Contract will be extended indefinitely, how to ask for a raise

Question

I'm a software engineer about to complete a one-year contract. My manager said they are very interested in extending my contract until the end of the project. I asked them what kind of timeframe that might be, and it might be two years.

How can I tactfully ask for a raise, at least a small one? They said I have made very good progress and at this rate I will be in a fairly senior position in a couple of years' time. I'm a junior and still learning the ropes, but the problem is I don't want to be stuck at the current salary for two years. We are rapidly moving towards the next phase of the project, which will probably mean more responsibility for me.

They said they will talk to HR to prepare to sign a new agreement. Should I direct this question to HR as well? Is it appropriate to ask this via e-mail? Some of us work from the office and some remotely, and management are very busy at the moment.

Answer 1

An "extension" to your contract can and should be considered as though it were a whole new contract.

You've now got a(nother) year's experience, so you are literally more valuable than when you started; if they needed to replace you they'd have to bring that person up to speed, which would be a cost to them; and you are being asked to consider a long-term (though still not permanent) commitment to the company, rather than the short term contract you started on. This situation is very different to when you first agreed to the contract a year ago. It is therefore appropriate to treat it as an entirely fresh negotiation, in which you will need to decide:

• what your desired salary/rates or other benefits are (check what others with your level of experience are paid in your area),
• how long you are willing to commit to the project/company,
• whether you would be willing to accept a permanent position if they offer it (which may impact the salary you can command, but may offer more job security and other benefits),
• whether you would be willing to walk away if the contract negotiation does not give you what you want, and what you would do instead,
• whether local laws are putting your contractor status in question anyway - for example in the UK, a contractor working for the same company long enough may be at risk of being considered a "disguised employee" under IR35, which changes the way their employment status is considered and how they can be paid. Check your local laws.

To minimise time pressure, you should decide these things as soon as possible, and begin the negotiation as soon as possible. If left to HR, it will probably literally be an identical contract as you are on now (i.e. same salary) but with a different end date, and that may not be what you want - if you wait to find out, it may be too late to spend much time negotiating.

Broaching this subject with a face-to-face conversation would be ideal (to minimise the risk of looking like you are issuing an ultimatum when, by the sound of things, you'd rather have an amicable conversation), but email will suffice if that's not feasible, and at some point you're going to have to put your requests in writing anyway.

Have the conversation with your managers first and foremost. They are the ones who know your worth to the company, and they will bring in HR if they need to.

Answer 2

They said I have made very good progress and at this rate I will be in a fairly senior position in a couple of years' time.

I think it would be best to wait till you receive the new contract agreement document and see if the company management has taken your good progress into consideration and made a pay revision in the new contract.

If yes, and it aligns with your expectations, very well and good and you need not do anything. If no, you can then use the opportunity to approach your Manager and ask them that you'd like to negotiate a raise based on your past performance and new responsibilities in the upcoming work.

Should I direct this question to HR as well?

I think it would be best if you bring this with Manager first and not the HR as you have been reporting to them and they are better aware of your contributions.

Is it appropriate to ask this via e-mail? Some of us work from the office and some remotely, and management are very busy at the moment.

It would be appropriate to communicate the intent via email as it gives both the parties time to give a thoughtful reply.

Answer 3

in America if you are actually a "contractor" paid on a 1099 they are probably breaking the law and you can/will be "reclassified" — sometimes YEARS in the future— as an employee. I know this because you said you worked continuously for 12 months, which is the definition by the IRS that meets "the test" of an employee.

Employee vs contractors status IS NOT something your employer has the luxury of simply deciding, contrary to what they tell you.

So consider that if you are engaged in a multi-year engagement and they are your only employer and they direct your work, you DEFINATELY are being paid as a 1099 when you should be paid as W2 (according to the IRS-- as far as your own financial position, it may or may not be better to paid as a 1099 depending on what you can deduct on your taxes)

Having said all of that, you can't in America make "a contract" to employ someone -- as an employee OR as a contractor— for a specific date into the future. That's called indentured servitude and it was made illegal by the 14th amendment of the constitution.

Assuming you should be classified as an employee (sounds like it), as explained above, you always have a right to quit and in most states they always can fire you without a reason.

So, since you always have the right to quit and they always have the right to fire you, you & they ALSO always have the right to re-negotiate your compensation. For this reason, don't push it. ask for a raise when you've made a substantial impact and you need more money.

and know that you may NEVER get that raise from them— no matter how much you are getting better, your boss will ALWAYS think of you (in their head) as the level you were at when they met you. So you need to ALWAYS be prepared to seek out competitive offers (other jobs) and, if you want to stay at the current company, bring those offers (PRINTED ON PAPER— the real deal, not just "I have offers" verbally comes out of your mouth) to your boss and BE PREPARED TO SAY GOODBYE. Likely they will counter-offer which could be what you want.

Although it is possible, very few people in your position get raises any other way.

[There is one "contractor-employee hybrid" where you are paid as an employee by some kind of middleman, like a staffing agency, who deals with your paycheck & insurance, and then THEY bill you out as-if you are a contractor. Either way the laws still apply as you are employee]