Contract of Service

What is a contract of service?

Contract of Service is an employee subject to employer direction and entitled to employment law protections.

A contract of service creates an employer-employee relationship where the employee is considered a regular employee of the company and is entitled to benefits and protection under employment laws. It is also known as an employment contract, a contract of employment, or a job contract. SHRM’s employee relations guidance recommends having employment counsel review contract of service templates at least annually to reflect changes in applicable employment law. HBR’s labor research shows that clear, well-drafted employment contracts reduce disputes by creating shared expectations from day one.

How long is a contract of service valid?

• The length of a contract of service can vary. It can be a permanent contract, a fixed-term contract, or a temporary contract.
• A permanent contract is a long-term employment contract, with no specific end date, this type of contract continues until either the employee or the employer terminates it.
• A fixed-term contract is a contract that lasts for a specific period of time, this type of contract typically set an end date, it can be months or years, and it will end on that date.
• A temporary contract, this type of contract usually has a short-term duration, typically less than a year, it is used for specific projects or to cover for an employee absence.
• It’s worth noting that some jurisdictions have laws that set limits on the duration of fixed-term contracts and restrictions on the use of temporary contracts.

Can a contract of service be terminated?

• A contract of service can be terminated by either the employer or the employee under certain conditions.
• An employer may terminate the contract for cause, such as poor performance or violation of company policies. In most jurisdictions, employers are required to provide the employee with notice of termination, or pay in lieu of notice, as well as to follow the correct procedures as outlined by the employment laws in the country.
• An employee can terminate the contract if they resign or if the employer is not able to fulfill their end of the contract. Such as not providing safe working conditions or not paying the employee as per the agreement. An employee may also be able to terminate the contract without notice if the employer has committed a serious breach of contract.
• It’s worth noting that the laws and regulations around termination of contract of service vary by jurisdiction, so it’s important to consult with a qualified attorney for accurate information and recommendations on specific situations.

The contract of service sets the foundation for a compliant employment relationship. Using objective assessments alongside a structured hiring plan drives improvement, helping organizations attract and retain top talent.

Frequently asked questions