Human resource is an integral part of every organisation that helps the organisation to achieve their goals towards success. Human resources are basically referred to the workforce or employee base of an organisation. Every organisation consists of a human resource management department (HRM) that looks after the different facets of the employment process, follows relevant employment laws and ensures the goodwill of the employees (Neiheiser et al., 2020). There are four basic types of contractual approaches that the organisations follow namely, “permanent full-time contracts”, “permanent part-time contracts”, “zero hours’ casual contracts” and “fixed-term temporary contracts” (Yazdanshenas, 2019). The essay highlights the different aspects of these contractual approaches and analyses their differences with reference to their advantages and disadvantages. The essay also consists of the evaluation of the contractual approaches by different organisations. Altogether the essay will prove to be a complete study of the different human resources contractual approaches replete with relevant examples of organisation following them.
The employment of human resources is a significant task for every organisation and the key role of the human resource management department of every organisation is to manage the employment within the organisation (Kinnie and Swart, 2020). There are a number of employment contractual approaches that the organisations follow to hire employees. These approaches are stated below:
Permanent full-time contract is a contract between an employee and the organisation on a permanent basis which does not have an expiry. The contract can end if the employer or employee chooses to do the same or after the retirement of the employee. This type of contract is also known as “indefinite contract” as it doesn’t have a fixed time for the end of the contract. The organisation may also provide the employees with a contract valid for one to three years with the assurance and expectation to renew it later (Jesnes, 2019). The employers hire a permanent employee with a long term plan in mind and generally tend to hire a skilled employee and provide relevant training and development programmes to ensure a permanent tenure of the employee.
A permanent employee works roughly for 35 to 40 hours a week. A permanent contract is the testimony of an effective professional relationship between an employee and employer. Therefore, it consists of a number of information and clauses regarding the job and the relevant contract. The contact consists of the job details like the specification of the job and the relevant job role of the employee which also includes the job title and the designation of the employee in the organisation (Lee, 2019). The job details in the contract also defines the expectation of the employer from the employee.
The contract also contains the mention of the term of the contract which might be written as “at will” or a specific term of years will be written which can be renewed “automatically”, in “one-way” or “jointly”. Another aspect of the contract is the declaration of the bonuses, salary and the subsequent benefits as an employee of the organisation. It also contains the legal constraints and conditions of termination.
According to Adler and Pittz (2016) the advantages of the permanent full-time contract are that the employees gain a permanent job which offers professional security to the employee which enables the employee to invest himself emotionally and physically for the betterment of the organisation. A significant advantage of the permanent full-time contract is the benefits given to the employees like health insurance, paid leave and other benefits which enables the employee to balance their family and work life and increases the engagement of their employee in the organisational work process. The appointment of a permanent employee enables the concerned organisation to cut down the cost of repetitive training to new entrants who do not stay for long but have a permanent employee who can ensure effective work. The employee also gets a permanent career opportunity and can develop the same without the fear of losing or leaving the job.
The disadvantages of permanent full-time contract are that the employers face more liability towards the employees on breach of the contract by the employer. The employer also needs to do more work regarding the administrative job as a permanent employee would have health insurance and other benefits provided by the employer.
Permanent part-time contract is a contract between the employer and the employee to work partly for the organisation while already being working for a different company at the same time or giving less time to the organisation where the employee is hired. The appointment of a part time employee enables the company to control the budget and expect and gain profits at the same time. The aspect of job security is similar to the permanent full time employees. The employers need not to give additional benefits to a permanent part time employee and in that process the appointments cost less (Maestripieri and León,2019). A permanent part time employee doesn’t have a fixed working hour and he can work at evenings or even on weekends. Permanent part time employees include individuals ranging from students, skilled professionals to retired professionals. The salary of these employees depend on their work efficiency. They are also given paid leave but that also depends on the amount of work they have done. The appointment of part time employees helps reduce the workload from permanent full time employees. These contracts do not have a fixed term of job, an employee can work till he or the employment chooses to break the contract or till retirement (De Stefano, 2017). The contract consists of the job role and description of the job profile. It also consists of salary details and a tenure of a fixed time that is renewable.
The advantages of permanent part time contracts are that there is a flexibility in hiring the part time employees as they cost the employer less because the training programmes are low key and they don’t have to provide any additional benefits to the employees which enables the employer to hire more part time employees and divide work efficiently. During the increased workload when the full time employees lag behind to meet the deadlines the employer can use the part time employees to shrew the workload and meet the deadlines (Sigot and Vero, 2020). The appointment of part time employees enables the organisation to cater a diverse customer base of different culture and language at low cost as the presence of a few diverse full time and few diverse part time diverse employees would help in the interaction with a diverse customer base. The company also benefits from part time hires in time of need like holidays or at the time of more demand. In times of organisational crisis an employer can depend on the part time employees as they demand low salaries but efficient work which helps the employer to maintain the budget in times of crisis.
The disadvantages of the permanent part time contracts are that the part time employees do not spend much time in the office with the colleagues which results in weak relationships among the workers of the organisation and increases periodic conflicts. Sometimes it becomes very difficult to track the efficiency of the part time employees as some work from their comfortable places and some come to office at different timings like in the morning or evening which makes it difficult to handle and solve the problems of both the full time and part time employees at the same time (Almakhour et al., 2020). The part time employees range from students to retired people who do not offer stability in the organisation such as a student who is pursuing a course would move out to another job after the completion of the course.
Zero hours’ casual contract is a contract between the employer and the employee but it does not have any formal aspect to it. The contract can be temporary and there is no fixed working hours for the employee. The employee under this contract might work for multiple employers. The contract is not set on any legal constraints and it has a casual arrangement. The employees under this contract are provided with the annual leaves and are provided the minimum salary fixed by the government (Campbell, 2018). The employees are not liable to work for fixed hours and amount and the employers are not liable for any additional benefits.
The advantages of zero hours’ casual contract are that in the time of increased workload or crisis the employer can use zero hour employees to meet the deadline and bring in flexibility in the work process on the same payroll. If an employer is launching a new business, he generally cannot forecast the workload and the number of employees needed for the same. Therefore, he can invest in zero-hour casual employees and would not have the risk of paying more permanent employees than needed (Kenner, 2017). The employer does not need to play if the employer is not working. The employer may only pay if the employee works and according to his amount of work. The flexible working hours have proved effective work results for these employees. The employees gain good experience of an unknown industry in this process.
The disadvantages of the zero hours’ casual contract are that the employees under this contract are not bound to accept the work assigned to them by the employer therefore the employer might not get any worker to complete the work in time of need. The employer cannot do a financial planning of the organisation depending upon these workers as there is huge unpredictability regarding the efficiency and availability of these employees (Murphy et al., 2019). The employer finds it difficult to control these employees as there is no fixed time or place to work and because of the casual work arrangement the employees have a greater say.
Fixed term temporary contract is a contract between the employer and the employee where the employee is hired for a fixed duration of time ranging from a year to more and the time can be renewed as per requirement or performance according to the contract. The salary of the employees is fixed before the joining and is not changed till the said term expires. These jobs are generally temporary and that is mentioned to the employee beforehand. The appointment can be done on the basis of a sudden work requirement or as a substitute to an employee on leave. The employers analyse the potential and skill of a particular employee before hiring him and the employee might or might not be on the payroll of the organisation (García-Pérez et al., 2017). The employer has a limited right to terminate the contract if he finds the employee underperforming or engaged in fraudulent activities. The employer is not liable for any additional benefits of the employee apart from the salary and few leaves annually.
The advantages of fixed term temporary contracts are that the hiring by the employers gets easier than the hiring of permanent employees in terms of cost, training and additional benefits. This is a way to increase the job opportunities for people and also reduce unemployment. These fixed term contracts can prove to be good career stepping stones for those who are inexperienced and want to start their career (Konings et al., 2016). These contracts also help the employers to find skilled employees as fixed term temporary employees to later permanent employees which enables to lower the risk of hiring and dismissing a non-suitable employee for the organisation.
The disadvantages of fixed term temporary contracts are that potential employees would not find this idea as lucrative as the idea of permanent jobs therefore the number of applicants might be less (Sudabeh, 2017). The non-renewal of a fixed term contract might prove to be an unfair dismissal and the employee might claim the same that might push the employer into trouble.
Different companies use different contractual approaches to hire employees. For example, Tesco Plc is a large scale retail company of the UK dealing in groceries and general merchandise. It was established in the 1960s. The annual turnover of Tesco Plc is about 52 billion pounds and has an employee base of 4,20,000 employees globally and has about 7000 stores worldwide. The company Tesco Plc follows the contractual hiring approach of permanent full time contracts with the employees (Putra and Muzakir, 2020). The work at the organisation has a huge range, it includes different departments like marketing, operations and productions, R&D, HRM, finance, IT, Store workers, cashiers and so on. Every department needs full time employees to execute the relevant work effectively. Therefore, the company prefers to hire permanent full time employees who would ensure increased revenue of the company.
The Human Resource Management (HRM) team of Tesco Plc is robust enough to skilfully handle the hiring procedure and the goodwill of the employees. Every country that Tesco Plc operates in has a separate sub HRM team to look after the recruitments of the different employees for each department and their goodwill (Alam and Raut-Roy, 2019). The company has a contract designed for the hiring of employees of different departments which consists of the job title and description, the mention of the additional benefits, salary, the term of job which is renewable and so on. The hiring process starts from the advertisement of the vacancies followed by the recruitment process and the training of the employees and the goodwill of the employees. The permanent employees of Tesco Plc are provided the additional benefits like health insurance, provident fund, allowances and so on. This enables the employees to create a balance between work and family life and also helps the employees to engage emotionally and physically efficiently in the work process. Tesco Plc abides by the employment laws of the UK like the “Employment Rights Act 1996”, the “National minimum wage act 1999”, the “Employment Relations act 1997” and the “Maternity leave and parental leave act 1999” (Awadari and Kanwal, 2019). The company abides by all the rules under these acts while recruiting employees. The company grants relevant leaves along with the annual leaves like the maternity leaves, casual leaves, sick leaves and so on to its employees. The company also abides by the minimum wage act and the employee relations act and treat their employees as valuable resources and respect their opinions.
Another retail company Marks and Spencer is a company in the UK that deals in apparels, home products and food products. It was established in 1884 and is one of the leading retail companies of the UK. The annual turnover of Marks and Spencer is about 10 billion pounds and its employee base is about more than 75000 employees and the company has its stores in many other countries including the UK. The company follows the contractual hiring approach of both permanent full time contract and fixed term temporary contract approach.
Marks and Spencers have so many stores and so many departments like marketing, HRM, finance and so on that they need a huge employee base to execute the work process. The company follows the permanent full time approach to have permanent employees for the longest time which ensures cost cutting in repetitive recruitments (Taylor, 2019). They follow the fixed term temporary approach to minimise the risk of hiring and dismissing unsuitable employees and have the provision of granting permanent jobs to the fixed term temporary employees after a considerable period of time. Therefore, the company always looks for skilled employees almost suitable for the work process and provides proper training to the fixed term temporary employees so that they can work efficiently as permanent employees later. The company has a robust Human Resource management team (HRM) who looks after the hiring process of the fixed term temporary employees (Freedland et al., 2016). They are treated somewhat like the permanent employees except the fact that they are not provided with all the additional benefits of the permanent employees. The contract of these temporary employees are designed accordingly which consists of the job title and description and the salary which is fixed before the starting of the job term and is mentioned in the contract.
The salary is not changed till the contract period ends. The contract also consists of the mention of the fixed term of employment like 1 year or more. The term can be renewed as per the requirement and the choice of the employees. The HRM department of Marks and Spencer go through an effective hiring process starting from the advertisement of the recruitment. The recruitment process, the fixing of the term and relevant contract formalities to the training programme and the good will of the employees. Marks and Spencer abides by the employment laws of the UK while executing the employment process. The company abides by the “Employment rights act 1996”, the “National minimum wage act 1999”, the “Maternity leave and parental leave act 1999” and so on (Parent and Lovelace, 2018). The company abides by all the relevant rules under these acts. The company also follows the “Employment relations act 1997” and the company under this act ensures that the employers are treated well and their opinions are valued and included. The company also looks after the fact that all the rights of the employees are served right to the employees.
The organisations require a strong employee base to execute the work process effectively and increase the revenue. Every organisation and its human resource management department follows a one or more contractual approaches to hire the employees. The essay is based on these few contractual approaches and its definition with its advantages and disadvantages. The contractual approaches discussed in this essay are permanent full time contract, permanent part time contract, zero hours’ casual contract and fixed term temporary contract. The advantages and disadvantages of all these approaches are vividly discussed. The essay also contains the discussion of two different retail companies namely Tesco Plc and Marks and Spencer who follow the permanent full time contract approach and the fixed term temporary contract approach respectively. These companies follow the employment law of the UK and abide by the employment rules. These two companies are the two largest companies in the Uk and have a large employee base with an efficient contractual hiring approach. Altogether the essay serves as a complete study of the various contractual approaches replete with suitable examples.
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