No Renewal Rise, but IR35 Compliant Contract

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Renewal Rise
Renewal Rise

Renewal Rise

Dr. McLaughlin received the following communication about the lack of a renewal rise from an IT contractor.

Denis – 6 Month Contract

I am coming to the end of a 6 month contract, having completed a 3 month contract elsewhere.

This contract has been extended for 6-months, although I haven’t
signed yet.

I contacted my agent today, less than a fortnight from the end of my current contract) and put the following points (summarised) to her.

1. I have submitted my details to another agency closer to home, similar
project environment, client in the same industry sector, for a position with
an identical rate.

They seemed very positive, especially with the experience I’d gained with the current contract.

I would show no reluctance in accepting a position at a site closer to home

2. I feel I’m a conscientious worker, who is forced to work harder than
others, especially as I live 100 miles away from the client site. This was
the closest contract to my home.

The previous contract was based in London, and that involved a 4 hour train journey on Monday mornings/ Friday evenings but the rate was better, and I had more time to relax.

Traveling to and from the site for my current contract is really stressing me.

3. I spend more on travel costs and hotel costs with this contract.
Everyone else in the team is local, and therefore effectively has a higher
net rate after expenses.

Agency’s Position

She then explained the agency’s position, how the client is cutting back
(this is true as the client – a major bank – have put a stop on overtime, and
have cut 8 contractors in our team down to 6).

I followed this up with…..

‘If you don‘t mind me asking, how much do the agency make from my position’?

“8%” she replied, (don‘t know if I should believe this)

Asked What Renewal Rise I Wanted

We went on chatting, neither of us making any progress with either
position. She asked me “out of interest” how much I wanted for a renewal rise. Of course, I
had to aim high, expecting some compromise.

I asked for an extra £4, hoping they’d give me £1.50 or even £2. She didn’t even offer, and restated that the agency were working on a very slim margin, and that the agency would be unable to budge!

She argued that if I were offered a position elsewhere, I would be required,
from a professional standpoint, to work one months notice as per the terms
of my renewal, as I had already given my verbal acceptance to renewing. That’s without a renewal rise.

No Other Job

I actually have only 7 days remaining on my current contract, and would be
happy to leave at the end of the month if I could find another role but
between you and me that will not happen. That other agent never did get
back to me!

The conversation ended with her proposing to go to the client and ask them
if they would consider a raise.

I DEFINITELY DO NOT WANT THIS TO
HAPPEN

What if the client turns round and terminates the contract?

Why I Need a Renewal Rise

She then asked me to mail her over the weekend with the points discussed,
details of the other contract, why I need a raise etc.

Of course, the most my mail will say, if indeed I do decide to send a mail
on to the agency, is effectively:

1. Would the agency consider renegotiating the current rate, by reducing
the commission taken from client income, say 4%, given that my contract has
been extended for another 6 months.

2. I do not authorise the agent to discuss this matter with the client

IR35 Free Contract

One final point – I did add that I wanted the contract re-worded to lessen
the impact of IR35.

I was (surprisingly) assured that a new standard contract was being negotiated for all the bank‘s contractors that would essentially be more ‘IR35 friendly’.

She also confirmed that this new contract could be agreed for my renewal date.

IR35 Friendly Contract

What should I do? Should I push for a renewal rise from the agent’s fictional measly commission?

Have a quiet word with my boss. He is approachable, but I know for a fact
they will not give me a renewal rise.

Just have the contract re-worded and be happy with that?

I am worried that pushing for a renewal rise too far could leave me without work, or that
mailing the agent will give the bank cause for concern (even though its all
a bluff)

Yes, I am new to contracting

Dr. McLaughlin’s IT Surgery

Thanks for contacting me. I think the first thing to say, and I think you
know this, is that without another contract to go to, you must keep your current job, and you mustn’t jeopardise your chances of doing this.

In saying this, your agent is not correct in saying that you would have to
give a month’s notice as you verbally accepted the renewal.

You verbally accepted the renewal conditionally, and those conditions were that the
conditions for the new contract (including fees) were acceptable to you.

In short she was bullshitting you there.

Keeping Client’s Happy

I wouldn‘t be worried about letting your agent speak to your boss about more money, especially as your circumstances have changed. Agents are well-practiced in keeping clients ‘sweet‘.

They are salesmen and saleswomen after all. They won‘t put your job in jeopardy, as it costs them too. What they are likely to do is go to your boss and argue for a rise because of changes of circumstances.

You have a second chance of getting something if your boss refuses, but the agency decides to give you something themselves.

It also puts in a marker for a renewal rise the next time you come to the end of your current contract period.

Agency Asked About Renewal Rise

Your agency showed a little leeway by asking you what you would want in terms of a renewal rise ‘just out of interest’.

They blinked.

It wasn’t just out of interest, but to see if they could accommodate that.

You should do exactly as she says and produce something over the weekend showing why you should get a rise.

I don’t think that you’re going to get much of a rise, but I expect that you’ll get
something if you are persistent and put a good case.

Preferred Suppliers

The agent will want to wrap this up quickly, and that will be on your side. Keep the negotiations professional though.

Don’t ‘lose the rag’ or you’ll put her back up.

Anther thing to consider is if your agency is sole Preferred Suppliers
there or if there are other agents.

They could lose the placement totally if you believe if it is the latter.

If it is the former they could get somebody else in, but they would prefer not to, as you‘ve already proved yourself there.

Keep Your IT Contract

The crucial thing here is to keep your contract.

Construct your case for a renewal rise and then ask your agency to make an offer to you.

It won’t be much, but there may be something there.

Even if you have to take a fresh contract with no renewal rise, you should make it clear to the agency that you won’t take another contract renewal without a rise.

Market conditions are well-balanced at the moment, but they won’t
always be – and make sure that you get your CVs out well in advance of your
next contract renewal.

Dr McLaughlin (later)

Just as a little postscript. I’ve been thinking about why she is
insisting that you have to give a month’s notice, when it is so blatantly
untrue.

Why was she bullshitting here?

I think the reason is that she has already told the client that you are staying, and that she would lose face if she had to go back and say that it wasn’t true.

She probably wants the month‘s notice because she wants to be able to tell the client that you took the new contract but then gave a month’s notice.

It would be a good idea if you made it clear to her that you would be leaving in a week’s time if it isn’t sorted out to your satisfaction.

Don’t risk losing your contract though, through, by asking for a renewal rise too strongly.

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