Daily rate contract vs fixed term contract. What’s the difference?

In Salesforce experts by Gemma SnaithLeave a Comment

Has your career to date been exclusively permanent roles? You may have heard the words ‘contracting’, ‘daily rates’, ‘fixed term contracts’, ‘short term contracts’ and other similar terms thrown around in conversation with your Salesforce peers. It can be slightly baffling, can’t it?

You may have heard anecdotally that many Salesforce professionals prefer to work as contractors over holding a permanent role due to the attractive pay rates, amongst some sectors. Our most recent survey of Salesforce professionals across ANZ reported 29% of Salesforce professionals actively preferring a contract role over a permanent or fixed term contract role, rising to 41% amongst Salesforce Developers, and an even higher, 47% amongst Mulesoft professionals.

If you’ve never stepped into this contract world, it can potentially be a little confusing. “What’s the difference between a fixed term contract and a daily rate contract” we hear you ask? “Isn’t fixed term better, because it’s for a guaranteed period?” Possibly, but not always. We’ll explain.


What’s a fixed term contract?


In a fixed term contract you’re paid as a salaried employee, and so you receive all of the benefits such as annual leave, personal leave and public holidays paid. But this means that you aren’t financially recognised for the inconvenience of missing out on these perks either. Your salary will very likely be in line with what you would be paid if you were in that role permanently, except for you’ll only be in it for a fixed period of time – there’s an end date. These contracts can be extended, or are sometimes converted into a permanent role, but they can finish when that end date comes around.


Why would someone leave a permanent role for a fixed term contract?


In reality, a lot wouldn’t. Fixed term contracts can be suitable if the circumstances align. Perhaps it’s a career enhancing project that you’ll be working on and are therefore happy to gain the experience, fixed term or not. You might be relocating to a new city or be in between jobs, and eager to get back into the workforce ASAP, and so the fixed element suits your needs.  But we do find that in the Salesforce world, overall people would tend to rank this option as their least preferred choice. And that’s true of people who are currently in permanent or daily rate contract roles.


What’s a daily rate contract then?


This is the type of engagement that you’re likely hearing stories of high pay rates referring to, and the kind of opportunity that the person you’re chatting to over a slice of pizza at your most recent Salesforce Meet-Up is excited about.

A daily rate contract still has an end date, but you are paid for the work (hours/days) that you do, based on an approved timesheet. You might be signed up for an initial period of 3, 6 or even 12 months with perhaps the possibility of extension. So no pay on public holidays, or paid personal leave, but you’re paid handsomely for the sacrifice. Sound good? When you average out the rate that you’re paid daily from your corresponding annual permanent salary, you can expect that if you’re paid on a daily rate for an assignment, that it would exceed the salary that you would earn in a comparable permanent role.


Er – this sounds great, what’s the catch?


The misconception here is that you literally multiply your daily rate by 365 days a year. If only, right? In reality, there may be gaps between contracts, and it takes some effort to be lining up your next contract as your most recent one is drawing to a close. Obviously the business isn’t open for the Public Holidays throughout the year, and many businesses have a forced shut down period for 2 weeks over the Christmas break, and so personal leave will not be entirely in your control. Plus, we all need  breaks, and we all get sick occasionally, plus psychologically, it isn’t quite so relaxing when you feel that you aren’t being ‘paid’ for those days.

The other thing to consider is that in a daily rate contract, the notice period can be shorter. Some can have the standard 4 week notice, but other can be shorter, ranging from a week to one day, and in some case – no notice at all.


What are the benefits of contracting then?


Setting aside the earning ability, the opportunity to learn is what excites a lot of people. Because you may be pivoting from contract to contract, there’s little time for stale periods, you have the ability to pick the contracts you accept and which interesting projects you expose yourself to. You may only work on a contract for a number of months, so you are not limited by the organisation you’ve committed to, and their Salesforce roadmap over the long term. You’re in the driving seat. And let’s face it, 12 months is a long time in the evolution of Salesforce products and features!

So, it’s swings and roundabouts, but this highlights the differences and some key differences that you should be aware of, and hopefully clarifies some of the terminology around Salesforce contracting for you.

Is contracting on the up? We’ve found that this year to date, our daily rate contract placements at Talent Hub have grown by 100% when compared to last year, and so if you’re keen to explore the opportunities that we have at the moment, get in touch with Ben at ben.duncombe@talent-hub.com.au to talk about your specific situation and needs.

Psst..did you know that we host a weekly Salesforce specific podcast? Head over to the Talent Hub Talk podcast page, as you have lots to catch up on!

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