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Contract Employment

Contract Employment

In order to strive in this competitive world, most companies' human capital needs additional support besides the existing employee base for functions related directly to the business. There are several functions in the company that are not directly related to the business such as the support functions. For instance, human resources, accounting, facilities management, security and IT are functions that are not directly related to the business, yet, they are very crucial to sustaining the smooth flow of the business.

Who are Contract employees and what is their role?

Contract employees are hired based on a contract of service or contract employment. They are hired for the support functions in order to aid the existing permanent employees in these departments.

Key distinctions between employees with contract employment and employees with permanent contract:

- Term of Service: A key distinction between employees who have a permanent contract and the employees under contract employment is the term of service. The term of service is permanent or very long term for the permanent employees and that of contract employees is restricted or limited. This elucidates the key term contract employment where the contract of service describes the time period of the service.

- Privileges: Employees under contract employment may have fewer privileges or benefits from the company as they are there for a certain period of the business tenure. Hence, in some cases, they may not get benefits such as pension; high leave benefits, more wages, etc. Pension, attractive leave benefits, progressive wages or salary structure etc are extended only to the employee under permanent contract.

- Rights within the company: Similarly, as the contract of service is limited within a period of time, the rights of the company are limited too. Certain companies may completely take the responsibility for the employees' welfare. However such employee welfare schemes are applicable to only those employees who have a permanent contract. Unless, implicitly mentioned within the contract employment, contract employees may not have the benefit of these rights.
- Nature of employment: Employees under contract employment are considered self employed and can change contracts with several companies on completion of the contract with one company. Yet, it is imperative that they complete the tenure mentioned in the contract as they may be liable to paying a penalty mentioned in the contract or even warrant a legal action.

- Nature of Union: Employees under contract employment, as they are self-employed, have the right to organize their own union. Moreover, there are separate labor laws devised to undertake the welfare of these unions and contract employees.

These employees under contract employment are thus subject to several conditions that are mentioned in the contract and that need to be abided by.

Employees under contract employment in public organizations such as the government, large banks, and mainly the public sector companies have several rights under the contract employment that attract people to engage themselves under contract employment. Some organisations like oil companies have extended the benefits and welfare programs given to employees under permanent contract to the employees under contract employment.

How is Contract Recruitment carried out?

In most cases, contract recruitment is carried out through the same process as their counterparts with permanent contract where advertisements regarding the vacancy are placed in newspapers, various websites and posters. Mostly, the employees under contract employment are hired directly by the company.

Contract recruitment is usually conducted by agencies or companies that hire employees under contract employment for other companies. This form of contract recruitment is carried out by companies that are in the business of providing contract employees to their client companies under contract employment.

Contract employment exists in the mainstream business too for certain projects that are short term and require experts to work within that period.