How to become a contractor and get a life

When the Employment Relations Bill comes into effect on October 2, it may cause some confusion in the contracting industry. But opportunities for contractors still remain.

When the Employment Relations Bill comes into effect on October 2, it may cause some confusion in the contracting industry. But opportunities for contractors still remain.

But why would you fancy going down that path, and how do you go about it?

For Manukau City Council systems analyst, Chris Cunningham, the idea of contracting appealed because if offered "freedom and flexibility". He can finish early if he wants, take the odd day off, and easily change his job.

Cunningham, 32, has been at the council for over two years, perhaps longer than many of its so-called permanent employees. So why has he stayed?

He says Manukau offers state-of-the-art-technologies and this has allowed him to moved across a variety of


"Contracting is a way of always learning, developing my skills and knowledge," he says.

There are downsides such as no holiday or sick pay. "But that can be an advantage as you can take time off when you want and you don't feel guilty," he says, having just come back from a month in Britain.

And then there is what Cunningham doesn't mention: tax benefits from GST status and being able to charge a higher hourly rate.

But even without considering the financial benefits, he still recommends the contracting lifestyle.

Recruitment agencies are happy to advise people on how to become a contractor. Many have their own contracting departments.

Candle IT & T Recruitment contracting services manager, Christine Fitchew, says becoming a contractor is easy - you just quit your job, register for GST and look for work. But you have to decide whether you want the insecurity of the environment and uncertainty of income.

Fitchew advises people to set aside three months' income to see them through any "dry" times.

However, handle yourself properly and you should not have any, she says, particularly if you have the right skills.

The skills in demand at the moment are C/C++, Unix, Java and ASP.

Commercial experience is also needed, says Craig Parsons, IT contracts manager at recruitment firm Enterprise, as often contractors are expected to arrive on site and immediately add value to the project process, a point Fitchew echoes.

Parsons also suggests assembling your CV, outlining your skills and experience. However, keep it brief, perhaps three to four pages long. You should decide what you want to do, for how long (so employers know how long they are likely to have you and can therefore prepare), and what to charge. Agencies can help in preparing CVs as well as in job hunting.

Parsons says recommends you register with several agencies to spread your risk and improve your chances.

Both Parsons and Fitchew suggest making sure you are paid promptly, as agencies may delay payment.

But agencies can also help with time sheets and help ensure work is continued, paperwork is dealt with and the best rate is negotiated.

Contractor and writer Geoff Palmer, who has been in the IT industry 18 years, offers a more definitive guide - the 25,000-word IT Contractors Handbook, put out by Computerworld's publisher, IDG.

He advises contractors to form companies, register for GST, and decide which products and services to buy (an email address and mobile phone are essential, while business cards are just "nice to have").

Palmer also suggests being active in establishing contacts, dealing with agencies and negotiating rates. Contractors should convert a salary into an hourly rate by making allowances for holiday, sick pay and other expenses.

Palmer advises finding work for Christmas early, as no one hires at that time.

He warns of the "weekly contract con". People are offered, say, $50 an hour for a 40-hour week, and are told if they do it in 20 hours they can go home. But what if the work takes 80 hours? He advises sticking to an hourly rate.

The handbook also says contractors should be nice to permanent staff and not abuse time sheets. Palmer says people should train when between jobs and his guidebook details a raft of tax and financial matters.

While life as a contractor may be more flexible and offers wider opportunities, it is more complicated and challenging.

Parsons reports much turbulence in the industry with contractors losing their jobs to permanent employees in corporate New Zealand's seemingly endless restructuring.

"On the other hand, with the e-commerce wave well and truly cresting, hundreds of companies are recruiting contractors to help them to bring their systems and businesses to the technology forefront," he says.

"For the last three to six months we have been looking on average for 10 people at any one given point in time. As of today, we have 56 contracting roles to fill, which would demonstrate a sizeable increase in contracting. Our biggest challenge is sourcing candidates," Parsons says.

Looking for career tips? Contact Darren Greenwood at

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