Properly hiring workers forms the core of a professional relationship between the employer and the employee. An employment contract is an agreement outlining the conditions of an individual’s working relationship. It includes salary, working hours, duties, benefits, and holidays that the employee is entitled to. In other words, an employment contract contains all the employment terms. There are full-time contracts, part-time contracts, casual contracts, and temporary employment contracts, among others.
Employment contracts can differ according to the work’s nature, length of time, and legal status. The type of contract offered to an employee also depends on the employee’s status and the needs of the organization.
In this article, we’ll take you through all the different types of employment contracts. Knowing them will help you better understand an employment agreement given to you in your job search journey.
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Different Types of Employment Contracts
Here are 8 types of employment contracts, each serving different purposes and employment arrangements:
1. Full-Time Contract
The most common type of contract outlines the number of hours an employee will work every week. Besides, a full-time contract also includes other details. These types of contracts are ideal for those wanting job stability.
The key components of a full-time contract include the following:
- Salary and compensation, including bonuses and other forms of compensation.
- Standard work hours
- Benefits, such as health insurance, retirement plans, etc.
- Company’s dress code policy
- Employee’s roles and responsibilities
- Provisions related to the protection of the company’s intellectual property and confidential information.
- Notice periods are required for employer and employee in the event of resignation or termination.
- Probationary period
- Framework for performance reviews
- Information regarding the process of addressing disputes or grievances.
2. Part-Time Contract
Part-time employees work less than the standard number of hours that a full-time employee does. They are entitled to the same rights as regular employees. It means the same pay rates, training, pension schemes, etc. Part-time employees usually have the option to work overtime if their contract has outlined minimum hours of work per week.
Part-time work offers more flexibility to those with family commitments or those who are studying. On average less than 30 hours of work per week is considered part-time.
3. Temporary Employment Contract
Temporary contracts are short-term employment periods (up to a year) with a specific end date. These are used for those willing to fill in for another worker(s) who may be sick or for another temporary worker (s). Those who accept temporary contracts are called temp or seasonal workers. Temporary workers can also be hired when an organization needs expertise beyond what its regular staff can provide.
It is critical for a temporary employment contract to include a specific start and end date of the employment. Here’s an overview of the major components of this contract:
- Employer-employee information
- Employment terms, which include the beginning and end date of employment.
- Compensation
- Termination clause
- Confidentiality
- Intellectual property
- Regulating law
4. Casual Contract
A casual contract is an employment contract that gives employees the freedom to do work as required. It does not have fixed working hours. Here, the employer is under no obligation to offer work, and the employee does not have to accept the offered work if they don’t want to. This type of contract can be fixed-term or indefinite.
Casual contracts can also take the form of zero-hours contracts when it doesn’t specify a minimum number of hours per week. Under a zero-hours contract, the employer does not need to offer the employee any assignment. However, the employee should accept any assignment offered unless they have a valid reason not to. If they don’t, they can face disciplinary action. These contracts do not include any information about pay rates or benefits.
A casual work contract includes the following components:
- Job role and expectations
- Work hours
- Salary, payment frequency, and compensation for instability of the employment
- Holiday and leave entitlement and pay
- Employment benefits
- Casual conversion clause regarding whether a casual employee can be a regular or part-time employee
- Confidentiality statement if the employee has access to sensitive information.
- Dispute resolution
- Contract termination
5. Fixed-term Contract
A fixed-term contract is for a specific period for workers whose skills aren’t needed throughout the year. Unlike temporary employment contracts, fixed-term contracts can be renewed after their expiry date. A fixed-term employee generally gets the same benefits as a full-time employee. However, the contract has an end date.
Here’s what a fixed-term employment contract includes:
- Job role and description
- Compensation and bonuses
- Benefits, such as sick leave, vacation, retirement plans, etc.
- Criteria for Reviewing Performance
- Notice period and termination-related information
- The end date of the contract
- An early termination clause (if applicable)
- A clear statement indicating whether the contract is an at-will agreement or not
- Procedure for contract renewal (if applicable)
6. Freelance Contract
Freelance contracts are given to those who are hired to complete a specific project. These contracts do not include benefits, as freelancing falls under self-employment. The contract simply states the expectations of the work to be completed and compensation-related information. Freelancers have the flexibility to complete work according to their schedule. They can also negotiate compensation terms. Here’s what a freelance contract includes:
- The scope of work, includes the start date, project’s scope, deadline and end date, and payment methods.
- Detailed payment terms
- End product ownership rights and copyrights
- Termination clause
- Competitive engagements regarding working with other clients who offer similar services
- Non-disclosure clause
- Clauses regarding changes and revisions
- Indemnity clause
- General clauses, which include protections, legal disclaimers, and other statements
- Party signatures
7. Internship Contract
An internship employment contract is a legal agreement between an intern and an employee. It provides clear information regarding the roles of both parties. The contract forms the basis of a fruitful partnership. A proper internship contract includes the following:
- Name of the host company offering the internship as well as the intern’s name
- Nature of work
- Whether or not the intern will be paid
- Working hours
- Internship length
- Non-disclosure agreement
- Policies and procedures regarding the dress code, termination, and attendance
- Contractual penalties
- Regulating law
8. Apprenticeship Employment Contract
An apprenticeship contract is handed out to an apprentice or someone who is learning a trade from a skilled employer. The primary purpose of the contract is to provide training, while the secondary purpose is to undertake work for the employer.
The apprentice is entitled to all statuary employment protections. The contract makes it difficult for the employer to dismiss an apprentice. They can only do so if there is some serious misconduct on the apprentice’s part. If the contract is broken, the apprentice is entitled to benefits and remuneration. This contract generally includes the details of the apprentice and the program, salary offered and criteria for increases, terms and conditions, working hours, length of time, and apprenticeship trade.
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Summing Up
Working professionals, as well as HRs, should have a proper understanding of these different types of employment contracts. They ensure compliance with governing laws as well as the protection of the organization and the employee. Handing out a clear contract ensures that both the employer and the employee are on the same page regarding the scope of the work. Thus, it paves the way for a sound professional employment relationship.
