Contractor job security – it’s less of an issue than you think
When you announce to your friends and family that you’re quitting your permanent job to pursue contract work, the more anxious among them might ask whether you’re concerned about job security. It’s not an unhelpful question – although contractors know that, by their very nature, each assignment is a short term contract, it doesn’t mean that you’re indifferent to things like security and career longevity.
It’s just that when you’re working as a contractor, you develop a different mindset when approaching your work.
The good news is that you can tell your loved ones not to worry. As a day rate contractor, you have a lot of options, not least because your lucrative contracts give you a degree of financial padding, allowing you to carefully consider your next move.
Unlike a fixed term employee, as a contractor you won’t be afforded any of the fixed term contract rights that go along with being traditionally employed, even on a temporary basis. This does, however, offer you a much higher level of flexibility and negotiating power, particularly if it looks like your contract needs to run longer than expected.
Should I pursue long term contracts?
The answer to this depends on your status as a contractor.
If you’re working under an umbrella company then it might be in your interest to pursue contracts that last for months at time. The reasons for this are:
● Increased security
Although you didn’t get into contracting to work for one client without the benefits of permanent employment (sick/holiday/maternity/paternity pay etc.), it can be nice to build up a nest egg secure in the knowledge that you’re not going to have to look for work every few weeks. This can be especially beneficial for fairly new contractors who have built a client base, but need to make sure they have extra savings for the leaner times.
● Chance to see a complex project through to completion
If you get a reputation for being someone who can steer a long, difficult project and make it a success, this will stand you in great stead for repeat bookings.
● You don’t have to worry about IR35
As the umbrella company counts as your employer and deducts the appropriate amount of tax and national insurance, you don’t have to worry that HMRC will consider you for being an employee ‘in all but name’ and then pursue you for additional tax and penalties.
If you’re a contractor working under your own limited company, then pursuing longer term contracts might be a riskier proposition, particularly if you don’t want to fall foul of IR35. However, as long as you can prove the following three criteria are true, you can happily sign on with your client for an extra few months without suffering any surprise tax investigations.
● You must not be controlled by the client
As an independent business, you must be able to prove to HMRC that you dictate the time and location of your work, not the client.
● You must be able to send a substitute in your place
The client must agree that if you are unable to perform your duties, if you send a qualified substitute, then they will allow them to complete the work on your behalf.
● You’re not obliged to take on any extra work in addition to the project that was originally agreed
If the client wants you to suddenly work on something else, they’ll need to draw up a whole new contract and you have the right to refuse that work.
If you are settling into a longer term assignment and you deduct your travel to and from work from your taxes, take account of the 24 month rule. If you expect your assignment to last more than two years then your workplace is no longer classed as temporary and HMRC will no longer allow you to claim for your travel expenses.
I don’t want to work long term assignments! How do I keep a steady flow of contracts coming in?
– Keep your skills sharp and relevant
Job security comes in many forms and for a contractor that means keeping your eyes peeled and your mind alert to opportunities. Contract jobs can appear at a moment’s notice and are often filled just as quickly, so it’s about utilising the tools you have available to make sure that you’re never short of a new assignment.
To make sure that you’re able to act when the right moment reveals itself, identify the job boards that come up trumps for your industry and keep tabs on the skills that are especially popular. Make sure that you’ve taken the appropriate time to maximise your offer to clients — taking a week to pursue some vocational training can really pay off if the skills you learn are in heavy demand.
– Be consistent and persistent
Don’t be afraid to bug recruiters! If you’ve sent your CV off to a new agency, it’s customary to follow up with a phone call the next day. A short phone call is preferable to an email in this case as it helps the recruiters differentiate you from their other placements. I also shows them you’re serious about finding work and puts your CV in the forefront of their mind. Like any sales move, you’ve got to be judicious and make sure that you strike the balance between being persistent and being annoying. That said, if you manage to speak to the right person, you could be privy to assignments before they’re more generally advertised.
So, as you can see, job security is very much in the eye of the beholder. There are so many ways to shore up your contracting employment as you look to the future. It’s also worth remembering that no-one is entirely safe from the threat of redundancy and the nature of your contracting work means you actually have more options and survival strategies than your permanent colleagues. You’re going to be just fine.