Contract Employee

Meaning & Definition

A Contract Employee is a legally binding agreement between a contractor and a company that specifies the duties, length, place of work, and pay of the contractor (as outlined in the contract). Contractors are not considered permanent employees; rather, they have a temporary relationship with the company, depending on the business needs of the company.

Important aspects of a Contract Employee

• Helps organizations fulfil temporary or project-based workforce requirements.
• Facilitates hiring flexibly without ongoing responsibilities.
• Provides temporary access to specialized skills.
• Assists in controlling labour costs through employee planning.
• Faster onboarding than permanent employees.

Legal & Regulatory Considerations

There is no separate statute that specifically applies to this term.

Employment contracts, service agreements, and internal HR policies govern this term. 

The Terms of each are defined under the following headings: 

• Timeframe, role responsibility, payment structure, and exit criteria. 
• The clear classification and documentation of the term may minimise any risks of a misclassification.

For more info, visit: Contract Labour Management Software