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Contract workers – the myths vs the facts

Thursday, May 18 2017

There are clearly many misconceptions existing in the workplace regarding the complex issue surrounding contract workers. Each employee is engaged under a contract of employment be it written or oral. A written contract is merely evidence of the terms of the agreement.

Persons who are commonly referred to as permanent employees are, however, employees whose contracts of employment carry no defined dates of termination and who are engaged under existing terms.

Additionally, there are those engaged under contracts for service who are independent contractors or selfemployed.

For the purposes of this article, I am dealing only with persons who are workers within the meaning of the Industrial Relations Act.

For the most part, when the term “contract worker” is used in our workplace society it usually refers to someone who is engaged on a fixedterm employment contract. Our industrial court is seldom concerned with the employment status of workers, but more so with the concept of continuous employment.

So, let us examine some widelyheld myths which may be the source of misdirection at the highest level of management.

Myth #1: The services of a contract worker can be terminated for any reason The correct position is that all workers, be they on fixed-term contracts or on permanent contracts, are protected by identical legal rights, particularly as this relates to the termination of the contract of employment as a result of disciplinary action. This means that an employer must treat with all workers in a fair and just manner and that where disciplinary action is contemplated it is implemented in a manner consistent with good industrial relations practices.

Accordingly, the same principles of progressive discipline must apply, particularly where it relates to concerns about the worker’s performance. Further, a contract worker would be entitled to Trade Union representation at any disciplinary proceeding where allegations of misconduct or poor performance are made against him.

Myth #2: Contract workers do not have the same rights to statutory or employment benefits as permanent workers The terms and conditions of a contract worker will be normally expressed in a written contract of employment. Accordingly, these may differ from those applicable to permanent employees. However, where there exists a collective agreement in operation between the employer and a recognized majority union, and a contract worker is engaged in a position in the bargaining unit, then the applicable terms contained in the collective agreement are usually expressed in the fixedterm contract. Where these are not expressed, then the general terms in the collective agreement will apply.

Our laws for example provide significant benefits to workers in this jurisdiction. These benefits apply regardless of the employment status of the worker. For example, the Minimum Wages Act is quite detailed and provides for a benchmark for wages and other benefits like vacation leave and sick leave. Further, all workers are entitled to National Insurance benefits subject to their contribution; and maternity benefits are mandated subject only to the completion of one continuous year of service.

This condition precedent is also applicable under the Retrenchment and Severance Benefit Act and is the only legislation that provides exceptions to the payment of a statutory benefit based on employment status. As an example, casual, seasonal or fixed-term employees are generally not entitled to severance benefits whether or not they have completed one continuous year of service. However, the onus would be on the employer to establish the true status of these persons. In such instances, our industrial court has repeatedly determined that it will not allow employers to mask the true status of a worker who has provided years of continuous service, but who may have been engaged on recurring and renewable fixed-term contracts of employment.

Myth #3: Contract workers cannot enjoy job security It is correct to say that workers on genuine fixed-term contracts of employment do not enjoy the same degree of job security as those with permanent status.

This is simple to understand as such employment arrangements are really intended to facilitate temporary project-type work as opposed to appointments to established positions in the organization structure. It is obvious, therefore, that upon completion of the project for which the employee was engaged, the contract would automatically terminate without liability to the employer. However, the case may be entirely different where, as is often the case, the worker was engaged to perform regular work in an established position. In this regard, the employer may find it difficult to simply rely on the contract having expired for refusing to offer the worker continuing employment. In such circumstances, the employer may be required to provide justification and show good reason why the worker’s contract was not renewed.

Making the right decision with respect to the employment status of workers is an important consideration in the management of an employer’s workforce. It is a worker’s responsibility to inform his/herself as to the rights, benefits and protection available under our laws. Conversely all employers are obligated to apply our laws as they were intended and particularly as interpreted in our jurisprudence.

I am convinced that in many instances and upon closer analysis of rights, entitlements, obligations and responsibilities, many employers will come to the realization that the practice of continuously renewing fixed-term contracts of employment provides little or no commercial advantage as opposed to offering contracts of permanent employment.

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