It’s an inevitability of temporary work that contracts come to an end. This leaves contractors with a simple choice more often than not. Find a brand new contract to work or look at potentially securing contract renewals. The latter option here obviously totally depends on whether you and the end client actually wish to continue with your relationship. However it additionally requires you to be able to effectively negotiate to maximise the value of that renewal. With our below key tips for contract renewals, we aim to make things that little bit easier.
10 Tips for Contract Renewals
- Have a Plan B. Showing that you have other contract options available to you, will greatly strengthen your negotiating position when it comes to renewing. Apply for numerous other contracts when going for a renewal and you are more likely to leverage better pay for yourself in line with evidenced market rate.
- Don’t forget to sell yourself. It is important to reinforce and reiterate your value to the end client in renewing. It goes without saying that this will only increase your chances for success. Make sure you are speaking to the decision makers at your end client, otherwise efforts to convey your value will ultimately be pointless.
- Don’t be too eager to renew. If you are too keen to stay, it will make you look desperate. This will actually undermine your negotiating position. It’s important to find that right balance, show too little interest and this will be equally damaging.
- Plan your timing wisely. Don’t start your renewing negotiations too early; otherwise you will diminish your ability to line up alternative contract options. As a general rule wait until at least 4 weeks before the end of your current contract before bringing the subject up.
- Build a financial safety net. It is best practise to always have at least six months of income set aside.This is to cover you in case things don’t go entirely to plan with renewing.
- Don’t hold your client to ransom. If choosing to not renew a contract will damage an end client’s project, then do not use this as a threatening means of leveraging better pay in a renewal. You may feel you are being clever, but burning bridges like this is not wise and will ultimately lead to less work in the long term.
- Renewal length is key. If demand is high for your skills, than there is limited point in locking yourself into a long contract. Look to work towards 6 month contracts. However if demand is low, than longer term contracts are far more preferable.
- Objectively evaluate your bargaining position. It is easier said than done, but it is vitally important to evaluate your position objectively. Assess whether the end client is eager to retain you, how important you are to them and their ability to offer you more. Ask yourself how valued are your skills in the market, how many other opportunities are available to you and whether your pay is in line with market rates.
- Keep IR35 firmly in mind. If currently caught by IR35, then it makes sense to negotiate terms to bring you clearly outside IR35. This could actually give you a better financial return compared to pushing hard for a better contract rate.
- Get the paperwork for your renewal. It is vitally important to have the proper contract paperwork in place and signed for a renewal. Without this you will have no legal recourse should things turn nasty. For example an end client arguing that executing the work constitutes acceptance of a draft contract.