I have been asked to take 15% rate reduction. What should I do?
Tuesday, 25 October 2005
We received this in our Feedback mail.
Contractor
My client has recently told all contractors to take an across-the-board rate reduction of 15%. There’s to be no argument or discussion over it. Those that don’t accept it will be given whatever notice it states in their contracts.
This is the second time that they have done this as I had to take a 10% cut last September as well.
I’m tempted to jack it in, and look for a job elsewhere. What should I do?
NamesFacesPlaces Reply
It is ridiculous that companies are doing this. The time to do this is when contracts are being renewed. This is unethical.
If, during boom times, contractors were to come en masse and tell them that they wanted an across the board increase of 15% or they were all walking out in the middle of the project, despite the fact that they were in the middle of their contracts, then the company would be absolutely furious and call them all sorts of names.
They would call them shysters who were attempting to hold the company to ransom, and they would be right.
So if they wouldn’t like it themselves, why would they do it to others? That’s the hard realities of business, they’ll say.
Another Hard Reality
Well one of the hard realities of business is that loyalty has to be earned. It isn’t given free.
You shouldn’t do anything so rash as to pack your contract in. If you do, in this market, you might find that you are out of work for a long, long spell, with no income coming in.
No, get smart!
Take the pay cut, but use the time to start looking for another contract. You might as well be paid during the time that you are doing so.
Advise the other contractors in your office to do so too.
Blows Up In Their Faces
What the company might find is that they’ve now got cheaper contractors, but their turnover in them has increased, and as each contractor leaves, they take with them business and systems knowledge of the company which their replacement won’t have.
The company may well find that, although they seem to have cut the costs of the project, they haven’t really done so, as productivity will go down, meaning that there is a greater risk of the project running late and over budget, and not delivering what the customer wants, whilst bouncing in and out of test.
They are taking a huge gamble here that everyone will be docile.
Be seemingly docile – but make your exit plans, and start to implement them.
This company don’t deserve your loyalty!
This article originally appeared on the British contractor's website IT Contractor.
Gerry McLaughlin (Feedback@NamesFacesPlaces)
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Take it but......If there's no other choice take the 15% rate cut. Never forget it for a second. Return the favour with 50% less work. P*** em off at the next available opportunity. Even break your contract walking out during a major release for only $2/hr more. They put a gun to your head you so it's OK for you too. Business is a two way street. One swift kick in the guts deserves another with interest. Bugger 'em, 10/24/2005 09:54:17 AM
This isn't an ozzie article.At the end of that interesting article it says that this originally appeared in the British Contractors website. My first question would be when did it appear? I've gone to the site but it's not in any of the recent articles. So we need some context. This kind of thing happened a couple of years ago. The company I work for here (in Sydney) shafted their contractors in London like this in 2003/4. But now whenever I need to contact somebody in the London office I've found out theyre leaving or have left because the jobs have picked up big time over there. And our London office is huge so that's a lot of contractors. Anyway. Obvious answer to the question in the article. Take the pay cut and start sending out those CVs. Then if you get somebody to hire you just give in your notice to your current employer. Micko, 10/24/2005 07:21:23 PM
see if you can get a better rate elsewhereThis happened at Telstra after the IT crash but it probably wont happen now in a burgeoning market unless the CIO is an idiot or unless you're over paid. If the company you're with insists that you take a 15% rate cut or they will give you notice you should take it but insist that your contract be changed to allow you to give 2 weeks notice to the company. (Many contracts are one sided where they can give you 2 weeks notice but you cant give them any.) Then immediately start applying for every suitable job on the job boards. Ask for your old rate + 10%. This will give you a reality check on you're rate. If you can get a better rate somewhere else - go! If you cant get a better rate somewhere else - Stay and stop complaining - you were overpaid! Murray, 10/24/2005 09:40:37 PM
Could be worseYou could be replaced by Indians on a cruise ship.... http://timesofindia.indiatimes.com/articleshow/1263110.cms UnemployedITer, 10/25/2005 02:55:33 AM
Experienced This TooMy sympathies to the victim here. I experienced this while working for Reuters in the UK. The company issued an ultimatum to all contractors in the company: accept a 20% rate cut or your contract will be terminated with the minimum notice. The best course of action is to accept the rate cut and start looking for new work. It is clear that the company is looking to reduce the number & budget of its contactors on its books (I call this process a "contractor purge"). Your future there is in jeopardy, and it's time to move on. Ensure that your contract allows you to terminate with a reasonable notice. This is your escape clause when you find a new job. It is possible (but hard) to negotiate more favourable terms, even in the face of an ultimatum. For example, ask for a reduced rate cut, an extension of when it begins, or negotiate a shorter notice period in your contract (eg 1 or 2 weeks) to allow you to take a new job quickly. Delaying the process works in your favour, since your existing terms continue to apply. Just keep one thing in mind: the company wants to get rid of you, so desert the sinking ship... but do it pragmatically. IMHO, the ship is clearly sinking when a companies take this desperate action... "across the board" cuts mean they don't even know which of their contractors are worth their pay, or don't care who they lose. The sad irony (which underlines the stupidity of it) is that they will lose their *best* contractors. Brett Alcorn, 11/22/2005 06:38:10 PM
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