value if the value is uncertain. Show the salary, benefits and contractor outcome separately so the decision remains transparent.
Check the engagement before comparing structures
A day-rate label does not automatically make the engagement self-employed. Revenue’s five-step framework looks at remuneration, personal service, control and the overall facts. If the relationship is really employment for tax purposes, the payer may need to operate PAYE. Complete that check before using a self-employed tax comparison as the basis for a decision.
Frequently asked questions
What day rate is equal to a salary in Ireland?
There is no single conversion because billable days, tax position, benefits, pension, costs and downtime all change the comparison.
Should a contractor earn more than an employee?
Often the gross day-rate equivalent needs to be higher because the contractor is carrying unpaid time, business costs and risk.
Can I compare contract income with net salary?
Yes, but compare like with like: billed turnover, business profit and personal take-home are different figures.
Is €500 per day equal to a €110,000 salary?
No. €500 multiplied by 220 days is €110,000 turnover before business costs, pension, unpaid time and personal tax. Salary benefits and protections also need a separate value.
Should I include employer pension contributions?
Yes. Compare the employer-funded amount with the pension funding you would need to build into the contractor rate.
Does a longer contract justify a lower rate?
Possibly, if the longer term materially reduces sales effort and gap risk. Check notice, termination, payment and minimum-days terms rather than relying on duration alone.
What if the contract is paid through PAYE or an umbrella?
Then the tax and fee flow differs from a sole-trader model. Obtain a structure-specific illustration and compare the same gross and benefit assumptions.
Sources & references
Related calculators
Use these tools for the numbers behind this guide.