Employment Contract Types and Legal Requirements

Employment Contracts and Arrangements

Definition of the Employment Contract

The employment contract is an agreement between the employer and employee. The worker agrees voluntarily to provide services and submit to the organizational and management power of the employer.

Essential Elements of the Contract

The essential elements that must be defined in the employment contract include:

• The parties entering into the contract (identity of the employer and the worker).
• Working time, start date, and duration.
• Workplace.
• The category or professional group.
• Salary.
• Vacation entitlement.
• Notice periods and the applicable collective agreement.

Employer Duties Regarding Documentation

The employer has the following duties:

• Submit a copy of the contract to the worker.
• Deliver a basic copy to the representatives of the workers for signature.
• Communicate and deliver the contract to the public employment service office within 10 business days.

Types of Contractual Arrangements

Indefinite Contracts

Workers join the company as permanent employees, with no time limit. These contracts promote regular and stable employment.

Temporary Contracts

The association of the worker with the company is of limited duration. These include:

• Training Contracts: For practical experience and formal training.
• Specific Types: Contracts for specific work or service, interim contracts, and temporary production needs contracts.

Replacement and Part-Time Contracts

These arrangements may be permanent or temporary.

Notice Period for Temporary Contracts

If the duration of a temporary contract is greater than one year, the party seeking to terminate the agreement must give the other party a minimum of 15 days' notice.

Temporary Employment Agencies (TEAs/ETTs)

Definition of a Temporary Employment Agency (TEA)

A TEA (known as ETT in some jurisdictions) is a company whose business is to hire workers and assign them temporarily to other user companies.

Contractual Arrangements via TEA

Contracts between the TEA and the worker may be permanent or temporary.

Legal Restrictions on TEA Assignments

Assignments are illegal in certain circumstances. For example, you cannot make a contract provision to replace workers on strike at the user company, assign workers to another TEA, or perform particularly hazardous work.

Note: Specific regulations regarding purpose and legality were updated on 1/1/2011.

Contract Formalities and Termination

• Form: Contracts must always be written.
• Extinction Compensation: Upon termination, the worker is entitled to receive compensation of 12 days' salary per year of service.

Worker Rights (TEA Employees)

The worker is entitled to the same basic working conditions and employment rights as workers hired directly by the user company for the same job.

Responsibilities and Powers of the TEA

• Meet salary obligations and social security contributions.
• Annually allocate 1% of payroll to the training of temporary workers.
• Has the power to discipline the worker.

Responsibilities and Powers of the User Company

• Provide reports on occupational risk prevention to the worker.
• Has the power of organization and management of the workforce.
• The user company holds subsidiary liability for salary obligations and social security contributions owed to the worker if the TEA fails to meet them.