First time contractor - extension/rate increase questions

[jmcbubbles]

Hi,

I am coming to the end of my first 12 month contract and have been offered a 12 month extension by the client, and now am considering my options regarding a rate increase. I work in the pharmaceutical industry, doing IT work but a very specialised role - I have a combination of industry and technology experience that isn't too easy to find in Europe. I've gotten on very well in the client company, have become a bit of a go-to person if anyone has questions or issues to sort out - people tend to come to me before they go to anyone else who is in the same role - I am usually able and willing to help them out and as a result I have become quite popular with the rest of the staff at the client company, at all levels.

As I have established myself pretty well in the company and can perform the job better than some of the others who are here longer than me (fact, not infacted ego talking!), I think I'm justified in asking for an increase. I'm also worried I might have agreed to a relatively low rate at the start of the contract as the agent knew I was new to contracting.

My questions, specifically are:
1 - for this kind of extension, would you guys generally always request an increase??
2 - if the client refuse to increase the rate they are paying, how common/acceptable would it be to ask the agency to reduce their cut?
3 - how would a contractor normally find out how much of a cut the agency is taking in the first place?? I know what rate I'm getting but I have no idea how much the agency are charging the client - I've read around on this and other forums and the advice is "find out how much the agency is getting" - but how would I find this out??

Any advice would be appreciated - I don't know how long I'll remain a contractor so obviously want to be able to earn as much as possible while I'm doing it!

Thanks!

[northernladuk]

I didn't read this fully but..

1. Don't discuss rate increases with your client. You are contracted to your agent and you are getting a cut of his rate from the client. It is the agencies cut you are trying to eat in to. The client is unlikely to be very happy if you start getting him involved in rate discussions. That is why (or one of the reasons) he uses and agent.

2. Point out to the agent you have now fallen foul of the 24 month rule (which you have) and will now be x pounds down due to not being able to claim mileage etc so at the very least you want an increase to cover this. You don't want to be doing the same work on what is effectively less money. Before you ask what this means read the guides and google 24 month rule.

3. Best way to find out what agent is getting is to hang around the printers IMO. At some point in my last 3 contracts it has appeared there. If it does pop up do not be tempted to steal the piece of paper or let too many people know you have read it. This information is not your consumption so useful to have but may piss people off if they know you have read it. Just use some common sense. Don't wave it around the office like a guy on my first contract did.

[jmcbubbles]

Thanks for the quick response northernlad...

1 - fair enough, and good advice - I wasn't planning to go directly to the client, but the agent is leading me to believe that if the client won't increase the rate they are paying then there's no other option - which I know see is not true!

2 - I am not a UK citizen and am contracting in Europe, so I don't think that 24 month rule thing will apply to me - thanks for the tip though, I'll look further into it and see if that or anything similar would apply to me

3 - haha good idea, I'll keep an eye out at the printers - but HR are located on a different floor to me so I think I'd be noticed aimlessly hanging out around their printers any other tips??? I would really really love to know how much the agency are getting...

[rd409]

I didn't read this fully but..

1. Don't discuss rate increases with your client. You are contracted to your agent and you are getting a cut of his rate from the client. It is the agencies cut you are trying to eat in to. The client is unlikely to be very happy if you start getting him involved in rate discussions. That is why (or one of the reasons) he uses and agent.

2. Point out to the agent you have now fallen foul of the 24 month rule (which you have) and will now be x pounds down due to not being able to claim mileage etc so at the very least you want an increase to cover this. You don't want to be doing the same work on what is effectively less money. Before you ask what this means read the guides and google 24 month rule.

3. Best way to find out what agent is getting is to hang around the printers IMO. At some point in my last 3 contracts it has appeared there. If it does pop up do not be tempted to steal the piece of paper or let too many people know you have read it. This information is not your consumption so useful to have but may piss people off if they know you have read it. Just use some common sense. Don't wave it around the office like a guy on my first contract did.

WNLUKS.

3. I have also tried to put in my daily rate in conversation to the hiring manager, once I befriend them; over a pint. This would usually be a conversation about different lifestyle between a contractor and a permie. If the agent is on huge margin, the manager usually spills the beans with astonishment. If they are not that bothered, usually means that the agent is getting less than 10%.

Also if the agency is on PSL, then most often their cut would not be huge.

HTH.

[pmeswani]

Thanks for the quick response northernlad...

2 - I am not a UK citizen and am contracting in Europe, so I don't think that 24 month rule thing will apply to me - thanks for the tip though, I'll look further into it and see if that or anything similar would apply to me

Sorry if I am stating the obvious, and hope it's not taken the wrong way. If you are not a UK Citizen and not working in the UK, why are you asking a UK Contractor forum for advice? Sorry if that is coming across as rude. It's a genuine question and would like to know what value add we can offer.

Also, I assume that as you are there for more than 180 days (give or take a few days) that you are paying local taxes plus any applicable taxes in your home country?

Regarding rate negotiation, nothing ventured, nothing gained. Ask the question of the agent and hope for the best.

[Wanderer]

1. Don't discuss rate increases with your client.

Opinion is divided on this one and I wouldn't take that as a hard and fast rule. Too many agents are out to rip off contractors and clients alike and want to keep both sides in the dark about how much is being paid.

On longer contracts (> 3 months), I always try to engage the client to find out how much they are paying the agency. Sometimes they are happy to discuss it and will even collude with you to get a pay rise by cutting the agent's margin, other times they are very strict about it and just say "Talk to the agent". As Northernladuk says, it's surprising how often paperwork gets left lying around on the printer or put on a shared drive where you can read it. I'm not convinced it's always done accidentally either....

[northernladuk]

3 - haha good idea, I'll keep an eye out at the printers - but HR are located on a different floor to me so I think I'd be noticed aimlessly hanging out around their printers any other tips??? I would really really love to know how much the agency are getting...

It tends to be the managers that print it out and leave it on a printer. HR tend to know better.

Opinion is divided on this one and I wouldn't take that as a hard and fast rule. Too many agents are out to rip off contractors and clients alike and want to keep both sides in the dark about how much is being paid.

I would normally agree to this and advise the contractor uses a bit of nouse as to who to speak to. As the OP is on his first contract I thought I would point out the chain to him. first contract of 12 months would lead me to believe he has forgotton, or never reaslise how contracing work and keep focus on the difference between your client and the agent and who you work for and get paid by etc...

[jmcbubbles]

Sorry if I am stating the obvious, and hope it's not taken the wrong way. If you are not a UK Citizen and not working in the UK, why are you asking a UK Contractor forum for advice? Sorry if that is coming across as rude. It's a genuine question and would like to know what value add we can offer.

Also, I assume that as you are there for more than 180 days (give or take a few days) that you are paying local taxes plus any applicable taxes in your home country?

Regarding rate negotiation, nothing ventured, nothing gained. Ask the question of the agent and hope for the best.

Fair enough question Basically, I love a good forum and it's quite difficult to find a decent contractor forum - this by far is the best and most active one I could find, and the questions I'm asking are pretty general to contracting, not UK-specific. I'm Irish anyway so I figured my neighbours could help me out with some advice

Thanks for all the help guys! I guess I'll play it by ear once I get the new contract and start formal negotiations with the agent - and in the meantime will try to cozy up to someone on the client side who might be able to spill the beans on how much the agency are getting!