You are on page 1of 2

SECTION 10 – CONTRACTOR RATES

GRAPH 10.1 - COMPONENTS OF HOURLY RATE
A trend in the employment of professional engineers is
FOR CONTRACT WORK
the increasing number opting to practice as contract Superannuation
engineers. Employers of professional engineers are making Professional Development
greater use of such arrangements as a means of meeting Sick Leave
peak workloads or to engage contract professionals for Annual Leave
specific projects or tasks.
Miscellaneous Leave
The Australian Bureau of Statistics estimates that up to 20 per
cent of the workforce is now engaged in non-standard work
arrangements with professionals operating as independent Public Holidays

contractors or consultants among the fastest growing group. Long Service Leave
Base Salary Salary Continuance
Ultimately, the hourly rate charged depends on the market Professional Indemnity
Termination/Redundancy
for the service provided and there is no substitute for
specific knowledge of the particular industry and the value
Any travel costs and workers compensation would be on
of the service being offered to a client, but these rates can
top of these rates, and it may be necessary to factor in an
be used as a benchmark to ensure that contractors don’t additional charge to cover legal and accounting fees. Care
undercharge for their services. should also be taken to allow for rising professional
These hourly rates should be read in conjunction with indemnity insurance premiums. ASIC fees may also need
Professionals Australia’s Standard Terms of Engagement and to be covered depending on the particular business entity
Professionals Australia’s Guide to Writing Contracts for or structure the consultant or contractor has in place.
Independent Contractors and Consultants. Both documents
take account of important issues arising from changes to If the contract engineer is engaged on a short-term basis,
Personal Services Income rules effective July 2000. The a further factor should be included to allow for the time
changes will potentially impact on contractors and and overheads involved in seeking contracts. A factor of
consultants engaged on an hourly basis. These documents 20% would not be unreasonable for this purpose. The
are available to members from Professionals Australia’s hourly rate should then be based on 1000 hours.
website at www.professionalsaustralia.org.au.
Using the formula described here, a contract engineer
The hourly rate for contract engineers takes into account seeking a salary equivalent of say $100,000 per annum
the conditions of employment which apply to employee would calculate the hourly fee as follows:
professional engineers, as contract professional employees
must meet this cost themselves. Short-term contract $100,000/1000 hours = $100.00 p/h
Professional engineer employees have access to the Long-term contract $100,000/1210 hours = $82.65 p/h
Australian Industrial Relations Commission and receive
annual leave, sick leave, paid public holidays, long service Market Rates
leave, superannuation, jury leave, compassionate leave, The survey found little change in prevailing market rates
family leave, professional development and retrenchment/ with a median hourly rate of pay for short-term contractors
redundancy provisions. of $125 compared to $115 for long-term contractors. These
rates do not include GST.
The contract engineer may be engaged on an hourly basis
and generally does not have access to these provisions.
SHORT TERM ($ p/h) LONG TERM ($ p/h)
The contract engineer must take such provisions into
account when determining the hourly fee to be charged. Level 1 50-70 50-60
Based on a 38 hour week, the hourly fee is calculated Level 2 75-100 75-95
using a 1980 hour year (i.e. 38 hours by 52.1 weeks) and Level 3 90-125 90-120
deducting from the year the following factors: Level 4 120-150 105-125
Level 5 150-200 125 -175
Public Holidays 12 days 92 hours
Annual Leave 20 days 152 hours
Long Service Leave 4.3 days 33 hours Contract Agency Rates
Sick Leave 10 days 76 hours
If the contract engineer is engaged through a contract
Salary Continuance 3% 60 hours
Superannuation 10% 198 hours agency, some components such as workers compensation/
Prof. Indemnity (inc public liability) 3% 60 hours disability insurance and superannuation contributions
Misc. leave (family, jury, etc) 3 days 23 hours would normally be paid for by the agency. These
Professional Development 5 days 38 hours components would then be removed from calculations.
Termination/Redundancy 5 days 38 hours The result would be to increase the number of hours upon
TOTAL 770 hours which an hourly calculation is based. A typical calculation
made by a contract agency might see the annualised hours
rise to around 1600, so that the hourly rate for an equivalent
Thus the hourly rate should be calculated on the basis of $100,000 employee salary would be $100,000/1600 hours
about 1210 hours (1980 - 770). = $62.50 per hour.

118 June 2015 Professional Engineer Remuneration Survey Report © Professionals Australia

in both instances Following development through Level 1 he/she is an experienced engaged in complex engineering applications. • initiates or participates in short-range or long-range planning In assisting more senior professional engineers by carrying out tasks and makes independent decisions on engineering policies and requiring accuracy and adherence to prescribed methods of procedures within an overall program. but with guidance on unusual features and who is usually engaged on more responsible engineering assignments requiring substantial professional experience. and may plan. general effectiveness. and knowledge of more than one field of. to develop increasing professional judgement and apply it progressively to more difficult tasks at Level 2. with overall objectives. recommends and advises in The professional engineer receives administrative direction based speciality engineering areas. defined procedures for guidance. decides courses of action necessary to adequacy. soundness of approach. technical accuracy and adequacy. and co-ordinates to attain program objectives: and/or as administrator. or as an of mature professional engineering knowledge. selects. products. development and experience using a variety of standard development and provision of specialised engineering systems. Work is reviewed to ensure Work is carried out within broad guidelines requiring conformity conformity with policy and co-ordination with other functions. engineering methods and procedures enable the professional engineer facilities and functions. devising ways of reaching apply new professional engineering approaches and techniques to program objectives in the most economical manner and of meeting the design or development of equipment or special aspects of any unusual conditions affecting work progress. and and experience. co-ordinate and supervise the work of other professional and technical staff. the professional engineer engineering. such as minor phases of broader engineering work involving considerable independence in assignments. demanding a considerable degree of originality. engineering analysis. the undergraduate course. Informed professional engineering The professional engineer reviews and evaluates technical work. assignments. relative priorities and necessary co- operation with other units. engineer (as defined) who plans and conducts professional engineering work without detailed supervision. plant. including the establishment of professional engineering policy and financial controls. The including the establishment of policies and expenditures of large sums of professional engineer makes responsible decisions on matters money and/or implementation of major programs. methods and procedures. work receives less review. or expertise (for example. consults. • co-ordinates work programs. on organisation policies and objectives. Classification Level definition ingenuity and judgement. APPENDIX A – SURVEY QUESTIONNAIRE RESPONSIBILITY LEVEL DEFINITIONS LEVEL 1 Professional Engineer LEVEL 4 Professional Engineer The graduate engineer (as defined) commencement level. Classification Level definition The engineer undertakes initial professional engineering tasks of A professional engineer required to perform professional limited scope and complexity. • may take detailed technical responsibility for product Training. in office. With scope for engineering consultant. The professional engineer outlines and assigns work. and Decisions are related to tasks performed. the engineer draws • gives technical advice to management and operating upon advanced techniques and methods learned during and after departments. are usually regarded as technically accurate and feasible. accomplishment and staff assigned to work on a common project. schedules. acts as his/her organisation’s Under supervision from higher-level professional engineers as to technical reference authority) in a particular field of professional method of approach and requirements. rating. subject only to overall assigned. field or laboratory work. LEVEL 5 Professional Engineer Classification Level Definition LEVEL 3 Professional Engineer A professional engineer usually responsible for an engineering Classification Level definition administrative function. Recommendations may be reviewed for soundness of judgement but The professional engineer makes responsible decisions on all matters. and the professional may make recommendations involving large sums or long-range engineer progressively exercises more individual judgement until the objectives. With professional development expedite the successful accomplishment of assigned projects. level of competence at Level 2 is achieved. directing several professional and other A professional engineer performing duties requiring the application groups engaged in inter-related engineering responsibilities. design or computation. discipline and remuneration of staff. LEVEL 2 Professional Engineer The professional engineer supervises a group or groups including professional engineers and other staff. direct. techniques and methods. approach. Recommendations are related to solution of problems in connection to the tasks performed. relying upon precedent or • directs or advises on use of equipment and material. guidance may be available. The professional engineer makes responsible decisions not usually Work is reviewed by higher-level professional engineers for validity. subject to technical review. standards and procedures. Duties are assigned only in terms of broad objectives and are The professional engineer may assign and check work of technical reviewed for policy. the professional deals with problems for which it is necessary to modify established guides and devise new approaches. performs normal professional engineering work and exercises individual judgement and initiative in the application of engineering The professional engineer: principles. Achieving recognition as an authority in an individual accomplishment and co-ordination of more difficult engineering field of major importance to the organisation. The professional engineer independently conceives programs and problems to be investigated and participates in discussions The professional engineer may make some original contribution or determining basic operating policies. makes decisions concerning selection. 126 June 2015 Professional Engineer Remuneration Survey Report © Professionals Australia . facilities and buildings. reviews it for training. or exercises authority and Classification Level definition technical control over a group of professional staff.