Read more: Permanent Employment Contract: What you need to know
This contract is generally used when a particular project of fixed duration needs to be fulfilled, or if there is some other good reason for limiting the term of employment. If you are an employer you should be aware that many of the employment rights remain the same as for a permanent contract: after two years of service, employees who have at least two years service will still qualify for an unfair dismissal claim whereby a fixed-term contract is not renewed; this is still regarded as a ‘dismissal’.
Read more: Fixed-term employment contracts: Best of both worlds?
This contract has been reported much in the news of late, and is one of the contract types that have seen a surge in usage as part of the new ‘gig economy’. Businesses (and occasionally workers) are increasingly seeking non-standard working arrangements. A zero-hours contract works on the premise that the employee is guaranteed nothing more than zero hours, and that the amount of available work will fluctuate on a periodic (usually weekly or monthly) basis. It is generally (although not exclusively) utilised in sectors that employ predominantly low-skilled staff, where the customer demand is seasonal or fluctuating, and whereshifts or rotas are more common. In recent years, it has been the centre of a lot of controversy, as by the nature of the contract, employees are not guaranteed any minimum amount of paid work, which can lead to financial difficulties for employees, particularly when they earn a low hourly rate.
Read more: Zero Hours Contracts – A Business Benefit Or A Risk?
As the name suggests, these contracts are usually awarded to company directors and they are commonly designed to cover a fixed duration. As directors are the most senior type of employees, such contract often includes enhancements and clauses that are less commonly found in standard employment contracts, such as lucrative bonus arrangements based on overall company performance, share options, enhanced pensions, private healthcare funding, and car allowances. They often include more extensive and subsequently more stringent post-termination restrictive covenants in order to protect the business, since generally an outgoing director can prove to be more of a threat to a business than a more junior member of staff.
Read more: Director Service Agreement
SummaryThe above represents an overview of the most common types of employment contracts. Of course, there are other non-employee contracts (such as consultancy agreements) which are equally important to many businesses. It is important when hiring staff to select and agree on the correct contract type with each employee, to ensure that appropriate security and commitment are in place for both parties, and so that everybody knows where they stand and that the agreed terms are suitable for employer and employee alike. If you need help with the selection of the right contract type for your business, please feel free to speak to our employment lawyers who will provide you with expert advice with regard to all employment contracts.
How can we help?Our expert lawyers can provide you with all the business legal advice. We can also review your legal contracts and give you guidance on legal document templates to use for any situation.
How much does it cost?At LawBite our expert lawyers can check whether your contract:
- Contains everything you need
- is clear and unambiguous
- contains clauses that are unfair or dangerous for your business
- conforms with current law and regulation
Journey furtherPermanent Employment Contracts: What you need to know Fixed-term employment contracts: Best of both worlds? Zero Hours Contracts – A Business Benefit Or A Risk? Directors Service Agreements
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