As a company, you might find yourself hiring and onboarding employees of varying capacities locally, regionally, or even internationally. These employment contract define different key aspects of employment, such as start and end date, employee benefits, and even termination clauses.
Understanding the differences between employment contracts can be a tedious task, but it is essential for organisations. These form the foundation for good contractual agreements which fosters a more tailored and efficient workforce. Here, we break down the four main employment contract types for your easy reference.
The most common way of hiring
This is a contract that has no fixed duration of hiring your employee for the role. It is continuous, and is usually seen as the most common way of hiring. Such an employment contract usually ends in four ways: employee resignation, lawful termination, employee retirement, or permanent business closure. Employees are entitled to benefits such as health plans, paid vacation, medical leave, and retirement packages when using this contract
For three to four years of employment
This is a finite contract that is also known as a limited-term employment contract. With this, employees start and end their period of employment with definitive dates. They also receive full employee benefits during their employment period. When the contract ends, an employer may choose to renew, extend, or end the working relationship. And after a number of renewals, you may consider reclassifying the employee as indefinite. Do take note that each country’s labour laws are different with regards to contract renewal. For example, some countries have a limit of three to four renewals before mandating a conversion to indefinite employment, while Singapore does not have an explicit clause stating the same.
For casual employees
This is a contract for casual employment. It is similar to indefinite employment where there is a definitive start date but no fixed end date. With this, employees are usually hired on a shift-based working schedule. Depending on local labour laws and company policies, part timers are eligible for certain pro-rated benefits
For project-based employment
This is a project-based contract. The employee is only hired for the specific project, so there is a definitive start and end date. They do not get employee benefits during the period of employment. After the project ends, the contract comes to an end. There is no renewal, but the employee may be hired to work on another project. When that happens, a new contract is drafted and put in motion.
Regardless of the employment contract you are choosing to go with onboarding and managing a workforce can be tough. There are many aspects of the business, as well as labour laws and regulations, to take note of.
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