Types of employment contracts and their impact on employee well-being

By signing any contract, people commit themselves to respect a certain agreement. In many cases, signing a contract seems to be stressful for employees. No matter the company, it is important to understand the rights and obligations that we have by the Law. All the laws and regulations may seem confusing at first, so we decided to give a brief overview of all contract types that exist on the market and help you gain a better understanding of them. Alongside the contract types, we also outlined the main psychological stressors that occur due to different types of employment. Let’s get you ready for your next job interview!

In the beginning, let’s take a look at all types of contracts defined by the Labor Law.

The Labor Law of the Republic of Serbia, among other things, regulates the establishment of an employment relationship between an employee and an employer, as well as the employment contract and all its forms. An employment contract is a document that is valid from the moment the employer and the employee sign it, and it regulates the rights and obligations of both parties.

The employment contract can be concluded for a specified or permanent period. When the duration of the contract is not indicated in the document, it means that the contract is permanent.

Fixed-term contract

A fixed-term contract is concluded when it is justified by the employer’s need to complete the work within a certain period (up to 24 months at the most). In specific cases this period can be prolonged, such as replacing an employee who is temporarily absent, due to work on a project, with foreign residents until the expiration of the work permit, ect.

Part-time work

The employment relationship can be based on part-time for an indefinite or fixed time with the same conditions as for full-time employees performing the same job. This type of contract allows the employee to perform another job with another employer.

In addition to “classic” employment contracts, the employment can also be established through other types of contracts – a contract for temporary and occasional jobs, a service contract, a contract for professional training and development, or a contract for additional work. Contracts concluded in this form imply work outside employment.

Contract for temporary and occasional jobs

The contract for temporary and occasional jobs is concluded to perform jobs that do not last longer than 120 working days during the calendar year(eg. agricultural seasonal work is often defined by this contract).

Service contract

The employer can conclude a service contract for the purpose of performing tasks that are outside the employer’s activities, and which have as their subject the independent production or repair of a certain thing, the independent execution of a certain physical or intellectual work. Therefore, in order to conclude a contract with a person outside the employment relationship, the employer must not perform that work as a primary or secondary activity. For example, freelancers can enter into a service contract with the client.

Contract for professional training and development

As a condition for independent work in certain professions, the student has the obligation to perform an internship with a certain employer. Therefore, it is precisely the contract for professional training and development that defines this type of work outside the employment relationship for people who establish employment for the first time.

Contract on supplementary work

An employee who works full-time for an employer, but needs additional income, can conclude a contract with another employer on supplementary work, but up to one-third of full-time work at the most.

What do the studies say?

Numerous studies show that people react uniquely to different employment conditions. Therefore, people prone to anxiety prefer permanent contracts, while fixed-term contracts evoke uncertainty and cause stress. On the other hand, freelance and fixed-term contracts are more suitable for stable people for whom flexibility is important.

Also, it is important to point out that the latest research by the Institute of Statistics shows that the largest number of employees in Serbia has a permanent contract (out of the total number of 2,192,400, there are 421,700 employees with a fixed-term contract[1]). Although at first glance it seems that the portion of employees with permanent contracts is high, It is still significantly lower than the European Union average.

Bearing in mind that certainly a large number of employees in our country, as well as in Europe, are under fixed-term contracts, it is important to point out how such a situation can affect the stress and well-being of employees.

If you have ever found yourself in a situation where you have a contract for a fixed-term contract, you may be familiar with the feeling of anxiety before the contract expires and the fear of whether it will be extended, no matter how well it seemed to you that you performed during the period. This is exactly what some findings are talking about.

Some earlier research shows that employees on fixed-term contracts or temporary workers often fear that they will not get enough tasks or working hours at work and that this will lead to contract termination. Furthermore, employees with fixed-term contracts or freelancers often work overtime and do not turn down jobs out of fear of losing potential opportunities in the future[2].
With employees who work on temporary and occasional jobs or on a fixed basis, if the responsibilities are not clearly defined, there may be a conflict of roles, while it has been shown that this is not usually the case with freelancers if they have control over the work process[3]. Conflict of roles occurs when there are contradictions between different roles that a person assumes or performs, in this case, on a professional level. Usually, the conflict is the result of conflicting obligations that result in a conflict of interest.
Then, when it comes to the integration of employees into the organization and social interaction, employees who do not have a permanent contract often feel marginalized, especially if they are a minority within the organization.
Especially important, the way an employee with a fixed-term contract or a contract for temporary and occasional jobs will feel, and even perceive its position within the company, depends a lot on the person’s personality characteristics and belief in its skills and abilities. Hence, Greenhalgh and Rosenblatt [4]note that business insecurity is a complex subjective feeling, and in a study by Sill, Sora, and Gracia[5], which establishes the existence of a connection between business insecurity and health consequences, they state that business insecurity depends on the development of the skills that employees have and the desire to work.

In the end, it is important to remember that there is not one type of contract or employment that is ideal for everyone. Numerous factors affect the way you perceive employment conditions.

Hope that this review will help you understand the differences the next time you change jobs, but also think about your preferences and choose your work environment accordingly.

References:

[1] https://publikacije.stat.gov.rs/G2022/Pdf/G20225682.pdf

[2] https://www.jstor.org/stable/3379109

[3] https://www.researchgate.net/publication/247569840_Health_and_Well-Being_in_the_Workplace_A_Review_and_Synthesis_of_the_Literature

[4] https://www.researchgate.net/publication/228079587_Job_Insecurity_Toward_Conceptual_Clarity

[5] https://www.researchgate.net/publication/46545619_Job_insecurity_and_employees’_attitudes_The_moderating_role_of_fairness