IT contractors are cashing in during the credit crisis, and increased demand is pushing rates northwards.

A new study by SkillsMarket and the Association of Technology Staffing Companies (ATSCo) should help assuage any fears that contractors will be first in line for the chop if banks take the axe to IT departments.

Instead, it points to an 11% rise in rates for IT workers in financial services and a step up in the numbers employed, albeit away from the beleaguered credit space.

Ann Swann, chief executive of ATSCo, says: “Strong demand for IT skills in areas such as equities and commodities trading in investment banks is helping to pick up some of the slack on the credit side.”

Oliver Harris, head of temps at recruiters Robert Walters, says the contractor market is currently buoyant: “The start of the year in the permanent side has obviously been a lot slower. A lot of clients who don’t want to pay the hire costs are taking a much more flexible strategy, hence there’s a lot more temp hiring.”

Swann adds that there’s unlikely to be the vast headcount reduction in IT departments of the post-9/11 era due as there’s ‘far less fat to trim this time’.

Fewer rights for agency workers

Contractors’ apparent job security might be just as well following a potentially adverse ruling in the Court of Appeal last week.

The ruling rebuffed an agency worker’s claim for entitlement to rights of employment, and said that despite the fact she'd been employed at the same firm for a number of years, she was nevertheless employed on a temporary basis and was therefore unable to claim employee rights having been let go.

The ruling is expected to make it difficult for other agency staff to claim employment rights in future (including IT staff at banks) - meaning that, even if you've been working for the same bank for years and don't have a fixed term contract, you can be let go at the drop of a hat.

If you've got a contract, you'll still be afforded some protection, however. "Where a fixed term contract is terminated early, the worker may be entitled to compensation for the unexpired part of the fixed term period although this will depend on the terms of the contract," says Lydia Christie, employment lawyer at Finers Stephens Innocent.