Clause 4.2... A one-stop guide to the different types of employment contract.
The world of work is daunting enough without complicated legal jargon and the reams of paperwork that often goes with a job. So getting your head around the details of the contract is worth doing. Here we have a breakdown of the various sorts of contracts that you could be faced with on your employment travels.
The type of contract you've been offered should have an impact on your decision to take a role. It shouldn't be the defining factor, but you should make sure that the employment that you are about to embark on suits you and your lifestyle.
Full-time contracts are the most common form of contract. They are normally offered on permanent positions, and the contract should make it clear what you're going to get paid, how many hours you're expected to work, and what benefits will be included in your employment package. These can include holiday pay, pension, statutory sick pay, parental leave as well as more unusual benefits such as healthcare coverage, gym memberships, bonuses.
The number of hours you work on a full-time contract isn't necessarily concretely set but traditionally this would be somewhere around 35+ hours. In some contracts the employer will ask you to waive your right to overtime pay, especially in high intensity roles such as finance or consultancy. This is not unusual, but should be considered when signing. Normally roles that request this tend to be on the higher end of the pay spectrum.
Part-time contracts tend to be similar to full-time contracts except for the number of hours allocated. This means the role will traditionally be permanent, and will contain many of the contractual aspects of a full-time contract, including benefits etc.
There is a certain expectation that part-time employees have clarity on hours each week, but there is a degree of flexibility in the schedule they work. It is unlikely that a part-time employee will be asked to waive overtime rights, and it should be carefully considered if the contract states as such.
Part-time contracts are few and far between so often employees will negotiate a part-time contract after a period of full-time employment. As an employee, you should never be put off from enquiring about part-time work. You cannot be reprimanded for asking and often employers who see you as an asset to the company will attempt to be accommodating.
Fixed-term contracts last for a pre-agreed amount of time, or for the period of a specific project or task, with the contract ending on completion. These contracts offer all the same benefits of full-time and part-time employees, although some of the benefits will be specifically related to contract length, i.e. holiday entitlement.
As with other flexible working contracts such as temp contracts, fixed-term contracts can position a candidate well to negotiate both additional work and permanent, full-time employment.
Temporary contracts are similar to fixed-term contracts but there is greater flexibility on the term of the contract itself. As with fixed-term, the initial assumption is that the contract won't go permanent, but it does position the individual well to negotiate a permanent contract should the needs of the company change. In addition to traditional temporary contracts, there are temp-to-perm contracts that leave the possibility of a permanent contract open dependent on fit and performance.
Despite the fact that an end date may be included in the contract, this is often subject to change, and contracts may be extended, sometimes even on a rolling basis. A key aspect of contracts of this type is that the temporary worker is entitled to the same rights as a full-time employee but the flexibility allows the worker to accommodate study, acquisition of qualifications or to accrue experience in a specific sector.
Agency staff have their contracts agreed and managed by a recruitment consultancy or employment agency. Similar to a temporary contract, the worker usually works on a fixed or rolling basis, but unlike a standard temporary contract with an employer, the worker is paid by the agency and the employer is invoiced separately.
This type of contract also positions a worker well to negotiate a permanent contract with approximately 66% of temporary contracts being offered permanent contracts. As with the other flexible contracts, agency contracts allow freedom around work to study or pursue other interests, but unlike other contracts, the agency does a lot of the leg work involved.
After 12 weeks’ continuous employment in the same role, agency workers are then entitled to the same rights as permanent employees of the company.
Freelancers and contractors
When working on a freelance or contracted basis, contracts may vary from position to position. Roles of this nature tend to require the worker to be self-employed meaning they are responsible for their own tax and NI contributions, and will probably issue invoices that will need to be paid by the employer. This is often seen as a more tedious way to manage employment for the worker, but with a good accountant and some careful record keeping, it can prove both convenient and lucrative to an individual with the right mindset.
Contracts are often project based, or cover a specific period, and will end at a pre-agreed point. With good working relationships, this form of work can result in repeat business from the same company.
Freelance and contract workers may also not be entitled to the same rights as more permanent members of staff, although they do get to manage their own schedule, and negotiate their own terms.
Zero hour contracts
Zero hour contracts specify that an employee works only when required by their employer, and the employer has no obligation to provide a specific amount hours. Similarly, the employee is under no obligation to accept work offered by the employer. They are however entitled to the same annual leave as permanent employees, and they must receive the National Minimum Wage.
In addition to this, employees may seek work elsewhere as there is no exclusivity included in such contracts. It is not legal to prevent an individual on a zero hour contract from seeking other employment as well.
There has been a lot of negativity around zero hour contracts in the past few years as it does not provide the employee with either certainty or security, and therefore can leave them short changed. That being said, there are a number of people who look for these sorts of contracts because they like the autonomy they provide. It is, however, important to make sure you are happy to be on a contract of this type. If it doesn't suit, don't take it.
How to get it right?
When you get the offer of a contract from an employer, whatever sort it is, seek advice from a qualified party to make sure it's the right thing for you. There is nothing worse than feeling trapped in a contract without the chance to renegotiate because you were unsure when you signed it.
It is always better to take the time and make sure it's just right for you! And if an employer can't tolerate you getting it right? They're probably not the right employer for you any way!