When growing up, many Australians are told to study, get into tertiary education and get a job.
For most, this involves working for a company as a permanent employee.
In engineering, however, a number of alternative employment forms are on the rise. Some set up their own company, hire staff and run a conventional engineering firm. For others, contract employment is a growing area of opportunity.
Under contract employment, engineers are not permanent employees but instead hire themselves out to employers on an hourly rate for specific tasks or to fulfil a need for expertise in a given area.
Those working this way can either arrange their own insurance and find employers using their own networks or can use a recruitment agency. In the latter case, the engineer will typically be hired by the recruiter and assigned to roles which the agency has in its database. The agency handles payroll, insurance and other HR related matters.
This raises questions about the benefits and drawbacks of contract employment. For answers, Sourceable spoke with Mitchell Cook, senior recruitment consultant at GWG and Simon Bristow, senior regional director of Hays Engineering.
Both Cook and Bristo say that contract employment is growing. According to Cooke, contract staff account for around 25 per cent of all hiring in engineering whilst around half of all managers expect to grow the number of workers whom they engage on this basis. In the 2018 Hays Salary Guide, 24 per cent of engineering employers indicated that they use temporary or contract staff on a regular ongoing basis whilst 42 per cent employ them for special projects or workloads. In that survey, as many as 25 per cent of employers suggested that they intended to increase their hiring of contract staff over the next year, although this was lower than the 43 per cent who expected to grow permanent employee numbers.
Cooke and Bristo agree that contract work offers advantages.
Contractors, Cooke says, can work on varied projects and gain diverse experience. This delivers not only professional rewards but also greater options when conditions across various subsectors of the profession change. After the resource boom wound down, for example, many of those engineers who had skills relevant to road and rail projects were able to transition from mining into the stronger performing transport construction sector.
As well, Cooke says contractors enjoy more freedom to choose the type of employer for whom they wish to work and the sector in which they wish to operate.
Bristow agrees, adding that particularly where they are able to chalk up quantifiable outcomes, contract and temporary roles enable engineers to add immediate value to their CVs through displaying quantifiable achievements in their roles. Because contract and temporary hiring processes are less arduous compared with permanent roles, this type of employment enables candidates to secure and commence roles more quickly without multiple interview rounds. Contract and temporary work also enables candidates to more readily expand both their professional network and their breadth of experience. For some, contract or temporary assignments can lead to permanent roles.
Nevertheless, there are drawbacks.
Contract workers, Cooke says, are paid neither sick leave nor annual leave. Accordingly, they need to ensure that the hourly rate they accept is sufficient to compensate for this.
Bristow, meanwhile, cautions that temporary or contract work is not for everyone. Whilst some thrive on going from one assignment to another, others prefer the stability of a permanent role. Whilst most temporary and contract assignments have a finish date, these can be extended or cut short; contract workers must be able to handle this. Expectations of contract workers are often higher compared with those of permanent staff, a phenomenon some may find daunting. Contract and temporary workers must also adjust to frequent changes of employers and work environments.
Another issue is security. Among many, contract work is seen as less secure compared with permanent employment. Courtesy of difficulties and costs (redundancy pay) associated with laying off permanent employees, there is a perception that some employers look to contract staff as the first to go in tough times. Where they are retrenched, contract staff do not receive redundancy entitlements..
Whilst acknowledging the latter point, Cooke says perceptions about permanent employment and security are often overestimated. Where there ceases to be a need for their role, he says permanent staff can be laid off just as contractors can.
A final question surrounds decisions for engineers to seek work on their own or use a recruiter.
An advantage of the former approach involves the potential for higher earnings through the elimination of the ‘middle man’ in the recruitment agency.
Against this, Cooke says recruiters fulfil important functions in having insurance in place and having established payroll systems to set up workers quickly. As well, recruiters offer access to a more extensive network of employers. Whilst contracting on one’s own can work well for those able to generate sufficient work to absorb their insurance costs, he says such an approach can be problematic for those unable to do this.
For engineers, contract work is growing as an area of opportunity.
The decision about whether to pursue this warrants careful consideration of the benefits and drawbacks associated with this type of arrangement.