Once seen as a less stable option compared to permanent employment, contract positions are now becoming increasingly popular among professionals across a variety of job functions and industries. Some opt for this form of employment because it offers them more flexibility and control over their time; others may find that it gives them the chance to work on a variety of projects that interest them.

For companies, hiring contractors helps them manage overhead costs, and has the benefit of keeping their workforce agile.

Related: The benefits of hiring contract workers

If you are thinking of switching from permanent employment to contract work, it is important to work out your rates to ensure that you are compensated fairly. According to Marlinda Zulkifli, Head of Page Contracting Malaysia, contractors usually seek a 25-35% increment from their existing salary.

“The increment ask could even be higher if they are an existing permanent employee enjoying all the company benefits,” shares Marlinda.

Contract professionals are usually justified in asking for more money: This is to compensate for the fact that there is no guarantee that their contracts will be renewed after the agreed contracting period, as well as missing out on some of the employee benefits enjoyed by permanent employees, such as health insurance or an annual bonus.

Related: How to prove your value as a contractor

“We’ll usually get the contractors to share their current benefits with us, and these will be taken into account to propose a competitive pay package to the client,” says Marlinda.

So, how should you go about calculating your daily rate as a contract professional?

First, divide your current annual salary by 230 days, which is the average number of working days in a year.

Then, multiply this number from between 1.25 to 1.35 – this will give you your daily rate, taking into account the 25-35% increment.

If you are currently a contract professional – or a permanent employee who is thinking of making the switch to contract work – one of the benefits of working with a recruitment company like Michael Page (Page Contracting) for your next career move is that our consultants will do the hard work of ensuring fair remuneration, including considering the various types of leave (annual, medical, hospitalisation and others) that you are entitled to.

Working with a recruitment agency will also help ensure that the company that you will potentially work for fulfils its legal obligations under Malaysian law, including making the following statutory contributions: EPF, SOCSO, EIS and HRDF (a new levy paid to the Human Resources Development Fund to enable training and skills upgrading for the Malaysian workforce).

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Read more:
7 benefits of working as a contractor
Contracting vs permanent job: Which is better for you?
Starting a new contracting role? How to fit in at work fast