So, tell me about contracting...

[Fraud]

I've found a job I like the sound of, and that I think I'd be suited to, but it is a contract role, which I've never done before..

its a 12 month contract through an agency with a large IT company

I'm aware of the following..

No Annual leave
No Sick Leave
Hourly rate is inclusive of super (which I've assumed means hourly rate/1.09 = gross pay)
"12 months" means "up to 12 months, we might not need/want you after 3 months"

what else is there to worry/think about? The pay rate looks like it would be enough to compensate for no annual/sick leave (ie. I've worked it out and assumed I only work 44 weeks a year to allow for ~2 weeks worth of NSW public holidays that I won't get paid, and 5 weeks worth of holiday/sick leave for myself and I'd still be quite happy)

Also, I've got holidays booked for pretty much all of Feburary at the moment - how likely is it that they'd tell me to get fucked on that basis - or worse still, that they would decide to fire me while I was gone?

how often do 12 month contracts get reduced? (ie. "We're not going ahead with this project, we don't need you" etc.)?

Would I have to submit a timesheet under this arrangement usually, or would they assume I worked a 40 hour week unless I told them otherwise?

all advice appreciated...

I've not mentioned the company name as even if I don't go for this one, it is likely any job I do go for will be under similar arangements, so I'm keen to hear it all... but in saying that, are there any organisations to avoid like the plague?

Cheers

[Instigator]

Very often they get reduced. The whole point of a contractor is they get you in to fulfill a need, if that need goes, so do you. Also a lot easier to get rid of the shit cunts. If you do well they often look to snare you full time or at least extend your contract on an on-going basis.

Depending on how flexible they are your holidays in Feb might need to canceled, it's not an 11 month contract with one month off. If you are sick you don't get paid for that particular shift.

Most contracts I've worked you submit a weekly/fortnightly time sheet.

[Fraud]

So I went for, and got that job, and started in late December... I thought it'd be a good time to bump this in case anyone else wants to know this stuff, and also because I have a few new questions...

The pay rate looks like it would be enough to compensate for no annual/sick leave

This still seems like the case. Just remember that the pay rate is inclusive of super, and that you also need to cover PI/PL insurance, and an agency fee (which sounds like bullshit to me)... more on that later...

Also, I've got holidays booked for pretty much all of Feburary at the moment...

I assumed there would be a 2nd interview, so I didn't mention it.. and then there was no 2nd interview, they just offered me the job.. so I had to fess up.... they were fine with it. I imagine this is VERY much the sort of thing that comes down to the manager/company. As it turns out my contract actually requires me to take 4 weeks off a year anyway.

how often do 12 month contracts get reduced? (ie. "We're not going ahead with this project, we don't need you" etc.)?

It was a bit humbling when in my first team meeting after starting here, they announced that they lost out on a contract that they were 99% sure they'd won, and as a result, "Bob will be leaving at the end of this month"... so yes, it apparently can be that volatile.. but they were trying to find him another role internally (not sure how that went, i was on leave when he finished up)... so it seems in that case, it comes down to the actual company you work for whether they give a shit what happens to you.

Would I have to submit a timesheet under this arrangement usually, or would they assume I worked a 40 hour week unless I told them otherwise?

I fill in two... one that allocates my time to projects, and one that gets me paid. Both get submitted internally, and then the company I'm working for approves the time and passes it to the agency, who pays me (about two weeks later)



All in all, I'm quite happy. I think this heavily depends on the company you're actually working for, and your manger(s). Mine has been fine, but I remember when I worked at Optus (in a permanent role), the contractors were treated like shit... they were highly disposable bums on seats, and the company was never keen to be flexible with them... Here I'm very much a part of the team, and they work around my availability etc.


now... more questions...

PI/PL insurance: Agency is taking 1% of my income out for this. I have the option of going and getting my own.. All of the online quotes I've done for it have worked out to pretty much 1% anyway, so is there any reason not to just keep going through the agency?

Agency Admin fee: Agency is taking 1.5% of my income out for this. I don't know why. I'm not overly offended by this charge, and I'm stuck with it until contract renewal anyway, but is 1.5% normal? ie. should I be negotiating this down? Yes, every week they do my PAYG, super etc... but thats it. further more, the 1.5% they're taking off me must be insignificant compared to the $20/hour they are most likely making on top of the hourly rate they pay me, so I'm not sure why they even bother...

Rate increases: Should I expect/try to get rate increases at contract renewal? should I be going for a percentage(2-3%ish?), or should I just keep up to date with market rates, and stay quiet if I'm not getting ripped off?

Contracting as a pty. ltd: I have this option, and can switch to it at any time. I'd still have to go through the agency, I don't think I have a lot of expenses that could be put through a company, and at this point I can't do any income splitting or anything like that. On that basis is it worthwhile? I'm more than happy to do the paperwork if its worthwhile, but I can't see the value in it at this point - what am I missing?

[Nafe]

PI/PL - advantage of going through the agency means that you only pay for it when you work. If your contract terminates and you don't work for 2-3 months, then you're not paying for it anymore. Buying your own means you're paying for the whole year even if you don't work it.

Agency Admin Fee - The good agencies don't have this. My old one didn't. Are they paying weekly, fortnightly or Monthly? You could negotiate this down after a while, but unlikely.

Rate increase - I would try for an increase after 6 months *IF* your rate is below market, else it would be 12 months. Are you on comparable market rates? Asking for too much could work out badly as they will go back to your Manager for this, it won't come out from their end.

PTY - you have added expenses of getting an Accountant to do your work, registering for GST, BAS each quarter, plus taking out your PI/PL, Workers Comp, settting up Super etc. Advantage is cashflow up front is much better, or if you're doing dodgyness through a family trust etc. You also don't have to pay your agency admin fee, but most likely spend that on Accountant fees etc.

Personal opinion - the agency floated a bullshit rate to you to make it sound much better than it truly is. They don't tell you your real rate after they take out your super, PI/PL/adminfees etc. That is a bullshit practice and one of my personal bugbears. A recruiter should be upfront and say $x after super and fees. Not the other way around.

[TTerror]

Are you an engineer or PM?

I think all the added fees are bullshit, the agency I was with (Peoplebank) offered the same, I was only interested in the PI/PL. The rest I prefered to handle myself, half the advantage of being a contractor is the fact that you are more flexible with your taxation and cashflow ie. any car related stuff I claim towards the business. it does get complicated so a good accountant is critical though.

[myliberty]

http://www.ato.gov.au/content/4540.htm

[Fraud]

PI/PL - advantage of going through the agency means that you only pay for it when you work. If your contract terminates and you don't work for 2-3 months, then you're not paying for it anymore. Buying your own means you're paying for the whole year even if you don't work it.

Hadn't thought of it that way... good point.

Agency Admin Fee - The good agencies don't have this. My old one didn't. Are they paying weekly, fortnightly or Monthly? You could negotiate this down after a while, but unlikely.

weekly pay.. its not really that much, it'd end up costing me $100-200 a year tops, and I'd blow more than that on cabs home when pissed so I'm not overly phased by it. I can't help but feel they are semi-blantantly stealing from both ends, but meh. Might try and negotiate it down at the end of the year and see how I go.

Rate increase - I would try for an increase after 6 months *IF* your rate is below market, else it would be 12 months. Are you on comparable market rates? Asking for too much could work out badly as they will go back to your Manager for this, it won't come out from their end.

after 6 months, even on a 12 month contract? I was going to wait until the contract was up... Hard to tell if I'm on market rates, I've never contracted before, and don't know anyone doing anything similar anywhere else. The other guys I'm working with are all on the same rate as me, through the same agency. My previous role wasn't as focused/specialised, and I was on Salary...

As it is, I'm not at all unhappy with what I'm on, but I'm guessing that in this sort of role they're not going to offer a higher rate automatically/out of the blue, and they'll need to be prompted to think about it. After 12 months if I've proven I can look after myself and not fuck up, and know the products/procedures/equipment/customers, surely it wouldn't be unreasonable for me to at least ask the question? few bucks an hour to equate to a ~$5k pa payrise?

PTY - you have added expenses of getting an Accountant to do your work, registering for GST, BAS each quarter, plus taking out your PI/PL, Workers Comp, settting up Super etc. Advantage is cashflow up front is much better, or if you're doing dodgyness through a family trust etc. You also don't have to pay your agency admin fee, but most likely spend that on Accountant fees etc.

So unless I'm earning a tonne of money, and have ways to write off expenses against it, its not worth it?

Personal opinion - the agency floated a bullshit rate to you to make it sound much better than it truly is. They don't tell you your real rate after they take out your super, PI/PL/adminfees etc. That is a bullshit practice and one of my personal bugbears. A recruiter should be upfront and say $x after super and fees. Not the other way around.

That was pretty much my feeling, but from the recruiters point of view, they're probably advertising the rates to PTY LTD contractors who DO want to know the actual rate, because their super/expenses/dodginess applies to that full rate. If they listed both rates in their ads it'd probably lead to more confusion.

Are you an engineer or PM?

I'm an engineer, but with some mild PM work (not enough that you'd define the role that way, but its helped), and a little bit of presales interaction (pushing this more and more because thats where I'd like to go next I think).

[Nafe]

Forgot you're on a 12mth, yes, wait til closer to the end of the conract, if you're doing a good job and they want you to stay, then negotiate a raise of say 5%

[Fraud]

Thanks champ