Within the EOR provider services, employment contracts for employees typically fall into two main categories based on their duration: definite and indefinite contracts.
Definite contracts
Definite contracts are used for an employment relationship with a predetermined start and end date. Sometimes, they’re tied to the completion of a certain project. Given their short duration, these types of contracts are often used for seasonal work, filling out temporary staffing needs, or checking if the new hire is the right fit.
Once the contract reaches the end date, the employment automatically ends. While the definite contract is effective, the employee receives full benefits and rights. However, in certain countries, there’s a limit on the number of times the definite contract can be renewed.
Indefinite contracts
Indefinite contracts are the most common type of contract, which is used when hiring employees on a full-time, permanent basis. As such, they don’t have a predetermined end date and can last as long as either party terminates it through lawful termination, resignation, or retirement.
That’s why employers need to provide reasonable notice and severance pay in case of termination. Under an indefinite contract, employees receive benefits, like health insurance, pension plans, and maternity leave.
Contractor agreement
Native Teams offers contractor agreements that outline important payment details, as well as payment processors. These agreements can be used when you want to outsource specific tasks or projects that don’t require direct employment.
Since the contractor isn’t legally considered an employee, they’re responsible for managing their taxes and contributions, just like self-employed individuals. On top of that, they don’t receive employee benefits but have more freedom in how they perform their work.
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