Contracts of employment

A contract is an agreement made between an employer and

employee in regards to the terms that a specific job regards, for
example: salary, the amount of hours being worked and
requirements for the job. Different types of contracts include: A
fixed permanent contract, a fixed part time contract, a freelance
contract, an on completion contract, a confidential contract and an
exclusivity contract.

Fixed permanent contract

Definition: Permanent employees are hired for a specific role within a company and
do not have a set end date to their employment. Fixed-term employees will be paid
in the same way as permanent employees and pay the full amount of income tax and
national insurance under PAYE, just like permanent employees do.

Pros:
● They can be very useful to cover a period of maternity leave or long term sick
leave.
● They can help your organisation meet workforce and resource needs while
limited to a budget, for example due during periods of economic uncertainty or
where the long term nature of the work is not certain. With a FTC, you can
specify the length of the contract at the outset while retaining the flexibility to
offer to keep the employee on if you find that circumstances allow you to do
this.
● You can trial a new approach or idea with employees on a FTC without the
rigidity or commitment of a permanent contract, again while retaining the
potential to offer a longer term or even permanent arrangement if this suits
both parties.

Cons:
● Depending on your sector and the type of role, it may be harder to recruit if
people are used to, prefer and can find permanent contracts elsewhere. In the
current climate, in many sectors this may be less of an issue where job
opportunities are generally more limited, but this will remain a concern
particularly when attracting ‘best talent’.
● Following on from the previous point, FTC roles may have to carry a higher
rate of pay to attract the right candidate to a short term position, since the
individual will be missing out on other benefits typically offered under a
permanent role.
 ● You may find that given the flexibility afforded to both you and the worker, you
are having to recruit more staff more frequently. This can increase recruitment
costs and resource requirements.
● Morale and workforce stability can be adversely affected if you increase the
number of temporary workers and there is a higher churn of FTC workers.
● Employers should note that FTC workers may be automatically considered
permanent after four years of employment under the arrangement, unless the
continued use of the fixed-term employment contract can be objectively
justified or is excluded by a collective agreement.

Jobs in media that use fixed permanent contracts:

● Project manager
● Podcast editor
● Producer
● Media officer

Fixed part-time contract

Definition:Fixed Term (Part-time) Employment Contract - EMP. CONT. 27. This
Fixed Term Contract (Part-time) is designed to be used for a variety of different jobs
where the employee is taken on for a defined or fixed term, on a part time basis.

Pros:
● It offers valuable experience.
● You might earn more.
● You might get interesting work.
● It gives you flexibility.
● You can avoid a long-term commitment.
● Employees hired on a fixed-term basis have most of the same rights as
permanent employees.

Cons:
● It can be hard to recruit for. Job applicants may not find the prospect of a short
contract as attractive as a permanent option.
● Depending on your sector and the type of role, it may be harder to
recruit if people are used to, prefer and can find permanent contracts
elsewhere. In the current climate, in many sectors this may be less of an issue
where job opportunities are generally more limited, but this will remain a
concern particularly when attracting ‘best talent’.
● Following on from the previous point, FTC roles may have to carry a higher
rate of pay to attract the right candidate to a short term position, since the
individual will be missing out on other benefits typically offered under a
permanent role.
 ● You may find that given the flexibility afforded to both you and the worker, you
are having to recruit more staff more frequently. This can increase recruitment
costs and resource requirements.
● Morale and workforce stability can be adversely affected if you increase the
number of temporary workers and there is a higher churn of FTC workers.
● Employers should note that FTC workers may be automatically considered
permanent after four years of employment under the arrangement, unless the
continued use of the fixed-term employment contract can be objectively
justified or is excluded by a collective agreement.

Jobs in media that use a fixed part-time contract:

● Marketing manager
● Actors
● Background actors

Freelance contract
Definition:A freelancing contract, commonly in the form of a contract for services or
consultancy agreement, should include the details and expectations that both parties
hold including, but not limited to, pay rates and scope of work.

Pros:
● FLEXIBILITY-One of the key benefits is the freedom and the flexibility it
allows. If you are restricted, whether you have childcare to worry about or are
concerned about work-life balance, freelancing can offer you refuge.
Freelancing, depending on your industry, will allow you to set your own time of
work, how long you work and where you work. This can be a huge benefit,
allowing freelancers to be able to spend time with their family or take care of
their children whilst still being able to work. Keep in mind that organisation is
key, and you will still have to put in a solid amount of hours to make your
freelance business work.
● MONEY- When you are an employee, you will likely only see a small increase
in your salary on yearly basis, if that. However, when you are a freelancer, you
can demand more. Of course, you need to have competitive rates but if you
establish yourself as an expert in your field you can make more money. It will
also mean that the more you work and the bigger projects you take on, the
higher your income will be. Additionally, if you are running your business as a
limited company, you will likely be taxed less than if you were an employee.
● BE YOUR OWN BOSS- You are your own boss, and if being an employee
feels like being confined in your role, then freelancing may be for you. You
make all the decisions, from the hours you work to the project you choose to
work on. This can be liberating for some people and allows them to flourish.
You will need to be confident, eager to learn and able to handle running a
business if you want to succeed as a freelancer.
 ● BUILD SKILLS- As you will be your own boss and be the owner of your
freelance business, it will push you to build on your skills. This can be a great
way to expand your abilities and generally increase your skills. Also, if you
focus on a niche, then you can build skills in your niche and become an
expert.
● NO COMMUTE- Depending on your industry, you will likely have the choice of
working from home. This can be another incredible advantage of being a
freelancer. You can completely eliminate lengthy commutes to the office and
save that time for work or anything else that may require your time. Some
commutes can take hours out of your day, they can be long and stressful and
put you in a bad mood before you even get to work. The benefit of working
from home comes with the responsibility of you making sure that you work
productively and effectively from home.
● RUN A BUSINESS- When you become a freelancer you will be running a
business. You will need to either set up a freelance company or register
yourself as self-employed with HMRC. You will need to consider getting a
freelancer accountant on board as well as a business bank account. Running
your own business can be a reward, however, it is a big responsibility that you
need to take on board before you go freelance. Being responsible for all parts
of your business does mean that you will be the only one reaping the rewards
of your hard work and effort.
● CHOOSE WHO YOU WORK WITH- As an employee, you have little to no
choice of who you work with. Your boss will hire employees they think are
right for the business. You don’t have to work for clients you can't stand
working with or deal with a horrible colleague. As a freelancer, you can set
your own rules and work with people and clients that fit with you. However,
this does not mean that you may on occasion have to work for a demanding
or an annoying client. But you will have the option of not working with them
again if they really make your life difficult.

Cons:

● IRREGULAR INCOME- If you leave behind employment you leave behind the
security it offers in terms of regular income. This is probably one of the
biggest negatives of working as a freelancer. Freelancers always have to think
ahead and potentially worry about the next job. Freelancers will need to
always be actively engaging with potential clients to get work. However, if a
freelancer has a handful of regular customers then it takes away the strain of
always hunting for freelance jobs.
● ADMIN TASKS- As a freelancer, you may expect to only be working for clients
and doing the work in your field. For example, if you are a freelance
photographer you might expect only to be doing photography related work.
However, when you are a freelancer you are essentially a business owner and
will need to carry out the admin tasks too. This includes dealing with business
finances, chasing invoices etc.
 ● LONELINESS- When you work by yourself as a freelancer it can be lonely.
The office can be loud and full of distractions in the form of colleagues etc.,
however, you may find that working by yourself isn’t much fun. Sometimes
colleagues can be great and play a part in your support system. How to
Become a Freelance Photographer The art and science of taking pictures can
be applied in a plethora of fields and many different businesses; photography
is no exception. The field of photography encompasses everything from
general (professional) uses like taking pictures for calendars,
advertising/marketing purposes, or pictures for collectors/dealers to specific
uses (for instance underwater photos can be a freelance gig). As a freelancer,
you will need to actively build your own network and support system instead
of it being provided for you.
● LACK OF EMPLOYEE BENEFITS- This is another huge pitfall of freelancing.
If you want to take a holiday or are forced to take time off because you are
sick, you won’t get paid. This means that freelancers need to always have an
emergency fund which they can use if they are not able to work or want to
take time off. Other employer benefits may include pension schemes, private
healthcare etc. which freelancers will also miss out on.

Examples of jobs that use freelancing contracts:

● Editor
● Content writer
● Production manager
● Writer

On completion contract
Definition:Completion Contract means contracts for the completion of existing
contracts that have been the subject of contractor default, termination or the exercise
of the owner's right to do work.

Pros:
● The easiest advantage is that the contractor knows the actual results of the
contract & not the estimated results, which usually happens in the case of the
percentage completion method.
● Deferment of tax liability is the biggest advantage from the cashflow point of
view. No revenue means no profit & no profit means no liability to pay tax.
● This shorter window gives buffer time to the contractor to manage his cash
budgeted expenses.
● If the contractor follows this method for all his projects, he gets a better picture
of his profits & his analysis will be based on real-time figures.
 ● As against the percentage completion method, this method saves efforts to
make lump sum estimates at the end of the accounting year. Estimates are
usually reversed in the next year & actual entries are passed. Thus, the efforts
are saved.

Cons:
● The biggest disadvantage is uneven revenues or results of operations of the
entity.
● This unevenness creates doubts in the mind of the readers of financial
statements. An analyst may also term investment in such companies as
“risky”.
● This method follows neither of the accounting systems (i.e. cash or accrual).
● The contractor is unaware whether the contract is profitable as of today or not
since none of the usual accounting methods is followed.
● It may happen that the contract is completed in the 2nd year, but the
contractor already receives all the money & the tax is higher due to higher
profits. He may or may have cashflow at the time of payment of tax.
● This method is untidy in the case of long-term contracts.
● This method reflects the ambiguity in the accounts.
● Even if the contract is aware of the losses in any particular contract, he can
set off such loss against profits from other contracts only when this
loss-making contract is completed.
● The biggest disadvantage is that if all the contracts finish off in a single year,
the financial picture will be untidy & the analyst may observe huge
fluctuations. This shows inconsistency in the contract.

Examples of jobs that use an on completion contract:

● Editor
● Producer
● Production coordinator
● Compositor

Confidential contract
Definition: Confidentiality contracts, or non-disclosure agreements (NDAs),
confidential disclosure agreements (CDAs), or proprietary information agreements
(PIAs), are agreements made between parties to protect information, ideas,
transaction details, and trade secrets from being revealed to third parties, either by
one or both parties in the agreement, during or after a business deal or employment
period.
Pros:

● Company Image Protected- One of the main reasons why NDA is signed is
image. There are plenty of companies that are reluctant to admit to their
customers and stakeholders that they had to use somebody’s help in creating
a product. Indeed, almost any big company you know outsources these or
those services, but only few of those are ready to speak about it in
public.Besides, if there will be any negative publicity associated with your
contractor, it would never influence your image, since your cooperation will
never go public.
● Personal Data Security- One more good reason to sign an NDA is to provide
total security for the data you provide to the contractor. Though the majority of
outsourcers would have never used it anyway, in case the data are extremely
important for your business, e.g. price strategy, financial reports, it is better to
go and protect yourself and sleep tight.
● Technical Security- Not so explicit advantage of nobody knowing who
developed your product for you is technical security. It is quite evident that the
same developer uses a common approach to all products he develops. I.e. If
one of those will be hacked, IT-criminals might find the way to hack all
products developed by that developer.But if you signed an NDA, they will
never know about you and your little product.
● Idea Stealth Protection- This point is majorly referred to startups, especially
at the stage when the idea is yet to be developed. You know how costly fresh
ideas are today. So to make sure your vision of a product is not stolen, it is
better to ask anybody involved to keep their mouth shut at least until the
release. And NDA suits for that like nothing else.

Cons:
● Can create an atmosphere of mistrust
● Risk of deterring top-tier talent from joining the firm
● Can possibly sour the relationship with current employees
● The agreements are not always easy to ‘police,’ provided that the breach is
not made public,
● The agreements are often drafted in very wide terms and this may lead to
problems of interpretation and enforcement, and
● Sometimes things are kept confidential that should not be, in the public
interests.

Examples of jobs that use confidentiality contracts:

● Producer
● Actor
● Editor
● Cinematographer
 Exclusivity contract
Definition: An exclusivity agreement is a document in which a prospective buyer
and seller of a property agree to deal with each other in good faith in the anticipation
of an exchange of contracts for an agreed price by the end of a fixed period of time.

Pros:
● An exclusivity agreement is one of the best ways to achieve financial security
● A stable stream of revenue
● They are Legally Binding contracts

Cons
● Limited flexibility and creativity
● Prolonged time without the option to take other opportunities
● Financial strain due to losing out on other business opportunities and
partnerships
● In the past, exclusivity agreements were sometimes problematic in so-called
‘zero-hour contracts’