One of the questions that come up time and time again is what are daily rate contracts and why would I do it?
After 8 years of recruiting in the contract market, I’ve gathered the main pros of why contracting potentially may be better for you!
I recently read a statistic that by 2027, 51% of adults will be gig/liquid/freelance workers and 80% of companies will use a flexible workforce. So now is the best time in the market to analyse whether a contract role would suit you!
First of all, what is daily rate/hourly rate contracts?
A daily rate or hourly rate contract is the price or cost of a particular service for a day's period. Contracts can vary from 6 to 12 to 18-month contracts and more often than not contracts will be extended.
Companies hire contractors to add immediate value to their project and a lot of the time it helps companies scale up quickly and avoid some of the costs that are associated with hiring i.e. offering company benefits, paying PRSI, holiday days, etc.
Making the big move from a yearly salary to a daily rate contract can be intimidating so it’s important to understand the pros and the cons!
1. Higher Pay –
Working as a contractor gives you the opportunity to earn a higher salary than you would as an employee. Companies who engage in contractor value contractors who can hit the ground running and add immediate value therefore you received a higher pay rate for this.
The easiest way to calculate and compare against a yearly salary is to multiply your day rate by 230 (230 is the average amount of days a contractor will work within 12 months)
2. Flexibility and Career Path –
Contracting gives you the opportunity to move within projects and companies and therefore gain a lot of experience working on different projects and technologies and therefore allowing you the opportunity to work with different companies and teams. It allows you to adapt to new working environments and gives you the opportunity to own your career and career path.
As a contractor, you become highly sought for within the market, so it also allows you to plan out your work-life balance better – a lot of contractors will take a holiday after they finish 1 contract before they move to the next!
1. Job insecurity –
As a contractor you can be let go at any time, most contracts have a 30-day notice period. However, it’s important to note that you aren’t protected by current legislation that offers certain rights to employees.
2. Lack of benefits –
As a contractor, you aren’t entitled to any benefits – i.e., holiday days, pension, etc. As a contractor you get paid for the days/hours you complete – most contracts are 40 hours a week for a duration of 6 – 18 months. It’s important to realise that although you do not get benefits you should be receiving a premium daily/hourly rate!
In conclusion, there’s plenty of pros to the contract world and like with everything there are cons too! If you are interested in hearing more about the contract market or if you would like any advice or tips on how to move from an employee to a contractor, please feel free to reach out to me for a confidential chat!