Ask HN: What's an appropriate compensation counter offer in London 2024?

Hacker News Discussion ↗

Engineers weighing a promotion to “Head of” roles at UK startups in 2024 face a trade‑off between cash salary, equity with uncertain payoff, and the UK’s punitive effective tax rate between £100k–£125k. Commenters argue that negotiations should be grounded in market value and BATNA (real alternative offers), not personal expenses or tax anxiety, and that early key hires are often under‑equitied relative to their impact. Many suggest pushing for a six‑figure salary, clearer and non‑revocable equity terms, and possibly non‑cash benefits (pension, extra leave) rather than sacrificing base pay to chase potentially illiquid equity.

Salary Negotiation Strategy

  • Focus on BATNA (best alternative to a negotiated agreement): know what you’d realistically do if talks fail, and what you could get elsewhere.
  • BATNA is not bluffing about other offers; it’s about your own clarity and willingness to walk away.
  • Several suggest framing negotiations as collaborative and multidimensional (salary, title, equity, career path, flexibility, leave) rather than a single tug-of-war over base pay.
  • Personal expenses and side income are seen as irrelevant to employers; value should be argued via market rates and replaceability, not personal needs.
  • Some propose learning formal negotiation frameworks and reading dedicated books.

Salary Levels, Market Data, and Location

  • Multiple commenters state senior IC roles in UK tech often start around £85–100k+, with “Head of …” roles materially higher, especially in London.
  • Manchester is seen as a lower-paying market than London, but £85k for a senior in Manchester is described as decent.
  • Salary sites (Glassdoor, levels.fyi, etc.) are widely viewed as underreporting real pay, for reasons like biased samples, stale data, and employer incentives.

Tax Bands, Pensions, and Salary Sacrifice

  • The £100k–£125,140 “62% effective tax” band is explained as loss of the personal allowance plus NI, not a literal marginal tax drop afterwards.
  • Many argue it’s not a “trap”: you still end up with more net income at higher salaries; progression matters more over time.
  • Common strategy: use pension contributions and salary sacrifice (including cars) to stay below specific thresholds and reduce effective tax, with some caveats on mortgage affordability and employer policies.
  • Over £100k also affects childcare benefits; this makes either staying clearly below or clearly above the band more attractive.

Equity and Stock Options

  • Strong skepticism about counting equity as reliable compensation; many treat it as a lottery ticket.
  • 0.2% for a very early, pivotal hire is described by several as low compared with common startup norms; suggestions range closer to 0.5–2% for first employees in tech, though exact numbers vary.
  • Multiple warnings about “equity” that is discretionary, revocable when you leave, or hard to exercise/sell; such setups are often valued at ~0 by commenters.
  • Horror stories include employees unable to afford exercising options, blocked from secondary sales, or fired before liquidity events.
  • Advice: push for actual, non-revocable share ownership; ensure clear vesting, treatment on exit/termination, and realistic exit strategy before trading salary for equity.

Management vs Individual Contributor

  • Repeated reminders that moving into “Head of” or management roles changes the work: more meetings, people issues, less deep coding time.
  • Some report higher pay but much higher stress and ultimately regret, later taking pay cuts to return to hands-on engineering.
  • Others note management can be ideal for those with strong soft skills and weaker interest in deep technical work.
  • Career value of the title itself is discussed: a “Head of” role may unlock future higher-comp opportunities even if current pay is below market.

Side Income, Leave, and Non-Cash Compensation

  • Several advise never mentioning side gigs in negotiation, as contracts often restrict outside work and it can only hurt leverage.
  • UK allows small side income tax-free (trading allowance), but details beyond that are not deeply explored.
  • Time off is highlighted as an important negotiation lever: extra vacation days, reduced hours, or flexible schedules can be very valuable, especially with young children.
  • “Unlimited vacation” is viewed skeptically: can favor employers unless there’s a strong pro-holiday culture and/or guaranteed minimum stated in contracts.

Consultants vs Employees

  • One view: use contractor day rates as a benchmark to back into a fair salary, then adjust for risk/benefits.
  • Counter-argument: consultancy and employment are distinct markets; companies pay higher daily rates for flexibility, speed, and reduced long-term commitments, so contractor rates are a poor direct anchor for employee pay.
  • Debate centers on whether using contractor rates is a powerful negotiation tactic or an inapplicable comparison.

General Perspectives

  • Several urge getting real competing offers to calibrate market value rather than speculating.
  • There’s disagreement on whether current compensation counts as “doing well,” with some stressing UK cost of living and others comparing to very high global tech comp.
  • Multiple comments reiterate: don’t over-optimise around tax bands or hypothetical exits; prioritise sustainable cash compensation, realistic upside, and long-term career growth.