10 Types of Employment Contracts
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Posting on Quora, a Talent Acquisition specialist (with over 27,000 answers) has found that 70% of people work. That means there are around 5 billion jobs performed on this earth. These statistics show a staggering number of job roles in our world.
We can imagine each position has unique requirements, protection for employees, and benefits offered by the employer. For this reason, we need a multitude of employment contracts in business. They exist to ensure employers are following legal standards and employees clearly understand what is required for a job.
To learn more about different types of work contracts and how to keep all parties involved aligned, follow us in the article below. We explore ten types of employment agreements we think you should know about.
Let’s get started!
What are Employment Contracts?
They are formal agreements between a company and its employees. A typical employment contract will include terms and conditions of the business relationship. So, you can expect to find the following information in this type of contract:
The purpose of creating an employment contract is to protect all parties involved in the agreement. It does this by presenting the expectations of the working relationship and the rights and duties of all parties so disputes can be avoided.
Different Types of Employment Contracts
Different types of employment contracts allow companies the flexibility to create agreements that suit the interests of the job and the employee. For example, permanent contracts are used for long-term employment, and temporary contracts for short-term projects with freelancers. Choosing the right employment contract will make managing documents and relationships much easier in an organization.
How do you manage contracts in your space? We would love to know since our powerful platform can streamline contract lifecycle management processes from start to finish with no code. For more information, contact us through one of our social media channels at the end of the article.
However, keep reading to learn more about the different types of contracts that jobs can use in the real world.
Full-Time Contract
First up, we want to explore full-time employment contracts. These agreements are used for employees who work 35-40 hours per week and are paid a salary. Permanent employees enjoy the benefits of:
A full-time employment contract provides job security to an individual, showing that the employer wants to work with the employee for a long time. Within the contract, the employee can find the following:
Part-Time Contract
A part-time contract is needed for an employee who works less than 35 hours a week. Within a part-time contract, an employee can find:
The best part about a part-time contract is that it is a flexible agreement. It can be used in many cases for various professionals, such as students who want to work only during holidays.
Zero-Hour Contract
This type of contract is attractive to companies and job seekers who don’t want to set standard working hours for their relationship. A zero-hour employment contract offers flexible solutions for employers and employees. For example, employees can choose when to work, and employers can provide work only if they have any in the pipeline.
Agreements that use zero-hour contracts do not offer many company benefits, and job security is low. However, they are useful for businesses with varying work deliverables, such as a landscaping business that is super popular in summer and not so much in winter.
Casual Contract
Casual employment contracts are flexible agreements used when a company needs to hire employees when necessary. In this case, a casual employee is not hired with standard working hours or a rigid schedule. The benefit of using casual contracts is that they allow a company to choose how many employees they want to hire at any given time while permitting employees to pick their preferred work shifts.
An employee on a casual contract will not receive the benefits their permanent colleagues might get. However, they could earn a higher hourly wage. Companies that see demands for their products or services at irregular times will choose to hire employees under casual contracts. For example, businesses in the retail industry, which get seasonal demands for products, would likely use casual contracts when hiring employees.
Union Contract
You might know of union contracts as collective bargaining agreements. Either way, a union contract is an agreement between a company and a labor union, which is a group that represents employees at an organization. Within a union contract, the following details will be found:
The reason why labor unions use these contracts is to protect the rights of employees at an organization. A labor union wants all employees to be treated fairly, so they represent the collective by communicating any issues and concerns with the employer.
Freelance Contract
A freelance employment contract is used for agreements between a company and self-employed professionals, also known as freelance workers. Freelancers typically work on short-term projects while managing their own time, so a freelance contract would contain the following information:
Freelance contracts provide the employer and employee with flexibility in terms of how and where they work, but they do not include company benefits or job security. This flexibility is what freelancers need since they tend to work with many clients and have numerous contracts to manage.
Executive Contract
An executive employment contract is used for agreements with high-level executives. These professionals are usually CEOs or senior managers in an organization. In an executive contract, you can find the following information:
The purpose of this type of contract is to provide structure to an agreement between an executive-level employee and employer while providing security for both parties.
Fixed-Term Contract
A fixed-term contract is needed when a company must hire an employee for a set amount of time. Another use case for a fixed-term contract is when a company needs to hire a professional to complete a project. For these reasons, a fixed-term contract clearly outlines the start and end dates of employment. Other information found in a fixed-term contract include:
We suggest using fixed-term contracts for non-permanent job positions. These contracts clearly explain how long the relationship will last and what is expected from both the employer and the employee.
Non-Compete Contracts
Also known as a non-compete clause, a non-compete employment contract is used to acknowledge that an employee does not work for any company competitors. A non-compete contract can also be used to arrange for an employee to not start a business that competes with the organization in which they were employed. The purpose of a non-compete contract is to protect the following for an organization:
Industries with special processes or important clients often require employees to sign non-compete contracts to avoid unfair competition.
At-Will Agreement
With an at-will employment contract, the company or the employee can end the business agreement at any time. Both parties can make this decision without giving the other a reason or a notice of termination. Although these are general rules, it’s best to consider the laws of your particular country regarding at-will agreements.
Despite the fact that an at-will employment contract is a super flexible arrangement, it does not offer job security to employees or work reliability for employers. With this type of contract in effect, there are no guarantees for the strength of the business relationship.
However, at-will agreements have a place in the United States market where parties can make quick changes to employment plans.
Sharing our Information about Employment Contracts
That’s a wrap on the different types of employment contracts from our point of view. As we learned, each contract is different and caters to the unique needs of an employment relationship. It’s also important to remember that industries and job roles have distinct legal requirements and labor laws, so choosing an employment contract that meets those needs is wise.
If you work with employment contracts on a daily basis, we suggest you check out Titan Docs.
Generate Employment Contracts with TITAN Docs
Titan Docs is a powerful app that gives contract owners point-and-click tools to build and generate documents from Salesforce. Its advanced technology allows businesses to speed up contract management tasks so teams can automate any document process and hire professional help faster than before, using absolutely no code.
With a 4.96 rating out of 5 stars on the Salesforce AppExchange marketplace, it’s no wonder businesses are grabbing Titan to quickly generate documents, seamlessly sign agreements, and build custom portals for employees or customers.
Titan Docs is also passionate about keeping your contract data secure and compliant with HIPAA, SOC 2, ISO, GDPR, and other leading frameworks. If you want to optimize your contract management tasks or any other Salesforce document process, contact us through one of our social media channels below. We have solutions for every business use case!
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Disclaimer: The comparisons listed in this article are based on information provided by the companies online and online reviews from users. If you found a mistake, please contact us.
