Contracting and cut in day rate.
Discussion
Welcome to contracting... You don't have to sign it, but they will most likely just give you notice to terminate your contract if you don't agree.
Very occasionally, if the client is really, really keen that you don't leave, they won't get rid of you however this is very unusual in my experience.
Very occasionally, if the client is really, really keen that you don't leave, they won't get rid of you however this is very unusual in my experience.
So they're renegotiating your contractual terms.
The option may well come down to...
The option may well come down to...
- Accept lower rate until expiry of contract then either renew or move elsewhere.
- Stick to the contracted rate and, assuming contract has unilateral break as they normally do, risk early termination.
Legally, they have no right to change the terms. Practically, if you don't accept terms then they'll look at terminating the contract. At best you'll get the notice period served ... but of course there (suddenly) may not be any work to do, so off you toddle immediately. You either have to accept the cut or look at moving on. Actually, that's not true ... you could put together a proposal for why you're not worth a rate cut linky ... but (assuming this is a blanket cut, not just yourco) the chances are you'll get nowhere. Part of contracting's rich tapestry.
This wouldn't by any chance be with HAL ?
(notice the clever way I avoid mentioning real names)
It is common practice in a number of consultancies to do this.
It has basically a two fold purpose;
1) they usually get a fair proportion that accept it thus saving the collective thousands of pounds
2) it often forces managers to look seriously at their contractor head count to see if they can satisfy the management's overall requirement for lowering costs.
In my case I refused, nothing happened.
But, as others have said above, it could play out differently.
(notice the clever way I avoid mentioning real names)
It is common practice in a number of consultancies to do this.
It has basically a two fold purpose;
1) they usually get a fair proportion that accept it thus saving the collective thousands of pounds
2) it often forces managers to look seriously at their contractor head count to see if they can satisfy the management's overall requirement for lowering costs.
In my case I refused, nothing happened.
But, as others have said above, it could play out differently.
I've had this twice - the first time was 3 months into my first ever contract so I didn't want to rock the boat - but still negotiated the cut from 10% to 5%... The second time the client wanted to cut 10%, they handled it aggressively with everyone receiving notice of termination and a statement that no exemptions would be made in any circumstance. I quickly secured something at 20% more than my original rate. A few days before I left an exemption was miraculously offered which of course I declined - if they wanted to reinstate the contract they had just terminated it was going to cost them +30%. It strikes me as a counter-intuitive move to enforce a rate cut across the board - you lose anyone in a buoyant 'sought after' marlet who knows the are worth the rate and is confidently prepared to walk; and conversely you keep anyone who would rather cling on the gig at a reduced rate.
theboss said:
It strikes me as a counter-intuitive move to enforce a rate cut across the board - you lose anyone in a buoyant 'sought after' marlet who knows the are worth the rate and is confidently prepared to walk; and conversely you keep anyone who would rather cling on the gig at a reduced rate.
Very true, can become a true own goal.When Barclays threatened this to us no-one signed up to it and they terminated us all just before Xmas (some of us were signed on until the following April). Threw a few pieces of work into turmoil but most had been delivered to be fair.
I've come to expect it as normal along with a lot of other things to be honest...
I've come to expect it as normal along with a lot of other things to be honest...
Am I missing something here - are we talking about a 10% rate cut for what is in effect the last 5 weeks or so of a contract? If my contract was up at that time I'd insist on it being paid as per the contract. If there is some suggestion that a new contract is rate -10% then that could a different story depending on the market.
elanfan said:
Am I missing something here - are we talking about a 10% rate cut for what is in effect the last 5 weeks or so of a contract? If my contract was up at that time I'd insist on it being paid as per the contract. If there is some suggestion that a new contract is rate -10% then that could a different story depending on the market.
But it'd be very likely you wouldn't get anywhere... you'd be served notice (probably 1 week on the client side) so lose out on the final 4 weeks of the contract. If they really wanted to, the client could say 'There's no work at all' and you'd get bugger all. Mutuality of obligation, and all that. Good for IR35 though. It's fairly typical of the banks to do a blanket change rather than fiddle about with individual contracts. In 6 months time they'll be re-hiring like mad, and trying to keep rates down which won't work because contractors will build the risk into their rates.bigandclever said:
elanfan said:
Am I missing something here - are we talking about a 10% rate cut for what is in effect the last 5 weeks or so of a contract? If my contract was up at that time I'd insist on it being paid as per the contract. If there is some suggestion that a new contract is rate -10% then that could a different story depending on the market.
But it'd be very likely you wouldn't get anywhere... you'd be served notice (probably 1 week on the client side) so lose out on the final 4 weeks of the contract. If they really wanted to, the client could say 'There's no work at all' and you'd get bugger all. Mutuality of obligation, and all that. Good for IR35 though. It's fairly typical of the banks to do a blanket change rather than fiddle about with individual contracts. In 6 months time they'll be re-hiring like mad, and trying to keep rates down which won't work because contractors will build the risk into their rates.I wonder how many of the "they can't do that" brigade are operating inside IR35...
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