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Pro’s and Con’s of Temporary vs Permanent

Employment Contracts for Project Managers

 

FEATURED PAPER

By Veena Sakunthala

SKEMA Business School

Paris, France

 


 
ABSTRACT

In a labour market characterized by search and matching frictions, it is difficult to make a choice of employment contracts. There is also a major problem existing regarding the failure of temporary contract even though a new economy of Gig workers is in the uprise and hence this paper will focus on finding the best alternative solution for failing temporary contracts. For this paper, the author initially picks out and analyses the various employment contracts and then makes a comparative study using the MADM methodology and summarizes the various Pros and Cons of temporary and permanent contract. Then with the help of attributes and selection criteria, each contract is ranked, and the best possible alternative is found out. This alternative can well-structure the way people are going to work in future.

Keywords: Advantages, Disadvantages, Temporary Contract, Permanent Contract, Employment contracts, Gig Economy

INTRODUCTION

A contract is not just a piece of paper. Just as a single word is the skin of a living thought, so is a contract evidence of a vital, ongoing relationship between human beings. An at-will employee is not merely performing an existing contract; he is constantly remaking that contract.[1] “There seems to be an upcoming transition in the way people are going to work in the near future, an era of Work-Life 3.0, where more people will be working on a Temporary contract basis rather than permanent ones characterized by less commitment between employer and employee coupled with increasingly portable employee skills.”[2] Many of these claims can be summed up as a move from strong internal labour markets to a system where outcomes are more closely related to those in the external labour market.

“It is widely believed that labour law is currently undergoing a ‘crisis’ of core concepts. This is exemplified, above all, by the growing number of labour relationships which fall outside the scope of protection provided by the concept of the contract of employment.”[3] The existence of two-tiered labour markets in which workers are segmented by contracts and the degree of job protection they enjoy is typical in many OECD countries.

A Permanent Contract is the type of Employment contract whereby an employee is employed by the company until the employer or the employee no longer wish to work there while a Temporary contract is one in which where an employee is expected to remain in a position only for a certain period. But the question lies in whether it is feasible enough to work on a temporary contract basis. Temporary contracts provide high flexibility in the labour market, but temporary workers can be laid off without incurring rightful payments or restrictions imposed by employment rights legislation. “In Britain, about 7% of male employees and 10% of female employees are in temporary jobs.”[4] While temporary contracts can avoid some labour market inflexibilities – (see for example Bentolila and Bertola (1990), Bentolila and Saint-Paul (1994) and Booth (1997) – there are potential costs. “Temporary contract-based employment possesses lack of opportunities for career advancement or quality of work”.[5]

Here we have done a Root cause analysis on temporary contract failures in OECD Countries. Based on the analysis, it is found that almost 70% of the temporary contract failure happens due to major factors such as lack of Job Security, Wages and overall satisfaction of the job. Lack of Benefits and Working hours contribute to other 30% of failure factors. “Temporary contract workers tend to be less satisfied with their jobs than permanent contract, according to survey evidence on job satisfaction levels in 14 European countries.”[6]

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To read entire paper, click here

 

Editor’s note: This paper was prepared for the course “International Contract Management” facilitated by Dr Paul D. Giammalvo of PT Mitratata Citragraha, Jakarta, Indonesia as an Adjunct Professor under contract to SKEMA Business School for the program Master of Science in Project and Programme Management and Business Development.  http://www.skema.edu/programmes/masters-of-science. For more information on this global program (Lille and Paris in France; Belo Horizonte in Brazil), contact Dr Paul Gardiner, Global Programme Director [email protected].

How to cite this paper: Sakunthala, V. (2018). Pro’s and Con’s of Temporary vs Permanent Employment Contracts for Project Managers, PM World Journal, Vol. VII, Issue XII (December). Available online at https://pmworldjournal.net/wp-content/uploads/2018/12/pmwj77-Dec2018-Sakunthala-temporary-vs-permanent-contracts-for-project-managers.pdf



About the Author


Veena Sakunthala

Paris, France

 

 


Veena Sakunthala
comes from an engineering background with a bachelor’s degree in Applied Electronics & Instrumentation engineering from Rajagiri School of Engineering & Technology, India. Born in Kerala, a Southern state in India, she is currently residing in Paris, France as a part of her MSc education. She has a work experience of 6 months as an Associate Engineer in an IT firm called Tech Mahindra Ltd where she was part of a Phase A development of the Website for automation of the dynamic pricing of Motor Spirits on daily basis for client Reliance Industries Ltd, India and 2 months of experience as a Strategy & Business Development Intern in an Energy based cable manufacturing company called Nexans S.A., France where she has done a market research and hence developed a strategy for expansion of one of their trademark cable into Asian market. She is currently pursuing her master’s in Project and Programme management and Business Development at SKEMA business school, Paris.

Veena lives in Paris and can be contacted at [email protected].

 

[1] Bird, R. C., Saunders, K., Cahoy, D., Newberg, J., Lester, T., Sullivan, C., & Arnow-, R. (2004). The Relational Theory of Contract, 95(2000), 94–95.

[2] Bollier, D. (2016). The future of work: issues at stake and policy recommendations from the employment industry, 1–39.

[2] Landscape, V. D., Cost, H., & Performance, L. (2018). Success in Disruptive Times.

[2] Dolado, J. J. (2015). EU Dual Labour Markets: Consequences and Potential Reforms (*), (June), 1–35.

[3] Deakin, S. (2005). the Comparative Evolution of the Employment Relationship. Labour, (317).

[4] No, I. Z. A. D. P., Booth, A. L., & Francesconi, M. (2000). Temporary Jobs: Stepping Stones or Dead Ends? Temporary Job: Stepping Stones or Dead Ends?, (205).

[5] OECD. (2002). Taking the measure of temporary employment. Employment Outlook. https://doi.org/10.1787/empl_outlook-2002-5-en

[6] OECD. (2002). Taking the measure of temporary employment. Employment Outlook.