Permanent vs Fixed Term Contract

Forums › Off topic › Permanent vs Fixed Term Contract - pay parity?

floydbloke

3646 posts

Uber Geek
+1 received by user: 4554

ID Verified

#207636 6-Jan-2017 09:45

Someone I know is going through a recruitment process., they have been offered the role verbally but have not yet had any formal discussion on pay.

Initially the vacancy description implied that it’s a permanent role, but it turns out it is a 12 month fixed term contract.

What is a reasonable percentage uplift in pay rate for contract vs perm? If the salary for the permanent role was to be, say, $55,000 pa what sort of hourly rate for the ftc would offset the loss of benefits that a permy gets (I’m thinking annual leave, paid sick leave, job security/continuation after 12 months, union ‘protection’)?

Sometimes I use big words I don't always fully understand in an effort to make myself sound more photosynthesis.

timmmay

20858 posts

Uber Geek
+1 received by user: 5350

Trusted

Lifetime subscriber

#1699222 6-Jan-2017 09:58

It really varies. My wife works in legal, they don't seem to get anything extra for one year fixed over perm. In IT you might get a little extra, but you mostly get paid more for hourly rate contracting with no notice period, fixed term you might get the same. They'll probably find it more difficult to fill, so it might give you a negotiating position.

marpada

487 posts

Ultimate Geek
+1 received by user: 182

#1699251 6-Jan-2017 10:32

If I understand correctly (at least I think my employer does it this way) Fixed Terms contractors have similar conditions to permanent employees as they have annual leave, paid sick days, PAYE, kiwisaver contribution, and not sure about other perks.

lxsw20

3689 posts

Uber Geek
+1 received by user: 2174

Subscriber

#1699254 6-Jan-2017 10:35

Personally I wouldn't expect any extra. If you want that benefit you need to be a contractor and take all the flaws that come with that too.

Geektastic

18009 posts

Uber Geek
+1 received by user: 8465

Trusted

Lifetime subscriber

#1699256 6-Jan-2017 10:36

Depends on skills and the nature of the work, plus the GST position of the contractor and so on.

Also it's a slight misnomer as it's not really a fixed 12 month term in the proper sense. You can still be biffed on a week's notice if the project goes belly up.

My wife contracts in change and program management and says she gets at least double the permanent salary and sometimes more on hourly.

Fixed term is normally the same as salary in terms of rates and benefits though.

BlinkyBill

1443 posts

Uber Geek
+1 received by user: 1100
Inactive user

#1699261 6-Jan-2017 10:54

Permanent and contracted roles are both governed by a contract, permanent employment contracts are often known as Employment Agreements, but are nevertheless contracts.

Permanent and Fixed-Term employment are the same thing, with the same (general) terms and conditions, and are subject to Employment Law. The only difference is one is ... for a fixed term; and the other has no term. So no reason to expect a remuneration difference between fixed and permanent, unless you negotiate something.

Fixed-terms are usually construed when a specific role is required to achieve something specific and then the need for that role ends. Fixed-term cannot be used as, for example, a 12-month trial. Here is a good overview prepared by the PSA https://www.psa.org.nz/media/news/fixed-term-contracts/ .

One thing to look out for when taking on a fixed-term employment is to make sure the contract specifies the conditions under which the emplyment ends, it is not simply the end of the term that signals the end of the employment.

Contracts though, do not allow for Employment-type benefits such as annual leave, sick leave, training/performance investment etc. These contracts are not covered by Employment Law, but are subject to Health-and-Safety and so on. In contrast to fixed-term employment, the term of the contract signals the end of the contract.

NonprayingMantis

6434 posts

Uber Geek
+1 received by user: 1528

#1699263 6-Jan-2017 10:59

Fixed term employment contract is the same as employment wrt benefits like annual leave.

Lego

Shop now for Lego sets and other gifts (affiliate link).

floydbloke

3646 posts

Uber Geek
+1 received by user: 4554

ID Verified

#1699264 6-Jan-2017 11:03

Some great info here, thanks everyone.

Reading the above, I'm a little surprised that the 'job-security' of a permanent role doesn't (in general) appear to warrant any financial compensation when taking on a fixed term instead.

We'll make sure to get a good understanding of all the T&Cs of the contract before signing anything.

Sometimes I use big words I don't always fully understand in an effort to make myself sound more photosynthesis.

scuwp

3927 posts

Uber Geek
+1 received by user: 2510

#1699265 6-Jan-2017 11:03

In our business, nil extra. Even though it is a fixed term they are never-the-less a full time employee and they get all the same benefits and conditions.

Lazy is such an ugly word, I prefer to call it selective participation

Geektastic

18009 posts

Uber Geek
+1 received by user: 8465

Trusted

Lifetime subscriber

#1699270 6-Jan-2017 11:13

floydbloke:

Some great info here, thanks everyone.

Reading the above, I'm a little surprised that the 'job-security' of a permanent role doesn't (in general) appear to warrant any financial compensation when taking on a fixed term instead.

We'll make sure to get a good understanding of all the T&Cs of the contract before signing anything.

Yes - now is the time for negotiation re annual leave amounts, notice periods and so forth!

I agree with you re the surprise factor - it is odd. Also beware (according to my wife!) the notice period, because some less scrupulous employers will try and get fixed term contracts rather than hourly or day rate contracts because they are usually cheaper, yet will be aware in the privacy of their own minds that the job is unlikely to last longer than 6 months or whatever and that therefore they can just be rid of the contractor at that point by giving notice, thus avoiding any uplift in the cost that would have come with the other, more appropriate, forms of short term contract.

frankv

5705 posts

Uber Geek
+1 received by user: 3666

Lifetime subscriber

#1699341 6-Jan-2017 13:31

lxsw20:

Personally I wouldn't expect any extra. If you want that benefit you need to be a contractor and take all the flaws that come with that too.

Ummm... a person on a Fixed Term Contract *is* a contractor.

BlinkyBill

1443 posts

Uber Geek
+1 received by user: 1100
Inactive user

#1699376 6-Jan-2017 14:05

frankv:
lxsw20:

Personally I wouldn't expect any extra. If you want that benefit you need to be a contractor and take all the flaws that come with that too.

Ummm... a person on a Fixed Term Contract *is* a contractor.

Ummm ... no. A person on a Fixed Term Contract is an employee. A contractor is not an employee.