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There are different types of employment agreements, all of which are have legal requirements. Not only this but contracts are very beneficial for both the employee and the employer. There are four main types of contracts that you can use to hire employees, these being permanent, freelance, self-employed and zero-hour contracts. Each of these contract types come with different benefits for your business, so it’s important to understand each of them properly. 

What is an employment contract? 

A contract of employment is a legally binding document between an employer and an employee that outlines conditions and legal requirements of your employment, this usually includes but isn’t limited to responsibilities, benefits you could be entitled to and your salary amongst others. If any information changes throughout employment, an updated contract must be issued siting these changes. 

Permanent 

This is probably the most common employment contract in the UK. The definition of a permanent contract is one that does not expire and will remain valid until either the employer or often the employee chooses to end the contract. If you’re looking for an employee who is working full time and on regular hours for your business, then this is the contract for you to use. 
 
Full time permanent employees usually work between 35 and 40 hours per week while part time permanent employees will usually work under 35 hours per week. Permanent contracts also cover those people who are salaried or who work for an hourly rate and also entitles the employee to the full range of benefits and employment rights as well as their working hours, terms of payment and their responsibilities. 
Advantages 
Disadvantages 
Dedicated team 
More administrative work 
Easier to plan out future 
Increased liability 
 
Potentially higher costs if you offer benefits 

Freelance 

If you’re looking to hire freelancers or people who you only need for a set period of time, then you’ll be looking to hire someone on a fixed term contract. Freelancers are ideal if you need temporary and want to avoid potential issues such as training, hiring and employee benefits. Freelance workers frequently work for more than one company at a time although individual contracts may specify sole employment for a time period agreed upon. 
Advantages 
Disadvantages 
Cost 
Lack of understanding your business 
Usually quick and easy to find 
Can not invest in freelancers eg. training 
Knowledgeable with experience 
Uncertain quality of work 

Self-employed 

Although freelancers are considered to be self-employed, they offer their services under contract for other people. In the UK, being self-employed is a person working for themselves and often running their own business as a sole trader or as part of a partnership or limited company. Employing self-employed people to work for your business is like hiring freelancers and comes with the same advantages and disadvantages. 

Zero hour contract 

Zero hour contracts is a non-legal term which is used to describe different types of casual agreements between an employer and an individual. These are also known as casual contracts and are usually for ‘on call’ work or ‘piece work’ meaning that they are usually on call when you need them, however you are not contracted to give them work nor do they have to accept the work when offered and asked of them. Zero-hour contract workers are entitled to statutory employment rights, including paid annual leave, rest breaks, protection from discrimination and must also be paid at least the national minimum wage regardless of how many hours they work. Zero hour workers are also able to work elsewhere and they are by law able to ignore clauses in their contracts if it bans them from either looking for work or accepting work from another employers. 
 
Appropriate use of zero hour contracts can include: 
 
Seasonal work 
New businesses 
Special events 
Advantages 
Disadvantages 
Easy access to workers when needed 
Zero Hour Workers aren’t always available 
No need to train new people 
Likely high turnover 
Lower costs than having permanent staff 
 
 
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