Introduction
Companies and business organizations often need workers and employees to achieve business goals. In this way, they require an employment contract and need to define terms and conditions for employment.
To meet the hiring process of employees, different types of employment contracts are available, such as permanent employment contracts, fixed-term and casual employment contracts, etc. All these types of employment contracts mainly depend on the requirements of employees. It varies as per the requirements and status of the employee.
In this article, we discussed different types of employment contracts that will help understand which employment contract fit an organization. An employment contract not only completes the legal requirement but also outlines terms and conditions between the employees and the company, which helps maintain the relationship between them.
What is an employment contract?
An employment contract is a document that outlines the terms and conditions in the form of an agreement and is legally binding to the employee and employer. An employment contract defines the terms and conditions of the working relationship between both parties, such as the rights, responsibilities, duties, working hours, salary, benefits, compensation, etc.
An employee contract also offers the terms and conditions of termination. It helps to protect all rights of the party, will result in reduced misunderstandings, and makes healthy and wealthy relationships between them.
An employee contract is used while the organization or the company is involved in the hiring or renewal process of an employee. Typically it is made in written form which is signed by both parties.
Understanding of contracts of employment
The employee contract contains different ways and forms that depend on the work for the company. Multiple methods of employment contract complete the process of the contract of employment. In most cases, it is made in writing form, and parties make their sign on it. It can also be made through conversation or implied. The three types of common methods that are used in making an employee contract which is given below;
Written contract
It is the most common and popular method used for making employment contracts. The written contract sets all outlines of the terms and conditions in detail. Like salary, time and schedule of work, benefits of employee, rights, duties of the employer and employee, obligations of the contracting party, etc. A written employment contract meets legal requirements when both parties put their sign on it. It helps to reduce stress and build a healthy relationship between an employer and employee.
Verbal contract
As per the suggested name, such type of contract is not in writing form and comes in the non-written category. The verbal agreement is used while contracting parties extend it based on their understanding and employment relationship. In the verbal contract, the employer verbally proposes the offer to the employee about the terms and conditions of the work, aware of the benefits, salary, etc.
If the employee agrees to the offer given by the employer, it is treated as a legal employment agreement. This type of contract can be used in a small working unit of an organization or work that is completed in a short period. Because of a lack of written documents, such a contract may confuse contracting parties.
Implied contract
This type of contract can be used when the written or verbal contract does not exist. Implied contracts can be used as either non-written or non-verbal employment contracts. When the employer and employee do not agree upon the terms and conditions they discussed previously or do not make it in the written contract but still begin work together based on some capacity, we can say that they made an implied contract. In the implied contract, the employee believes the employer agreed to protect their rights and benefits from their previous behavior or guidelines.
Let’s understand with an example: suppose an employer does not inform the employee how long their job is in the organization, but in general, terms explain that all employees stay for work for one year; which means it is implied that the role of employees is as a same for one year. This contract also becomes challenging in a dispute between the contracting parties. However, implied contracts still exist as a contract of employment.
Types of employment contracts
The employment contract can be offered depending upon various factors, such as what types of work are required in the company. Some different types of contracts can be specified according to their requirement, which are given below;
(1) Casual contract
This type of contract is made with employees who work in the company temporarily. In the casual contract, the employer mentions the task or work he needs and offers to pay a certain amount. The employer does not set any minimum amount per shift or hours in the causal contract.
This type of contract provides more flexibility to the employer and employee because there is no need to set working hours or shift work for employees. This type of contract can be used if an employer needs any short-term employment and may not require renewal or extension after the compelled employment.
(2) Freelance contract
The freelance contract can be used when an employer needs some specific project. Through the freelance contract, an employer hires employees to complete that project, such as website development, content writing, office renovation projects, etc. Freelance contracts specify the work description, the time limits of work, payment terms, etc. This type of contract does not provide any employment benefits like compensation and insurance. It is considered as a self-employment.
(3) Fixed-term Contract
This type of contract specifies some particular task and outlines the time and sum for that. Fixed-term contracts are commonly used for temporary employment or contract workers who agree to do some specified job and receive a sum. The employees of fixed-term contracts get the same benefits provided to full-time and part-time employees during their employment period as per the mentioned agreement. In some cases, this type of contract may lead to a permanent after the completion or at the renewal time.
(4) Union contract
Union contracts are regulated legal agreements between those parties who connect with the local or national workers’ unions. The union contract provides employees for specified business sectors on behalf of the union or provides employees on a contract basis for business organizations. This contract defines job specifications, working hours, benefits of employees, and other benefits. These contracts support employees because joining the union can protect their legal rights and benefits.
(5) Executive contract
These types of contracts are used for certain high-profile executives at the management level of the organization. This type of contract is similar to a full-time contract. Here, this contract also contains the same terms, such as benefits, protection rights of employees, and additional special incentives that attract upper-level skills employees. In these executive contracts, more clauses are included, such as confidentiality clauses, while working in the same position for other companies.
(6) Full-time contract
As per the suggested name of the full-time contract, this type of contract is offered as permanent employment. The common working hour is set in this contract as 35 hours or more. This contract includes the basic details like benefits, salary, clauses about leaves, paid leave, vacation period, sick time, termination clause, etc.
Now, the employer includes more benefits for new employees, such as workplace perks and skills development in the full-time contract. Generally, full-time contracts are made in written form because many clauses need to be included. That’s the reason employers can easily explain and offer through this contract.
(7) Part-time contract
This type of contract is used for employees who work for a short time compared to full-time employees. This kind of contract is normally used for those employees whose working hours are defined as less than 35 hours per week. Sometimes, the company offers the same benefits and protection rights that are offered in full-time employment contracts.
This type of contract is used for employees who work for a short time compared to full-time employees. This kind of contract is normally used for those employees whose working hours are defined as less than 35 hours per week. Sometimes, the company offers the same benefits and protection rights in this contract the same as full-time employment contracts.
(8) Zero-hour contract
This type of contract can be used when an organization does not require regular employment. It can be used when the work is available. In this contract, an employer serves the offer when work is available, and the offer may be verbal or written.
When the employer offers, it can be accepted by the employee when they call for work. The zero-hour contract typically mentions the task of work, and the sum is payable to the employees, based on per hour, week, or month.
Zero-hour contracts are mostly used to hire employees temporarily, such as labor work per day, caregiver work, etc. This contract does not include the standard rate of payment, benefits of employees, or any protection rights.
(9) At-will agreement
At-will agreement is such kind of agreement that looks like an employment contract, but it does not provide any protections to the employees. This contract also mentions the same things that are specified in other types of contracts, such as salary, employee rights, benefits, etc.
However, the duration of employment and guaranteed rights are not specified. This type of contract allows employees to quit their jobs whenever they want to, and the employer has a right to end the job without any reason.
(10) Non-compete and confidentiality contract
This type of contract is made by the employers for the protection purposes of the company’s confidential details not to be disclosed to third parties by employees. In non-compete contracts, all types of common clauses are mentioned, and additionally attached, the document or verbal agreement is called a non-disclosure agreement (NDA). The main aim of this agreement is to prevent employees from revealing secret and confidential information and the company’s operations to third parties.
