As the famous song by the not-so-famous 80s group ‘The adventures of Stevie V’ goes, ‘Dirty cash I want you, dirty cash I need you ooh.” Whilst the song may sound a little dated now, the idea that we all, unfortunately, need the dirty business of money in order to survive is as accurate now as it was back then.
I love my job as an electrician, but I still need money in order to provide a roof over the heads of my loved ones. Being an electrician may not make you a millionaire, but anyone considering a career as a sparky is probably somewhat tempted by the chance to make a reasonably comfy living working with our hands.
The tricky bit is understanding how electricians get paid. There are a few different employment possibilities so it will be no surprise to learn there are a few different ways electricians get paid and different ways electricians can charge for their work.
One last quick thing. I am in no way an accountant or financial advisor (I would earn a lot more if I were) Please take this post as some general advice from what I know about how electricians get paid from my life on the tools. It’s probably best not to make financial decisions based on a short blog post by an electrician! But for those who want a bit of general info laid out in a simple way, then please read on.
How Do Electricians Get Paid?
Electricians get paid in different ways depending on their employment status. Perhaps the easiest way an electrician can receive payment is in the form of a monthly wage from their employer (often referred to as ‘being on the books’) although it is the easiest, this comfort comes at a cost.
We need to talk about the type of employment as this has the greatest effect on how we get paid. As well as the employed option that will be familiar to many people, there are also options such as a self-employed sole trader, setting up our own limited company, or working via a recruitment agency. The table below gives a brief overview of the pros and cons of each, and I’ll break each one down in a bit more detail below.
Table Showing How Different Electricians Get Paid Plus Pros and Cons
|How Electricians Get Paid
|Steady paycheck: Employed by a company
|Steady Pay Check
Perks such as health care and dental
Van and fuel card often provided
Tax taken care of via PAYE
|Lower hourly wage than self-employed counterparts
No choice over work location (for many)
Set hours that must be worked (ie Monday – Friday)
Over time that isn’t always wanted
|Paid by customer: Self-employed
|Higher hourly wage
Change to earn big on price work
Choice over work location
|Responsible for filing tax returns
Chasing customers for payment
Payments can be sporadic
No holiday pay
No perks such as health care etc
|Weekly via agency
|Agencies usually have a lot of work on their books
Can help sort out taxes etc
High hourly wage
Can pick and choose jobs
|The agency takes a cut from the electrician’s wages
No stability – no work means no pay
No holiday pay (usually)
Employed Electricians Have It Easiest When it Comes to Being Paid
My career has revolved around being an employed electrician on the books. This means I have always signed contracts with employers which guarantee I work a certain number of hours per week in return for a monthly wage paid directly into my bank account on the same day each month.
This type of set-up will sound familiar to most people as according to the office for national statistics, the majority of people are employed compared to self-employed. Although as a tradesman there is a well-trodden route to becoming self-employed, many of us choose the employed route as there are lots of perks such as the holiday days, van and guaranteed work that you do not get gifted when self-employed.
Of course, there is a trade-off for all this ‘security’ and a steady paycheck. Employed electricians typically earn a lower hourly wage than self-employed ones. Another potential downfall and the reason I put the word security in quote marks, is that if the company you work for is unable to find work, redundancies are never far behind so this idea of security is scoffed at by many.
As a side note, I use to be shocked at how quickly I would see companies let go of their employee electricians when work went quiet. However, I understand it a bit more now that if the work dries up, having multiple electricians sat around the depot with nowhere to go is a very quick way for the employer to haemorrhage money
Self-Employed Electricians Sacrifice Payment Stability for Potential Gain
We’ve already pointed out that the stability of an employed electrician is a kind of falsehood but there’s no denying that an electrician on the books is pretty confident that their wages are going to reach their bank account on the allotted day each month. Self-employed electricians do not have such luxuries.
Self-employed electricians are paid after they complete a job for a customer and then submit their bill for payment. The speed at which they are paid depends on the type of customer and how they handle their personal finances (ie do they value paying bills on time, or will you end up ringing them every week chasing down payment).
Self-employed electricians often have the unenviable task of trying to juggle incoming payments from customers with wholesalers who are wanting payment for the materials they provided on a 30-day payment schedule. Self-employed electricians have been known to go bust when the wholesalers need payment for the items but the person they did the work for is refusing to pay. This article from constructionnews on how long the biggest companies take to pay makes interesting reading.
Electricians Can be Paid by their Own Limited Company
Some electricians choose to set up limited companies. In this scenario, the limited company gets paid by the customer and the limited company then pays the electrician a wage. There are tax reasons for using a limited company, which I am in no way qualified to talk about (!) but another reason some electricians use this method for getting paid is that it can help smooth out some of the payment bumps.
The electrician can set up monthly payments to themselves from the company so are not so reliant on the be and flow of customer payments. Obviously though, if the limited company doesn’t have the funds to pay the electrician, the only person they can complain to is themselves or the customer who isn’t paying.
To balance this out, as pointed out in the pros and cons table above, the advantage of this uncertainty is the chance to earn a higher income. The self-employed electrician who is paid by the customer sets their own hourly rate and can work as many or as few hours a week as they choose.
The possibility to do ‘price work’ now also opens up. Instead of charging an hourly rate, an electrical can quote a set price for a job. If the work turns out to be easier than anticipated and the electrician does the job quicker; they are quids in and have earned a much higher hourly rate (of course the opposite is true with price work, if it takes longer than expected, the electrician can end up working for a lower hourly rate.)
Agencies Take A Cut From Electricians Pay
Recruitment agencies are a good way for self-employed electricians to find work and get paid. Agencies are paid by the company that advertised the position. They often have lots of jobs they are advertising for good hourly wages and can help with admin duties such as paying tax as they take it out at source.
Be warned though, that your wages will always be passed through the agency of which they take a cut each week or month for their services. Generally, contracts are signed to prevent the electrician from getting to the site and colluding with the main contractor to cut the agency out. The cut the agency takes is something the electrician usually has to stomach and the agency would argue they deserve the cut for the work that they do.
The biggest difference between how electricians get paid is between employed and self-employed electricians. Employees rely on the company they work for to do well and be able to make payroll each month. In this way, the hassle of finding work and keeping customers happy is somewhat removed from the electrician’s shoulders. These concerns become someone else’s problem (usually an engineer in a suit who goes out to customers touting for work.)
With self-employed electricians, the onus is on them to find the work, quote the price, complete the job so the customer is happy and then get paid directly by the customer. Without a large company in the middle taking their cut the self-employed electrician can, in theory, earn more. As we have seen getting though, getting paid by the customer directly has its own challenges.