What are the types of employment contracts?
The various types of employment contract can be summarised as
- permanent (full or part time)
- temporary
- fixed term
- zero hours
- minimum hours
- freelance worker
- agency worker
“Employment status” is a complex area and subject to change in interpretation. This is a broad guide:
Permanent contracts
You can also describe these as “indefinite”, since all such contracts eventually come to an end. You can pay permanent employees hourly, weekly or monthly. They are a very common type of employment contract and can be full or part time. The law prohibits less favourable treatment for part time employees. The terms and conditions of full timers and part timers need to be the same, except for any pro rata calculation for pay and holidays.
Elevated status for “part timers”
Temporary contracts
These differ in that they will be for a set period, until a task is complete, or some event brings it to a close. You need to specify, in writing, the duration of the contract, or the event that will bring it to a close,. Agency worker contracts are a distinct form, see below. Maternity cover is a form of temporary contract that will end when the mother returns to work. Temporary contracts will be subject to notice. Specify such notice in writing.
Fixed term contracts
Here each party is bound to the other for a fixed period. They are common in very senior posts where the employee may need to make unpopular decisions. The employee may to protect themselves against a premature dismissal. In relation to terms and conditions of employment, fixed term employees must have the same rights as permanent staff. Such employees also have additional rights in relation to the ending of the contract or conversion to a permanent contract.
Zero hours
This is an arrangement whereby one party (the employer) can be ask the other party (the individual) to work without having a set minimum number of contracted hours. A contract of employment exists between the two. The employee should be available for work when the employer requires it or at agreed times. They are popular with some parts of the workforce, for example those who want to supplement their income.
Is there nothing positive about zero hours?
Holiday entitlement for zero hours contracts
Minimum hours
These are akin to zero hours contracts, but the employer guarantees a minimum number of hours per week.
A minimum hours contract allows the employer to include an ‘exclusivity’ clause. This means the employer can stop the employee from working for other employers.
Freelance workers
All employees are workers but not all workers are employees! For employment purposes there is an important difference between a worker and an employee. There is no obligation on the employer to offer work and no obligation on a worker to accept work it. However, when the employer offers work, then the worker must carry it out in person. A worker does not have full employment rights (for example the right to maternity leave). Workers do have some employment rights, or example protection from discrimination.
Self-employed or worker – call them what you like, Mr Mullins!
Agency workers
These are usually, but not necessarily, employees of an agency. Agency workers have certain rights designed to protect them from employers treating them unfavourably in comparison to an organisation’s permanent employees.
Contractors
If an individual is “in business on their own account” they are not employees. For small employers, it is the responsibility of the contractor to be able to demonstrate that they are in business. If they are not in business, then you should treat them as workers or employees and put them on the payroll.
Taking on self employed workers
IR35 for employers – do you need to be concerned?