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Employment contracts are contracts under the law and specify the terms and conditions of the employment. They are usually designed for an organization to bring in someone to complete a specific, pre-determined task, and not provide for on-going services. There are differences between contract employees and regular employees, and many organizations have policies that govern contract employees.
A written contractor policy usually has guidelines to govern host facility relationships with outside contractors. The contract is designed to clarify everything involved in the job. Written contracts are important tools for outlining responsibilities and limiting liabilities. When a host employer takes on certain responsibilities for controlling the work of contract employees, the host employer can become liable for withholding payroll taxes, paying overtime, providing benefits, and complying with immigration laws.
Some elements of a contract may include the following:
Pros and cons. There are arguments both for and against having employment contracts, and it basically boils down to what works for a particular situation.
Some of the benefits of contracts include the following:
There are times when an organization would not benefit from the control an employment contract can offer and would do better without one.
Some of the cons of such contracts include the following:
Implied contracts. Sometimes company representatives may say things to a prospective or current employee that may lead that person to believe something that isn’t necessarily true; however, in saying them, the company may be bound to that statement.
For example, a recruiter tells candidates that the company has never experienced a layoff and does not expect to. Candidates may then believe that, if they join the company, they will never be laid off. If they are laid off, the employee can argue (and sue) that there was an implied contract that there would not be any layoffs. The organization would have broken the implied contract.
Organizations need to be careful not to make any promise that they cannot keep or don’t intend to keep. This includes promises about stock prices, pay increases, job security, the position, and other terms and conditions of employment.
Some companies will include statements in their employment applications that employment is at-will and can be terminated at any time for any non-discriminatory reason.