Contract Work in IT

Hi all,

I have an opportunity to accept a 12 month contract role in IT.

I have two years experience and the pay (even considering annual and sick leave) is more than 50% of my existing pay (which is permanent).

What are some things to watch out for in contract roles in IT?

Would it be ideal for someone with my level of experience to accept a contract role?

I am not in too big of a hurry to change roles so am happy to wait for the right role rather than jumping into one.

Any valuable suggestions would be appreciated. Thanks!

Comments

  • +1

    does the 50% include super?
    are you eligible for bonuses in existing role?
    (just checking you have considered everything that makes up the 50%)

  • +3

    Things to consider also are public holidays (no pay) and superannuation. Also some companies stand down contractors over quiet periods - also no pay (eg over Xmas for 2 or 3 weeks).

    Can be worth getting an accountant to do the sums for you.

  • +4

    Higher pay for contract work is because you are classified as a contractor and therefore it makes it easier for the company to terminate your employment.

    I have been doing contract work for a few years now , higher pay is so much better. Its honestly not like being a perm employment makes the company any more loyal to you.

    • +1

      Higher pay for contract work is because you are classified as a contractor

      NSS!

  • few things you need to consider is are you being contracted as a sole trader? or just on a fixed term contract? also is it for a specific project.

    You will find extensions are quite common if your half competent and more importantly fit in, I once had a contract for 6 months… 3 years later.

    Often you will find contractors are expected to work harder, you will be measured on outcomes not time in a seat. You might find you will be expected to work harder and to tighter deadlines as you are being paid more. So, you may be getting more but you might be also working longer and more stressful hours.

    Besides the pay is there something else this contract job is offering you? I think you should be thinking about your career since you have little experience. Is this contracting job going to expose you to new skills that you want?

    • Initially a 12 month contract and then possibility of extension.

      They are offering me an opportunity to work with React, AWS and .NET. My background is in Java, Angular and mainframe. The market in Perth is skewed towards the former.

      • Hrmm… there generally are ebbs and flows with all skill needs. You could be hot on the recruiters list today and cold tomorrow. IMO, I think it's more important to know your pathway especially in the early parts of your career.

        Do you want to be conformable to challenged?
        Do you want to be a generalist or more of a specialist?
        Do you have a personal liking towards one or the other?
        Think about types of companies you want to work for? what do they need today? or what will they need, what's in the pipeline?
        Are you working towards something? your own company? your own development?
        Do you want to stay in Perth?

        • I like Full-stack Dev and am ideally looking for a gig in London when borders open (hopefully in a year)

          Haven't really thought about the questions. But in long-term am looking for a role in FAANG.

  • +1

    What are some things to watch out for in contract roles in IT?

    It's good to have a bit of a buffer of cash to fall back on in case you find yourself unemployed when the contract is over.

    Also, one of the things that many people don't seem to know is that the contract period might be six or twelve months, but there's no guarantee that you'll actually be employed that entire period. A company can still get rid of you at any time with pay in lieu of the notice period specified in your contract (could be a day, a week or a month, etc) - and hence the buffer of cash that I mentioned would come into handy.

  • I just started doing this a few months ago. When computing annual pay, I use 44 weeks to take leaves and holidays into account. Also, check if you need to get an ABN or you can go as a PAYG contractor(if you're just starting contracting this is the easier choice).

  • edit: Wao, I think I massively misread OP, I interpreted the question as 50% pay increase - if it is a pay decrease - hell no.

    you need to look at cost-benefit here:

    • Cost (or loss) if you move on from your current role

      • Is there any positives that you'll miss out on?
      • Training/experience that is valuable?
      • Is your current employer best-in-class?

    • Benefits:

      • 50% is a huge jump, even if it is perm to contract. I think you also need to make sure you're comparing apples to applies - is it the same role and experience level, but just contract? Or is there another factor that is influencing the paybump?
      • If you're good at faking it till you make it, you can make it as a contractor that jumps from contract to contract. Is your skillset in demand? Do you feel you can line up contracts back to back? (Or is there a good recruitment agency that can?)

    my 2-cents; take it, 50% is huge. Slog it out for a year or two and bank the savings.

    • Good point.

      My employer is currently cruisy and flexible. I do get free online trading, leading to certs in cloud computing. They are not FAANG but pretty good.

      The new company knows that I am a generalist and is happy for me pickup and learn a new language/software.

  • +2

    Why would you take a contract for only 50% of your current pay?

    • +1

      Its more than 50% silly so 51% of his current pay doesn't sound so bad.

    • +1

      Some people may like to live life on the edge! lol! 😂

  • more than 50% of my existing pay

    Depends on how you feel about your career. If you are mid career and on $100k pa then $150k pa might be a lot. But if your top is $200k pa as perm then you might damage your career but if you are peaking at $200k and they are offering $300k then it is a different story.

    Otherwise take the advice above.

  • +1

    I have been contracting in IT for over 12 years.

    My pay almost doubled from permanent work from Day 1.

    Its a gamble with risks and rewards :

    • You get more pay but no sick, annual, long service leave. If you are sick often or take lots of holidays this reduces the benefit.
    • You can be let go at any time. In bad times, contractors seem to be let go first. So you need to plan for that by using some of your surplus for savings / rainy day.
    • Your pay / rate can move up and down sometimes in significant amounts. I have had contracts with more technical criteria paying 10% more than market. I have had colleagues been told to either take a 15% rate cut immediately or leave.
    • You mostly don't get included in personal development, eg in house training but some companies don't mind.
    • Some contracts are short, some keep going.
    • The trap. Due to continuing work and my eagerness to not lose money, I have not taken a holiday (other than the sometimes forced closures over Christmas) in 7 years. You may also find that you don't want to go back to permanent work when you get used to the money.

    Overall contracting has been a great experience, my first mortgage repayment term was slashed by two thirds, which then enabled more savings then another property.

    I don't regret sacrificing holidays for this at all.

    • +1

      I am also a contractor, and agree what you said about "the trap". As you don't accrue annual leave as such, it's less motivating to actually take holidays. I personally don't think it's a good thing that one doesn't take holidays, but I guess if you can find enjoyment other ways then it may not be such a big deal.
      I rarely seem to get sick, so losing out on sick leave is not an issue. In fact in my last job as an employee I had 6 months sick leave accrued which went in to the bin when I resigned.
      Something I quite like is that because of my contract rate, the company only gives me the higher level tasks. The repetitive crappy tasks need to be done by the employees.
      There's no fear of me losing my job, the company needs me more than I need them.
      As someone else has said, one should not get sucked in to the feeling of loyalty. You end up worse off and with regrets.

      • Agreed with the harder tasks.

        I don't know what the mindset is, I am guessing I am paying you more so you take the projects that the permies don't like/want.

  • Whats the day rate and whats the IT role?

    Enough skilled people here should be able to tell you if its a good deal or you being ripped off.

  • +1

    50% of or 50% more than?

    • 50% more than my current role

  • +1

    when you are a permanent you take a sickie when you have a little sneeze
    when you are a contract you will drag your body into the office after being shot 17 times in a drive by shooting.

  • Have you learned everything there's to learn from your current gig? Will they provide you with any sort of training? What's the career prospect with your current employer? If you're any good, the money will come sooner or later so there's no need to rush into things.

    For your first contracting gig, I'd recommend going through a payroll company to sort your pay/deductions out. Don't know how much is your rate bur if it's <$50/hour, maybe you're better off using the pimp's own payroll since you won't be saving much.

    Be nice, grow thicker skins as some permie won't like the mercenary which is part and parcel with contracting.

    • My current gig is fairly cruisy but very slow.

      A simple code changes takes a few hours and my team mainly works remote - which doesn't really help when you ask for support/assistance.

      I get free online training, AWS and Azure Certifications.

      I get promoted in about ~ 9 - 10 months. The payrise can be 35% higher + bonus. The drawback is that I can't choose my teams and the technologies I work with. However, this contracting role still seems to be 20% more than that (even accounting for annual leave).

      The amount is after payroll tax deducted. I will be contracted out by the recruitment agent's company.

      • However, this contracting role still seems to be 20% more than that (even accounting for annual leave).

        I'd probably stay if it's just 20% more when leave and whatnot have been included in the calculation.

        If I was you, I'd milk all the AWS/Azure certs, get the promotion (how certain are you about that though?), warm the seat for a further 6-12 months then after that point, look for a contracting gig.

        Just keep in mind, the grass isn't always greener elsewhere.

        • The promotion is a guarantee but it will be after a few months. No guarantee about getting a good role with the promotion.

          Yeah, I am working on getting all those certs the best I can.

          The work is cruisy and the team is friendly. But I could do more by being challenged.

  • Happiness at work is generally found when you have a good team and a good boss. If you have both of these think carefully about leaving, disfunctional teams and bad bosses are all too frequent.
    That being said I got made redundant and starting my own company/contracting and couldnt be happier work and $. You need to be strong at your job and invest your own time into self development. Probably you need to earn $140k/year to make having your own pty ltd company, or you need to work as a sole trader ( not your liablity is then personal). I have my own pty ltd and which I have a few poeple who worth through me as sole traders ( which costs 5%, plus 10% for their superfund of choice ) as many larger companies dont like engaging sole traders or direct contractors.

  • If you are young and want to pick up some extra coin, then perhaps not a bad idea (risk v reward).
    Totally up to you, but if you have a family, kids etc, then job security might be something to consider.

    Talk with a financial adviser, and take a look at the pro's and con's.
    Money is great, but not everything! The more you earn, it's likely the more you will spend.
    If you don't have too many financial commitments, then it might be worth a crack.

  • which is permanent

    no such thing…

  • To be clear, are you going in as a contractor (own ABN, no entitlements) or are you on a fixed term contract (permanent employee but only there for 12 months)?

    Because those are two entirely different things.

    • +1

      Fixed term contract 12 months but paid hourly. My contact is run by the recruitment agency and they will deduct my super and tax for me.

  • Just an update -

    The recruiter put the incorrect start date on the contract so I asked him to fix it. But now he no longer responds to my phone calls or text.

    So I guess, I lost this opportunity or I ask my company for early release.

Login or Join to leave a comment