Its better to know the Advantages And Disadvantages Of Employment Contract as more jobs are being offered on a contract basis in Canada.
However, this means that the position you are hired for states upfront that it will last for a specific amount of time, let’s say three months, six months or a year and so on
There are many good reasons to seek out contract employment as part of your search for work.
Yet most job seekers only focus on postings that are “permanent” (that is, where you are brought on as a regular employee, and your income taxes and pension plan contributions are deducted by your employer directly from your paycheck).
This means that they are missing out on the numerous opportunities presented by contract positions.
What Is Contract Employment?
Contract employment means hiring a person for a particular job under specific conditions for a given period of time.
A contract employee is not a permanent employee and does not for the benefits and privileges that permanent employees enjoy in an organization.
The services to be provided by a contract employee is contained in the employment contract signed by both employer and employee.
All requirements, confidentiality clauses, payment terms, how intellectual property will be treated, employment terms and termination clauses are contained in the employment contract.
There is always an accompanying statement of work that clearly describes what is to be done, how, when and to what quality standards.
Advantages Of Contract Employment
Accepting a job that is designed to last for a fixed amount of time has its benefits.
For one thing, employers considers and values maturity and extensive experience when recruiting for these positions, since they want to bring onboard someone who can jump right in and do the job with a minimum of excitement or extra training. So being a little older or over-qualified may actually work in your favor.
Here are some other positives to consider:
- You get a chance to impress the employer and this can lead to an offer to be brought on board full-time as a regular employee
- Since you are being paid as a “contractor” instead of as a regular staffer, you may be eligible to deduct a portion of your work-related expenses that you wouldn’t normally qualify for
- You have an opportunity to sample a number of employers by taking on a series of different contracts in a variety of industries
- What matters most in a contract position is the results that you produce for the employer. Thus you may find yourself not needing to get as involved in workplace politics
What To Watch Out For In Contract Work
While there are many upsides to contract work, it is not ideal for everyone. In particular, if you do not like the idea of having to re-market yourself to a possible new employer toward the end of every contract job, then you should probably have a rethink before accepting a fixed-term position.
Other potential negatives to consider:
- Since other employees will know that you are only there for a specific amount of time, they may not invite you in to their “inner circle” or share as much information with you
- You will be paid as a contractor, which means the employer will not deduct for taxes. Therefore, you must ensure to remit your taxes to the government on your own
- You may not be offered such ordinary entitlements as vacation pay, benefits, training allowances, and pension contributions made by the employer
- You will not receive any severance pay at the end of your contract (unless you have negotiated a provision for this in your terms of employment)
Disadvantages of Contract Employment
Despite the numerous advantages of contract employment, it also has its own share of disadvantages.
Many may think that because of the ease that comes with contract employment that it will be free of disadvantages but that is far from the truth. Below is a list of disadvantages that come with contract employment
There is always a plenty of job opportunities available for contract employment but the security of such jobs is not guaranteed and employees prefer to work for organizations who guarantee them job security for their current job.
Most employees do not enjoy working under some conditions which do not give them job security but the stress of looking out for another work when still under contract with another employer stops them from looking for another job.
Hence, you work under stress which may lead to inefficiency and thus, a bad job.
Another disadvantage of those under contract employment is the stress of fulfilling their legal obligation of tax information, calculation and payment.
Those under full-time employment do not bother about this since it is taken care of by the employer, who either deducts the tax before paying or give you the information.
As a contract employees, you will have to go through all these to avoid tax evasion which is a crime punishable by law.
Getting the accurate account of your tax is not an easy task and may become more tedious than the jobs you do.
Jobs may be available for contract employment but before you can compete for such jobs, you must create a good and trusted brand.
The second option is for you to work for less amount than the big brands in order to create your own brand which can take a lot of time.
Therefore, you must be ready to work for less amount of money for a long time to create a good and trusted brand in your market before you can become available for all the job opportunities and be able to be paid well for your job.
This can lead to frustration and may lead to lack of interest in the job.
Another thing you must consider in contract employment is time management, so, if you are not good in time management, then contract employment may not be the best option for you.
When you combine two jobs at a time, time management becomes an issue, you will begin to give preference to one and give less attention to the other one which can also lead to inefficiency in your job.
Hence, you must be conscious of your time if you prefer to work under contract employment do as not to do a poor job and ruin your reputation.
Contract Employment Template
An employee contract template is used to formalize employment agreement with a new employee.
It contains the following details details like hours of work, the rate of pay, the employee’s responsibilities, etc. Both parties keep the template for reference purpose in case of disagreement.
Depending on your personality and desire for stability, contract employment may or may not be a suitable option for you.
On the other hand, a fixed-term job gives you a foot in the door and provides a short-term solution for those who are currently unemployed.
It gives you the opportunity to get to know the employer which could possibly turn into something more “permanent” if it turns out there’s a mutual fit.
Further more, the need to job search again and again is built right into this type of job position.
Also you may be viewed as a temporary outsider by your co-workers, or you may not be entitled to the kinds of benefits that a regular employee typically receives.
Therefore you should think it through before leaping into a contract job. But if you do make up your mind to go for it, you may just discover that it’s a great way to earn a living.
Frequently Asked Questions About Employment Contract
Q. What is employment contract?
Ans. An employment contract also known as contract of employment is a written agreement or documents signed by both employer and employee which specifies the employment conditions rights responsibilities and duties of an employee. These are known as ‘terms’ of the contract.
Both employees and employers must stick to a contract until it ends or until the terms are changed (usual by agreement between the employee and employer).
Q. How does contract employment work?
Ans. A contract employment is not a permanent job and employees do not enjoy the benefits given to permanent employees.
A contract employment can last from 3 months up to 12 months depending on the agreement reached in the employment contract.
Also, a contract employment can be terminated either by the employer or employee if the terms of the contract are not met by any of the parties involved.