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An employment contract or contract of employment is a kind of contract used in labour law to attribute rights and responsibilities between parties to a bargain. The contract is between an "employee" and an "employer". It has arisen out of the old master-servant law, used before the 20th century.
The distinction between independent contractor and employee is an important one in the United States, as the costs for business owners to maintain employees are significantly higher than the costs associated with hiring independent contractors, due to federal and state requirements for employers to pay FICA (Social Security and Medicare taxes) and unemployment taxes on received income for ...
A fixed-term contract is a contractual relationship between an employee and an employer that lasts for a specified period that is determined in advance. These contracts are usually regulated by countries' labor laws, to ensure that employers still fulfill basic labour rights regardless of a contract's form, particularly unjust dismissal.
These taxes are generally not paid by the employer on the compensation of a worker classified as an independent contractor. Instead, the contractor is responsible for their employer's share of the taxes when paying self-employment taxes at the end of the year. [2] Classification affects whether a worker can receive unemployment benefits.
A "contract" is an agreement enforceable in law. Very often it can be written down, or signed, but an oral agreement is also a fully enforceable contract. Because employees have unequal bargaining power compared to almost all employing entities, most employment contracts are "standard form". [84]
Labour hire is a form of employment in which an employer directs their de jure employees ("labour hire employees", or "agency workers") to perform work at an external workplace, belonging to a client of the legal employer. [1] [2] A labour-hire agency employs workers who are then "on-hired" to perform labour for a second party organisation.
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