Negotiating contract rates ahead of 2025

Following the bombshell announcement of a 1.2% increase in Employer’s National Insurance from 13.8% to 15%, alongside a reduction in the secondary threshold from £9,100 to £5000, employers are set to bear significantly higher costs from April 2025. 

Although the government maintains that this will raise an additional £25 billion in tax revenue, it has understandably gone down like a lead balloon with businesses and industry groups. There is a prevailing fear that financial pressures are likely to be passed down the supply chain, and inevitably have a negative impact on contractors’ pay unless rate uplifts are negotiated in advance. 

For contractors, this means there is even more reason to focus on negotiating contract rates that reflect both market value and the rising costs associated with employment. 

At Liquid Friday, we’re committed to ensuring that contractors receive a wage that is not only competitive but fair, and takes into account the legally required employment costs. We are already supporting recruitment agencies in negotiating assignment rate increases from their end-clients in order that contractors continue to receive equitable remuneration as the Employers NI increase starts to bite. 

5 tips for negotiating your contract rate

Here are five ways to help you secure the best contract rate in light of these changes: 

1. Know your industry rates

Gaining insight into current rates within your specific industry puts you in a stronger position to negotiate. Rates vary depending on economic conditions, special skill sets and regional demand, with contracts in areas like Greater London typically commanding higher rates. Networking in industry forums or social media groups can be helpful for understanding the going rates for roles similar to yours.

2. Work out your worth

After getting a feel for industry rates, consider how your unique skills and experience compare. Specialised or niche skills are often worth more, and a clear understanding of your own market value can give you confidence when negotiating. Make sure your job title accurately reflects your role, as this can also influence rate offers.

3. Enhance your skills to increase value

Keeping your skills relevant to current demands can make a significant difference in your rate discussions. Courses or certifications can help you stand out from the other candidates and give you an edge when negotiating contract terms. This proactive approach to upskilling can make you an invaluable asset to clients.

4. Start with your agency

Your recruitment agency is often an excellent resource for understanding rate expectations. Your consultant is likely familiar with what others in similar roles are earning and can negotiate on your behalf. Be prepared with evidence to justify a higher rate, and let them know if you’re facing increased costs due to changing policies or industry conditions.

5. Be selective with contracts

While it’s tempting to accept every offer, particularly at the start of your contracting career, choosing contracts that truly match your worth can lead to better opportunities over time. Sometimes, accepting a lower-paying contract to establish a relationship with a valuable client is a strategic choice. However, it’s important to weigh up each opportunity carefully to ensure it aligns with your goals.

Hold your ground and secure a fair rate

Negotiating a contract rate can be challenging, especially in today’s pressured economy. Ask yourself: “What should my contract rate be?” and “What am I prepared to work for?” Remember to balance your worth with fair, competitive rates that don’t price you out of the market.

With the upcoming National Insurance changes, we encourage contractors and agencies to seek adjustments to assignment rates where possible to accommodate these additional costs. At Liquid Friday, we’re dedicated to supporting fair wages that consider all employment costs, and we will be advocating for and supporting contractors as they navigate these shifts in the market.