Got the stomach for contract work?
While contract work can now be found across virtually every industry sector, the idea of going from one gig to the next, and trading employer-paid superannuation, four weeks paid annual leave, sick leave, and all the other perks associated with being on a regular payroll, in return for being a free agent, isn’t for everyone. While some may see contract work as liberating, others may cringe at the prospect of having their ‘bum in the breeze’ when it comes to their future earnings.
Since 2013, independent contractor numbers have surged from 8.5% (986,000) to over 11% (1,310,000-plus) of the workforce. Those who favour contract work over a ‘nine to five’ role have typically got an eye out permanently for their next project, to ensure there’s no income gap between gigs.
However, contract roles typically compensate you for not being a permanent salaried member of staff by paying a higher rate. Other plusses that come with working as an independent contractor include, A) much greater exposure to a wider variety of projects, B) depending on the nature of the work, more flexibility around when, where and how you work, plus C) the ability to avoid getting involved in pesky and often destructive and demoralising office politics.
If you’re self-employed, you’ll need to have an ABN number and whether you operate as a sole trader or a limited liability company, you’ll have much greater opportunity to expense your income at tax time, than you would as a PAYE employee. But remember, you’ll find it hard to prove to the ATO that you’re a contract worker if you only ever have one client.
Then there are the networking opportunities that come from working with a continuum of companies in your field, with each new gig only adding to your experience, and hence your future hireability.
Do your homework
Before you embark on contract work, think about what type of gigs will complement your income and career the most. For example, fixed-term contracts are a different ball game to freelance work, which may only provide you with work, one brief at a time. If your work is remotely creative, consider how you feel about handing over the intellectual property (IP) that you create while working on contract for someone else.
If there’s an air of uncertainty around who owns the IP you create, make sure you clarify it before entering into any agreements.
Also be wary of entering contract work on the strength of a handshake (aka a gentleperson’s agreement). As an industry professional who is well regarded by your peers, you have every right to request a formal contract, and if there isn’t one forthcoming, consider fast-tracking the process by creating your own.
Equally important, don’t undersell yourself when entering contract work, you won’t be respected for it. If the contract you’re entering is an undertaking to be available to perform a certain amount of work every month for a fixed rate – aka a retainer – you need to keep tabs on how much work you’ve done. Remember, the contract isn’t voided if the company doesn’t properly utilise the time they’re paying you for, they still need to pay you – a contract is a contract in anyone’s language.
It’s also important to ensure the contact agreement outlines exactly when you will invoice, when you expect to get paid, and who the go-to person is you need to approach on any ‘housekeeping’ issues. Similarly, if you’re required to pay your own superannuation, try to factor into your rate an additional 10 percent to cover it.
Assuming the company hiring you has their own contract, read it properly before signing on the dotted line. Don’t sign anything you don’t understand, and if necessary get a legal eagle to run an eye over it. Be especially wary of any claims to your IP and any caveats on your ability to work in the industry again (especially the company’s opposition) once your contract ends.