At RecruitMyMom, our recruitment team are well-versed when it comes to employment contracts. Choosing the right contract type for you might be daunting. To help you better understand each contract we’ve compiled the three main types of contacts so that you can make an informed decision.
An employment contract is an agreement between an employer and an employee that outlines the rights and responsibilities of the parties. Employment contracts protect both parties and remove potential misunderstandings in the employment relationship.
Permanent contracts
A permanent employment contract is an indefinite agreement between an employee and employer. The terms of the employment contract remain in place until either party gives notice of termination. Termination is either due to an employee resigning or for various reasons from the employer’s side. A permanent employee may be entitled to company benefits such as medical aid, pension, provident and more.
Fixed-term employment contracts
A fixed-term contract is similar to a permanent contract except that it has a start date and end date or a stipulated measurable outcome.
An employer will stipulate if the employee is eligible for company benefits such as medical aid, pension etc. Employers can use this type of contract to reduce costs. The contract ceases once the date or outcome is achieved. However, the contract can be extended if both parties agree and are in accordance with legislation.
According to the Labour Relations Act, when an employee earns less than the income threshold, the contract is limited to three months. If there are justifiable reasons, the fixed-term contract may be extended.
Tip for job-seekers: To avoid disappointment, it’s important to read and understand the terms of an employment contract before accepting it. Contact someone who can help you understand certain clauses if you’re unsure.
Independent contractors
An independent contractor or freelancer is someone that provides their ‘trade’ independently. Many independent contractors are sole proprietors meaning they work for themselves. An independent contractor agreement is not an employment contract but rather an agreement to provide skills. As an independent contractor, you are free to carry out work for more than one client at a time and are responsible for your tax liabilities. Since you are not permanently employed, you do not receive company benefits. Contractors will issue hourly, monthly or per-project invoices to clients. If you are interested in becoming an independent contractor then read this article: Become an Independent Contractor at RecruitMyMom
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