1. Why Do Employers Hire Contractual Workers?
2. Importance of Reading Through a Contractual Agreement
3. What Is Expected of Contractual Employees?
4. Can Contractual Employees Quit at Any Time?
5. Do Contractual Employees Have to File Taxes?
6. Are Franchises Contractual Relationships?

Contractual responsibilities definition is usually listed as part of a contractual job listing. This type of job requires you to sign a contract agreement. The agreement lists the terms and conditions of the job. You will not be allowed to start the job until you have signed the contract. The contract usually states how long the job will last. It also gives a specific end date or it states that employment is over once a project is completed.

Why Do Employers Hire Contractual Workers?

Some employers prefer to employ contractual workers only when they have heavy workloads. Contractual employment is also ideal for employers who want to test out a worker's skill set before hiring them on a permanent basis. Contractual workers are often paid according to an agreement that states they will receive a lump sum once a project has been completed. In some instances, they are paid over the course of the project, in multiple payout intervals. It's imperative to read through a contractual agreement to determine how you will be paid.

The amount of hours you will be expected to work as a contractual employee is typically listed in the job agreement. Many times, though, you will be allowed to set your own hours. The employer will give you a deadline for a project and as long as you meet the deadline, the employer does not care how many hours it takes you.

Importance of Reading Through a Contractual Agreement

Make sure to read through the contractual job agreement to pinpoint your contractual responsibilities, to see when and how you will get paid, and to determine if you are expected to work a certain number of hours.

What Is Expected of Contractual Employees?

Contractual employees are always expected to meet deadlines and to submit their work in a timely manner. Stipulations in the contract you sign will likely mandate that the final project be submitted in a satisfactory manner, meaning there should be no need for the employer to have to go back and do anything.

For example, if you are a freelance writer and you submit a blog posting for an employer's website, this posting should be delivered in its final draft form, with no further need for editing or formatting. If you fail to submit the work in a satisfactory manner, you could potentially face legal consequences.

Can Contractual Employees Quit at Any Time?

At the University of Vermont, a person who becomes a non-contractual employee can choose to quit his or her job at any point without being responsible for any liability. An independent contractor, on the other hand, will incur liability and must provide "make good for failure to complete the job." In many instances, quitting the job before the terms and conditions of the contract have been met will lead to a lawsuit.

Do Contractual Employees Have to File Taxes?

Much of the time, contractual employees are hired for a short period of time. Instead of receiving a W-2 from the employer, a contractual worker will receive a 1099-MISC form for tax purposes. Contractual workers do not have income tax withheld from their earnings, however, they do have to claim their income on their annual tax returns and pay a percentage then. Making estimated tax payments throughout the year can limit the burden of having to make a big tax payment come tax time.

Are Franchises Contractual Relationships?

Franchises are considered contractual relationships. A licensor grants a licensee to use his or her method of doing business. For example, a restaurant owner opens a franchise and allows the licensee to open his or her own restaurant and sell the same items and use trademarks, logos, and branding for marketing purposes. This is known as a franchise. It is important to note, however, that every franchise does qualify as a license, but not every license qualifies as a franchise.

The franchisee has contractual responsibilities that must be met to ensure the franchise is a success. Protecting the franchise brand, means the business must be operated in strict compliance to the franchise's operating standards. To do this a franchisee must:

  • Market the company in a way that it attracts and secures a strong and loyal customer base
  • Only sell approved products and services
  • Always provide superior customer service
  • Make sure all employees are well-trained and that the business is always properly staffed

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