Three Things to Make a Daily Rate Work for You
Posted on 28 July 2017
We have noticed of late that more and more employers are offering daily rate contracts rather than hourly rates, in an attempt to achieve consistency of spend and better cost control. Being cognisant of the uncertainties and risks surrounding contracting, most contractors tend to accommodate having to deliver additional hours without recourse, and daily rates can often work well for both parties if well managed. However, if poorly managed, it can lead to contractors feeling shortchanged, particularly if they are engaged in projects with tight deadlines and are consistently expected to work long hours.
If you are a contractor being offered a daily rate, here are three key things to make daily rates work for you:
1. Clarify what a “day” means contractually
Set clear expectations right at the beginning of the engagement by getting clarity on the standard working hours. Start and finish times should be clearly defined in your contract and, if you are required to work at multiple sites, it should also specify how travel time between locations will be treated – this often comes up as an issue especially where travel between sites may be long or during peak traffic hours.
2. Clarify how any deviations will be addressed
As much as we will seek to get key matters clarified early, there will always be occasions when things deviate from the standard. It is imperative that you agree with your manager how deviations will be treated, and always get sign-off from your manager in advance and in writing (should an issue arise at timesheet approval or invoice payment time, having an audit trail is invaluable). This is especially relevant to additional hours where you may expect compensation, time spent attending work social functions, or when you start/finish the day at a non-standard location and have to factor in travel time. All too often we see disputes arise because no prior agreements have been made!
3. Clarify treatment of personal activities during business hours
As a contractor you are paid only for the time you spend being productive for your employer. You do not receive the benefits a full time employee enjoys such as annual and sick leave, bereavement leave and time for personal or professional development. Taking any time off for such matters should only be through prior written agreement with your manager. Be particularly clear about any flexible working arrangements such as dropping off and picking up the kids or working from home. It surprises me how often these things become issues at invoicing time when managers do not sign off timesheets because there is no record of such agreements – especially when you may seek to start earlier or finish later to compensate for personal activities during core business hours.
Ultimately, the responsibility sits with you as the contractor to seek clarity around all work practices before signing any contract. Similarly, once the engagement is underway, you must continue to ensure any deviations that may affect timesheet approvals and invoice payments are in writing and confirmed by your manager. Failing to do this will cause issues – that is for certain! In saying that, it’s important to maintain a healthy level of flexibility - after all, the more flexibility shown the greater the likelihood of a contract extension and/or positive reference for your next opportunity!
I would be most interested to hear about your personal experiences on daily rate contracts and invite you to please reach out directly if you need additional information.