Do fixed term contracts limit opportunities for a contractor?

Posted on Monday, December 19, 2016 by Venn GroupNo comments


In recent months a number of public sector organisations have made a real push to transfer a high percentage of interim members of staff, working through agencies, onto their payroll on fixed term contracts. Contractors who have worked for years on an hourly or daily rate are now being forced to consider fixed term contracts in order to secure a role. It begs the question as to whether taking a fixed term contract limits future opportunities for that contractor?

One of the key problems a fixed term contract poses for an interim member of staff is the notice period. When a contractor works on an interim basis through agency, they will likely sign a contract with a 1 or 2 week notice period. Working on a fixed term basis is effectively the same as being a permanent member of staff, where there will often be an agreed 1 month notice even when the FTC is short term (3 months for example). This can cause problems towards the end of a contract when trying to secure a new position, as interim roles will more than likely turnaround within 1 from the job being released to an agency to the contractor starting the role. Not only is this a problem for the contractor but it also limits the number of available candidates to the hiring managers out there. Of course notice periods can be negotiated but candidates cannot rely on this.

Secondly, working on a fixed term basis means working on an annual salary regardless of the length of the contract. From the perspective of a contractor, this will usually reduce their take home each week/month, in comparison to working on a daily or hourly rate.

Of course there are benefits to working on a fixed term basis. Employees feel a level of security with the 1 month notice period, and thus not exposed to being asked to leave within 1 or 2 weeks as interim contractors might. There are also staff benefits such as days of annual leave, car parking, discounts and gym memberships (notwithstanding AWR ‘Day 1’ rights) . Admittedly these may not come to much during a 3 or 4 month fixed term contract but every little helps.

Is a contractor really searching for security or are they more driven by an interesting role or project? If so, why aren’t they in a permanent job? Even though there are some positives of working on a fixed term basis, contractors are contractors for a reason. They haven’t positioned themselves as a contractor to then work on a similar length contract to earn less, purely to have a few days of annual leave and get a free parking permit..

Overall, there are pros and cons of both fixed term contracts and interim positions. Whichever way you look at it, make sure your next role doesn’t hinder any future opportunities that may arise.

Richard Knudsen – Executive Consultant

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