Contract / Rate Cut Decisions

[TFour]

I have a contract till end September, for which clientco has imposed a 10% rate cut. I agreed to this rate cut having been promised a subsequent extension to the end of the year, naively believing the statements that "not all contractors are being extended" and "if you don't agree to the cut, there is no guarantee that your contract will not be terminated".

I have now received a contract extension but have not signed it. I am basically extremely personally unhappy with the 10% cut. I know other contractors that have not had it applied (yet) and also know contractors that have refused it and still been extended.

The circumstances specific to me are that my previous rate was for a Project Management role. In June I moved to start doing work for a different part of clientco - and am now running major programmes of work. I am not only running "my own" programme but have also agreed to keep another major project running because clientco have not been able to transition a permanent Project Manager into their reshaped organisation to do so. Order of magnitude, I was running 2 x £250k projects plus some minor business intiatives. I am now running a global Intranet programme with multiple workstreams AND a data warehouse programme at £4m plus another significant project. In normal circumstances I should have been highlighting the above and stipulating a decent rise. In reality I have panicked too early and got myself a pay cut for significantly more responsiblity and workload.

So....options.

1) Accept that I've already agreed to the cut in principle for an extension and sign-up, in the hope that if there are further extensions at New Year, that is the time to negotiate (with another 3 months reserves in the coffers).
Risk - I've now set a precedent by accepting a cut and if I did get a rise it may barely take me above where I was, never mind to Programme Management rates. I know I will be unhappy with this scenario and will struggle to create a good impression with a face like a long weekend for 3 months.
2) Accept the extension but immediately look for other work. Give the required 1 weeks notice on securing another contract and move on. I do not feel it is right to get another contract then use it as blackmail against current clientco.
Risk - this will put my reputation in bad light with clientco and the agency and possibly with new clients who see a contractor that jumps ship at the drop of a hat for an extra dollar.
3) Write a polite explanation to clientco - sponsoring manager and project sponsors - explaining my position on programme management responsibility v. 90% of Project Manager rates - and that I am finding it difficult to be happy about signing an extension without entertaining immediately looking for other work.
Risk - I look like a bit of a dip for moaning about reduced rates I agreed to 3 weeks ago. Looks like "greedy contractor" syndrome and may jeopardise the prospect of any more extensions.
4) Inform clientco and the agency that I will not be signing the contract extension as I do not feel the rates offered match the level of work/responsibility I am being asked to do. Prepare to leave on Friday.
Risk - More hardline, looks like blackmail at this late stage but is straightforward - they have made an offer, I have thanked them but refused it.

I know in this market I should be happy to have any work, but I am finding the increased responsibility v. lower pay thing really difficult to accept.

Would really appreciate some advice, even if it's "stop whinging like a permie and take whatever money you can get while you can".

[centurian]

stop whinging like a permie and take whatever money you can get while you can

[centurian]

I've now set a precedent by accepting a cut

In the game of poker that is renewal negotiations, you've blinked and indicated you don't have a brilliant hand.

Can this be recovered - yes. But your opponent will feel quite bulish about being able to bluff you now, so you may have to settle for a tougher fight - or be prepared to call their bluff.

[Fred Bloggs]

Option 2.

[TFour]

In the game of poker that is renewal negotiations, you've blinked and indicated you don't have a brilliant hand.

Can this be recovered - yes. But your opponent will feel quite bulish about being able to bluff you now, so you may have to settle for a tougher fight - or be prepared to call their bluff.

Agreed - at the first round. However, the rate cut applied for the last two weeks of my current contract. The renewal is a new hand - mine is arguably now stronger being 4 days away from walking away from all their projects, with no handover even were there someone to hand over to.

I actually think option 4 is more "honourable" than option 2 - it sets out a clear intention.

[fckvwls]

Agreed - at the first round. However, the rate cut applied for the last two weeks of my current contract. The renewal is a new hand - mine is arguably now stronger being 4 days away from walking away from all their projects, with no handover even were there someone to hand over to.

I actually think option 4 is more "honourable" than option 2 - it sets out a clear intention.

I would go with option 4 provided you are in a position to accept the possible consequences. Surely the risk to them and the programmes/projects you run is significant enough to justify exempting you from the proposed 10% cut?

[EddieNambulous]

I know in this market I should be happy to have any work, but I am finding the increased responsibility v. lower pay thing really difficult to accept.

To me, it seems that your choice of action is dictated by the financial position you are currently in.

If you can afford to take the risk of being potentially benched for several months while this market sorts itself out then you can happily bluff away and not be concerned if it all goes wrong and you end up without any work.

If you really need this gig, you might wish to just grin and bear it now.

Confucius say "Contractor who put himself on bench and then need to take even lower rate to pay bills need real good kicking"

[Zippy]

Option 4)

[TFour]

To me, it seems that your choice of action is dictated by the financial position you are currently in.

If you can afford to take the risk of being potentially benched for several months while this market sorts itself out then you can happily bluff away and not be concerned if it all goes wrong and you end up without any work.

If you really need this gig, you might wish to just grin and bear it now.

Confucius say "Contractor who put himself on bench and then need to take even lower rate to pay bills need real good kicking"

What is pushing me is the the feeling of being ripped off. What is making me stay is the thought of "just another week, just another wedge of revenue"....even if the revenue is 70% of what it should be for the role, its still 70% better than 0% (and it's 70% close to home). I can afford to be benched for 6 months+, but with a baby on the way what I should be doing financially is lining the coffers. I am just really struggling mentally with the current position.

Would the client just let me go? I know other contractors have refused a cut and have stayed, but on the other hand I have every belief that the client would happily just make other already-overloaded staff/contractors do my work than "lose face" and put me back to where I was (or above).

By mid-November it will be clear whether there's work next year (I feel there must be unless they are going to stop half the projects) or not - and it will be 6 or 12 month contract.....but then I'll be in the same position - having my bluff called for 70% rate in the face of 6/12 months work.

[TFour]

I would go with option 4 provided you are in a position to accept the possible consequences. Surely the risk to them and the programmes/projects you run is significant enough to justify exempting you from the proposed 10% cut?

It is, but some very strange decisions are take sometimes that fly in the face of all logic.