Definition
Contract of employment: a legal agreement between an employer and an employee setting out the hours, pay and conditions of the job.
- The contract states the job title and duties, the hours, the rate of pay, holiday entitlement and how much notice each side must give, so both know where they stand if there is a dispute.
- The type of contract offered decides how many hours are guaranteed, which is what separates full-time, part-time, job share and zero-hours arrangements.
- A business uses a mix of contracts so that the number of staff on site matches the number of customers, because paying employees to stand idle wastes money.
Note
An employer must give a written statement of the main terms, including pay, hours and holiday, on or before the employee's first day of work.
Full-time contracts
- What it is: the employee works the business's standard week, usually around 35 to 40 hours, and the same hours are worked every week.
- Benefits to the business: the same person is there all week, so they learn the business thoroughly, customers deal with a familiar face, and training is worth paying for because it is spread over more hours worked.
- Benefits to the employee: pay is predictable, which makes it possible to budget or take on a mortgage, and full-timers usually get first claim on training and promotion.
- Drawbacks: the wage has to be paid even in a quiet week, so it is a cost the business cannot switch off, and the employee has less time left for study or family.
Example
A Warburtons bakery keeps its production staff on full-time contracts, because the ovens run to the same schedule every week and the business wants the same trained people operating them.
Part-time contracts
Definition
Part-time contract: an agreement to work a set number of hours that is fewer than the business's standard full working week.
- The hours are agreed in advance, so a part-timer working Thursday and Friday knows those shifts are theirs every week.
- Benefits to the business: staffing can be pointed at the busy hours rather than spread evenly, opening hours can be extended without paying anyone overtime, and more people apply, including parents and students who cannot work full time.
- Benefits to the employee: work fits around childcare, college or another job, and part-timers still get holiday and other rights in proportion to the hours they work.
- Drawbacks: the employee earns less and can be passed over for promotion, while the business has more people to train and manage for the same total hours and has to hand work over between shifts.
Example
Tesco covers its Saturday peak with part-time staff, so it is not paying for extra checkout hours on a quiet Tuesday morning, and students earn without missing college.
Job share
Definition
Job share: an arrangement where two employees split the hours, duties and pay of one full-time post between them.
- One sharer might work Monday to Wednesday and the other Thursday and Friday, so the post is filled all week even though neither person works full time.
- The business gets two sets of skills for one job, keeps the role covered when one sharer is ill or on holiday, and can hold on to an experienced employee who no longer wants full-time hours, which is why job shares are common in the NHS.
- It only works if the two hand over properly, because anything one of them leaves half finished has to be picked up by somebody who was not there.
Zero-hours contracts
Definition
Zero-hours contract: a contract that guarantees no minimum hours, so the employer offers work only when there is work to be done.
- Benefit to the business: it pays for the hours it actually uses, so wage costs rise and fall with demand, which suits work that cannot be predicted, such as catering at a stadium or courier work for Deliveroo.
- Drawback to the business: workers can turn shifts down, so nobody may be available on a busy night, and because they leave as soon as steadier work appears, the business is forever training replacements.
- Benefit to the employee: hours can be refused, which suits somebody fitting work around a course or another job, and every hour worked is paid at least the national minimum wage.
- Drawback to the employee: income swings from one week to the next with no guarantee of any, which makes it hard to budget or get a loan, so the flexibility the business gains is exactly the security the worker gives up.
Common Mistake
- Part-time and zero-hours are not the same: a part-timer has agreed set hours each week, while a zero-hours worker is only offered hours when the business wants them.
- Zero-hours workers are not unpaid, and they are not self-employed; they are paid for every hour they work.
Exam technique
- For explain one benefit to the business of employing part-time staff, give the benefit and its consequence, such as covering the weekend rush without paying wages through a quiet weekday.
- Check whether the question asks about the business or the employee, because the same contract looks completely different from each side.
- Use any demand pattern you are given: steady year-round work points to full-time contracts, an unpredictable rush points to flexible hours.
Self review
- What is the difference between a full-time and a part-time contract?
- Give one benefit of full-time employment to the business and one to the employee.
- Give one benefit of part-time employment to the business and one to the employee.
- What is a job share, and what has to happen between the two sharers for it to work?
- State the trade-off in a zero-hours contract between the business and the worker.
