Temporary Job Contracts Explained
Temporary job contracts, as the name implies, are short-term employment agreements that are typically raised for specific employees who are only needed for a limited period of time. For example, they might be used to hire workers to cover an employee who is taking a leave of absence or to expand a company’s workforce to meet sudden but short-lived demand. These agreements are different from the more permanent arrangement offered by standard employment contracts, and these terms should be clearly laid out so that employees know exactly what their status is .
Companies may ask their employees to sign temporary job contracts so that both parties are correctly aware of the nature of the employment agreement. Employees are not eligible for the same benefits as full-time employees with these agreements in place — if healthcare benefits are receive, for example, they will go into effect much earlier (1-2 days) and the benefits will be different than what the company provides for its permanent employees. For this reason, it is important that a well-drafted temporary contract letter is issued to confirm the true intent of the parties.
Essentials Parts of a Temporary Job Contract
Before starting a temporary position, it is essential for you to formulate a temporary job contract. This is especially important for the employer and any freelancer you hire. While the length of time for these agreements may end up being very short, it is crucial that you have a contract that covers the essential components. The most important aspect of your temporary job contract is to include the duration of time that this agreement will last. How long do you have until your temporary employee officially steps down? Having a clear plan as to how long it should take is a good way to avoid any confusion or issues that might arise. Another key component is what the responsibilities for the existing employee are. What is your responsibility or job that needs to be done? Be as detailed as possible so the existing employee can hit the ground running. Pay rate is another essential item. What will you be paying your temporary employee? Again, be as detailed and thorough as possible. Specify whether you will pay them per hour, day by day, or by project completion. Specify date and method of payment, and double-check numbers. Last but not least is the termination clause. If for some reason things don’t go well, what is the procedure for letting this person go? Typically, there should be a one or two week notice so your temporary employee has time to finish whatever project is at hand.
Legal Aspects of Temporary Job Contracts
Temporary job contracts are governed by the general provisions of the Labor Code and by principles of freedom of contract. However, certain sector-specific provisions are applicable to temporary job contracts, especially when the employee provides services in events, fairs, or other exceptional or eventual activities.
In terms of the general principles that govern the regulation of temporary job contracts, the following provisions should be considered:
- Obligation to register each employment agreement with the Ministry of Labor and Social Security.
- A temporary job contract cannot last for more than one year.
- Temporary job contracts may be renewed one time only for the same period.
- Memo of employment: Employers are obliged to provide a memo of employment for employees within two months of their unemployment. The memo of employment should be provided in the language of the contract.
It is important for employees to consider that any subsequent employment agreements they make with their employer in order to conceal the original employment agreement will be deemed null and void.
If the term of the temporary employment agreement expires, the employment relationship will be ended, and the employer will need to provide notice as per the provisions of the Labor Code.
Pros and Cons of Temporary Employment Contracts
The use of temporary employment contracts is a widely levered strategy in the labor market that influences the way both employers and employees relate to one another. In Spain, the latest statistics suggest that temporary work contracts accounted for approximately 26% of all employment contracts, up 2% from the previous year. While many in the business world see the use of temporary contracts as a way to increase efficiency, both parties should be careful to weigh its potential positive aspects alongside its drawbacks.
Temporary employment contracts are typically favored by employers who need extra support during busy periods or because they cannot otherwise afford an employee. These contracts are often used as a cost-cutting or money saving strategy. They are not meant to be open-ended but instead regularly have a pre-determined time limit that is considered the ideal for tackling the issue that necessitated its use (oftentimes, businesses erroneously believe that no other employment contract is needed if the need for extra help is temporary). Even in the United States – known for its flexibility when it comes to employment contracts – temporary employment contracts are estimated to be covering about 14% of the working population.
Although the express terms of temporary employment contracts vary from employer to employer, they fundamentally share the same goal: to clearly explain the rights and duties of both the employee and employer for the duration of their relationship. Nevertheless, temporary employment contracts generally provide the employer with a wide room for discretion on whether to continue teaming up with the employee when their contract expires.
Accordingly, the most obvious advantage to temporary employment contracts is that they allow for greater flexibility in the employer-employee relationship. They allow the employer to determine whether he or she wants to continue expanding the workforce and, if so, whether the current employee is suitable for the job at hand. If the temporary placement goes well, a company may even extend a permanent job offer to the employee, thus saving time and money that may have otherwise been spent on finding a new candidate to fill the newly vacant position. While businesses might believe they can search and interview job candidates at the end of the temporary employment contract, in some industries (like the restaurant industry) it is more efficient to maintain the current employee. This may be especially so if the nature of the work necessitates a long ramp-up process.
At the same time, however, temporary employment contracts come with potential drawbacks for both businesses (which could include the hiring employer or temporary employment agency) and employees alike. For instance, temporary workers typically are less likely than long-term employees to be trained by their employers. Thus, when the need for temporary work arises, the employer might be inclined to hire less skilled workers. Since employees also tend to have fewer job protections, they might be less likely to report bad working conditions because they need the job. A company might also be wary of promoting temporary employees and therefore hires only for a very short term, which might prompt an employee to leave and find a new job altogether. When the company invests time and resources into training its temporary employees without any guarantee of that investment being repaid, the most skilled temp might leave, particularly if he or she is not offered a permanent position at the end of the contract period.
For the employee, there is a high likelihood of underemployment if employment contracts are not carefully scrutinized. Employers do not usually provide their temporary workers with the same benefits as their permanent employees and although temporary employees have the possibility of being hired permanently, there is no guarantee. There is little incentive for businesses to convert troublesome temp workers into permanent employees. Also, when temporary workers are not guaranteed a minimum number of hours, they might be considered part-time employees and therefore lack access to a number of workplace benefits that employees otherwise receive.
Sample Temporary Job Contract Summary
Crafted in accordance with the labor laws outlined in the AL 2003.02 dated June 18, 2003, a temporary employment contract aims to define the relationship and the unique conditions of a non-permanent employment arrangement. The general template is relatively straightforward and consists of the following components:
1. Title
An introductory statement specifying the inclusion of the contract with accompanying details and parties.
2. Academic basis
A clause that indicates the national legislation upon which the contract is based – in this case, the AL.
3. Location of execution
The city in which the contract is executed as well as a signature space.
4. Identification of the signatories
Identification of the signed parties and their respective particulars as outlined in the second section of the document.
5. Employment Formalities
Agreement on the formalities that should take place before work begins, such as a medical examination or insurance provision system.
6. Conditions of Employment
A list of general conditions of employment that includes working hours or days , rest periods, and breaks.
7. Contract Validity
Indicates the parties have mutually agreed upon the duration of the employment as well as the terms surrounding the termination of that employment and the reasons for it.
8. Salary
Information about the compensation structure and salary scales.
9. Contract Vows
Outlines other employment conditions that, while not pertinent to the contract itself, help to more fully define the nature of the employment.
10. Terms of Employment
Includes holiday and time off clauses and stipulations. It is mandated for the employer to provide a record of the employee’s paid time off. A generic template for this document is provided separately (see next section).
11. Severance
Terms and conditions for severance pay.
While the precise factors differ, certain elements recur in most contracts. These include:
Pay attention to the following points when crafting a temporary contract:
The additional caveat of never putting financial pressure on employees to give up their rights to severance pay is also noted in AL 17.04.05 dated December 18th, 2012.
Modifying a Sample Temporary Job Contract
The comprehensive temporary job contract sample discussed in the previous section can serve as a blueprint for crafting a contract that not only covers essential legal obligations, employer policies, and industry standards but also accommodates special circumstances.
Contract Elements While the foundational elements in most temporary job contracts are universally applicable, the duties and responsibilities to be performed can be tailored for specific jobs within each industry. Additional clauses can also be included to address particular needs, such as: · If the employment will occur only in certain states, only the state-related paragraphs should be included · In the event of an off-site assignment, there should be a separate provision relating to off-site assignments · In cases where relocation is involved, an additional section about relocation or relocation assistance should be incorporated into the contract · If a bonus or other incentive compensation is awarded in lieu of a salary or hourly wage, that portion should replace the salary or hourly wage provisions · If the labor pool contains a large number of part-time workers, the contract should include that the work schedule is subject to modification · If advance notice is required for termination, that requirement should be indicated · If the contract stipulates that a temporary worker cannot work beyond a certain number of hours per week, that limitation should be stated · If the contract applies to a shift worker, the shift schedule should be described · If there are different types of temporary workers that will be employed in similar positions, the contract should designate a different name for each, while still maintaining the boilerplate provisions · In addition to compensation, if other benefits are offered, that portion should be added to the contract · If the contract will be terminated under any circumstance, even if not mentioned in the contract, such as variable weather, the contract should indicate that · If the employer must obtain their own certificate of insurance, the contract should include that requirement · If the employer is required to obtain a license to engage in or perform any acts under the contract before it can be executed, the contract should indicate that
Against all of these customizations, the remaining terms in the temporary job contract sample should remain unaffected.
Mistakes to Avoid When Using a Temporary Job Contract
When drafting or reviewing a temporary job contract, whether for yourself or your company, it is important to avoid certain pitfalls. Failing to do so may expose you or your organization to liability under the Labor Code.
One common mistake made by employers is assuming that the contract must be signed after the commencement of the work and can be back-dated to cover prior work. As we have noted in previous posts, the law is that the contract must be signed prior to the employee commencing work. Cal. Lab. Code § 2810. If the work has already been done, the parties cannot enter into a valid contract to cover the prior employment. This is true even if the parties later sign the contract and create the appearance of a pre-existing agreement. See Calderon v. Thompson (1998) 67 Cal.App.4th 77, 84 ["any subsequent ‘agreement’ or ‘acknowledgment’ executed to cover prior work or for new work to be performed in the future is a sham and has no legal effect with regard to recovery . . ."].
Employers also frequently fail to include all the mandatory statutory provisions that are required under Labor Code section 2810. In the sample contract set forth above , employers must include the following terms:
• The rate of pay
• The working hours
• Any meal and rest periods
• Benefits provided
• Employer’s contribution
• Deductions are being made per state and federal law
• Whether the contract will be governed by California law
Another mistake is failing to make clear what type of agreement is being entered into. The California Supreme Court has recently held that a temporary employment agency was an employer of the worker, regardless of their agreement to the contrary. See Garcia v. Severtson (2016) 2 Cal. 5th 702 (overruling the now disapproved cases of Martinez v. Combs (2010) 49 Cal.4th 35 and Estrada v. Fedex Ground, Inc. (2007) 154 Cal.App.4th 1). Therefore, it is important for a temporary job contract to specify clearly whether the individual will be or is an employee or an independent contractor.
Finally, the contract should avoid any language that could be construed as replacing the temporary employee’s job with another position. For example, a temporary employee of a staffing agency cannot sign a temporary job contract with a client’s designated employee replacement without hiring that person as a full-time employee. This practice would render the temporary job contract invalid and could expose the company and the staffing agency to liability.