Banks get all Scrooge-like on their contractors
If you are an IT contractor working in banking, you are advised to book your skiing trip now – most institutions are now rolling out a mandatory ten days' holiday before Christmas to cut costs. This is not unprecedented by any means, but it still isn’t sitting well with those affected.
Barclays was among the first to roll it out this year, asking its contractors to take 10 days off before the end of the year in November because of “reduced resource requirement in Barclays over the next two months”, according to a memo sent to staff. However, Lloyds Banking Group is also requiring any “non-permanent resource” to take eight days off between December 16 and 27, aside from “certain colleagues will be fulfilling critical roles that may require their expertise”. HSBC and RBS are also asking contractors to take time off before Christmas, according to recruitment sources.
It’s common in the final months of the year for banks to implement a code freeze, meaning that there’s little essential work to be done during this time. However, contractors are only paid for their time working in the office – anything from £300-800 a day, depending on specialism – so banks are saving significant sums by enforcing hundreds of contractors to take mandatory unpaid leave.
“There are a couple of issues that contractors are raising, the first being that they haven’t been given any advance notice, so therefore haven't been given any time to plan anything for what is being presented as a ‘holiday’,” says one investment banking IT recruiter in the City. “It’s also another bone of contention for contractors, which have been battling lower rates and shorter contracts over the past 18 months.”
Then, of course, there’s the fact that banks are really only doing this to save money, rather than citing a requirement that contractors must take at least two weeks off from the organisation in question throughout the year, as they have in the past. The Barclays’ memo seems to accept that there could be some fall out from the move.
“Barclays has taken a decision due a reduced need for services and is not the only company to be taking this approach. Can you please discuss this with your vendor? We can only ask that you think this through and we hope you decide to stay with us. This will be on the same terms as you are currently engaged on, and the suspension will not break any period of service,” it wrote.
If this sounds bad, consider what happened during the height of the financial crisis in 2008. Many IT contractors were forced to take five weeks' holiday, which essentially amounted to a 10% rate cut under another name. Say the average contractor was earning £400 a day, or £2,000 a week – this works out as £104k a year. Taking five weeks out means around £94k annually (or a 10% pay cut).
Another issue, suggest recruiters, is that contractors have decidedly more options available to them going into the new year, so ruffling feathers could be a risky tactic. This may help explain the larger than usual number of contractors deemed "critical" to the business and kept on over Christmas.