Contract Renewal/New Contract Negotiating Rate for Shorter Term Contract

[peteski22]

Hi all,

Please go easy on me as this is my first post, my first contract, and my first foray into contracting...

My Limited company's contract with the client is expiring and they are keen to get me to work on a different project, I've been told informally that it would be a 1 month rolling contract due to the funding coming from another department. The initial contract which is just ending was for 5 months at a set rate.

My question is two fold (kind of), given that the offer of a new contract (they talk about it like an extension but I think it would be a new contract) is now severely shorter, is it unprofessional to consider requesting a higher rate (a rate increase) than before due to potentially having to look for a new contract in 1 month, as opposed to the 5 months I could budget for in my business previously.

Secondly, if it is acceptable to request a higher rate in these circumstances, what are the usual steps involved in negotiating this sort of thing?

I appreciate any help that people can offer, I'm not trying to be greedy with this post, but I have to ensure that I mitigate risk to the business as best possible.

Kind regards, and thanks in advance.

Peter

[NotAllThere]

If you want a rate increase, you have to provide a reason that the agency/client can accept. Shorter contract would be one such ground.

First step, tell the client/agency that you're interested in the work, but due to the shorter term and uncertainty, you would like a rate increase. Have a minimum rate increase in mind, and if you don't get that, be prepared to walk; but enter negotiations with something not unreasonable, but still higher.

[psychocandy]

Hi all,

Please go easy on me as this is my first post, my first contract, and my first foray into contracting...

My Limited company's contract with the client is expiring and they are keen to get me to work on a different project, I've been told informally that it would be a 1 month rolling contract due to the funding coming from another department. The initial contract which is just ending was for 5 months at a set rate.

My question is two fold (kind of), given that the offer of a new contract (they talk about it like an extension but I think it would be a new contract) is now severely shorter, is it unprofessional to consider requesting a higher rate (a rate increase) than before due to potentially having to look for a new contract in 1 month, as opposed to the 5 months I could budget for in my business previously.

Secondly, if it is acceptable to request a higher rate in these circumstances, what are the usual steps involved in negotiating this sort of thing?

I appreciate any help that people can offer, I'm not trying to be greedy with this post, but I have to ensure that I mitigate risk to the business as best possible.

Kind regards, and thanks in advance.

Peter

Yeh. I would. Even though, theoretically, even with a 5 monther they could can you with notice, its hassle having a month rolling. My client is a 3 month roller and thats hassle getting them to renew every time.....

[TheFaQQer]

If you want a rate increase, you have to provide a reason that the agency/client can accept. Shorter contract would be one such ground.

This

its hassle having a month rolling.

And this.

One month rolling means that on the very last Friday of the contract, you won't find out until about 4.30 as you're saying your goodbyes that there is another month there. In the meantime, you've missed the potential work that is on offer elsewhere because you don't know whether you are staying or not. Factor those into your rate discussions with the agency / client.

[doomage]

If they are not prepared to budge on rates you can ask for a very short notice period and politely remind them that you will be looking for work and interviewing.

Although client relationships are important they shouldn't overly impact the running (i.e. cashflow) of your business.

ps. start looking for contracts and interviewing.

[northernladuk]

Horrible things rolling months. Not something you want to do for too long and really tulipty of clients to offer these. I did this for 4 months and they cocked up the renewal at the end of every month so come the Friday I had no idea if I was in on Monday or not so effectively had to hand over every 4 weeks. Pissed the guys off I was working with as well as me. Ended up getting calls at 10 am Monday saying I can come in. Got in for lunch and charged them the full day. Didn't know if I was coming or going so eventually the enivitable happened, got a gig and didn't come back.

You have to push for a higher rate as they are horrible things to work with but I know my client wouldn't budge. Ended up just playing to rule and just not coming back one week when I had something else.

[psychocandy]

Horrible things rolling months. Not something you want to do for too long and really tulipty of clients to offer these. I did this for 4 months and they cocked up the renewal at the end of every month so come the Friday I had no idea if I was in on Monday or not so effectively had to hand over every 4 weeks. Pissed the guys off I was working with as well as me. Ended up getting calls at 10 am Monday saying I can come in. Got in for lunch and charged them the full day. Didn't know if I was coming or going so eventually the enivitable happened, got a gig and didn't come back.

You have to push for a higher rate as they are horrible things to work with but I know my client wouldn't budge. Ended up just playing to rule and just not coming back one week when I had something else.

As NLUK says, a lot of clients are useless at sorting out extensions anyway so if its once a month you can see whats going to happen as NLUK has pointed out.

With me, even though Im pretty sure Im staying, the client does this every 3 months i.e leaves it till a few days to go. Never yet had to can the monday morning yet but I can see that coming.

[psychocandy]

remember also as NLUK says, whats sauce for the goose etc.....

No obligation to come back on the monday if you find anything better if client hasnt bothered to sort out renewal. And I would say, in this case, they also lose their right to a handover - not your problem.

[peteski22]

Thanks

Thanks to everyone that viewed and replied, it's given me some things to think about!

In the meantime, I read on forums and websites, that having a rolling contract isn't good if it ever comes to being investigated by HMRC for IR35. I know it's not the one and only thing they'd look at, but I'm eager to give them as little reason as possible to question such things. I guess this is my problem and not my clients, but does it give me any more room? Or perhaps room to negotiate terms of the contract a little harder?

I will take the advice given above and discuss things with my client, but I'm also going to look around and interview as despite having a great relationship with them in my initial few months I don't like the risk around what's going on at the moment.

Cheers all.
Pete

[TheFaQQer]

Thanks to everyone that viewed and replied, it's given me some things to think about!

In the meantime, I read on forums and websites, that having a rolling contract isn't good if it ever comes to being investigated by HMRC for IR35. I know it's not the one and only thing they'd look at, but I'm eager to give them as little reason as possible to question such things. I guess this is my problem and not my clients, but does it give me any more room? Or perhaps room to negotiate terms of the contract a little harder?

I don't really agree that it's anything other than a marginal pointer - as long as you have a right of substitution, client doesn't have direction and control, and there's no mutuality of obligation then you should be OK. Make sure you have PCG membership or other insurance which will fight your case if necessary.

Can't see it giving you any more room, even if it were a huge indicator of employment. Your tax affairs are the business of you and your employer, not your client. Why should the client and the agency care whether you might have to pay additional tax in the future or not? They don't. That doesn't mean that you can't factor in the possibility into your rate negotiations, but actually saying "this might put me inside IR35 so I need £x a day more" isn't going to be anything that the client cares about. At best, the agent will say "no it won't, so there's no need to pay you more".

I will take the advice given above and discuss things with my client, but I'm also going to look around and interview as despite having a great relationship with them in my initial few months I don't like the risk around what's going on at the moment.

Cheers all.
Pete

If the budget is committed, then the main risk is that at the end of each month, you have to prod people to renew the contract. If the budget isn't, and that's why they only want a rolling contract, then negotiate a short notice period and look for other opportunities. When I was last on a monthly contract, I negotiated a 7 day notice period and left three weeks later for a better role.

Good luck with the negotiations, though.