Ir - Growing Tendency to Use Contract Employees

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Between April and July 2000, the Jamaica Broilers Group, in efforts to improve organizational efficiency laid off 200 in its Best Dressed Chicken and Best Dressed Food divisions and as a consequence achieved a $72.4-million first quarter profit immediately following the redundancy exercise. According to the Jamaica Observer article written on February 17th 2000 by Lloyd Nicholas, ‘.. at the end of July 1998, the Company had let go of 444 employees at their processing facility…just over half were rehired on new conditions as contract workers. After one year, the company spoke of the operational efficiencies that, having kept 52% of the former staff complement, productivity increased by 71%. This growing trend of contract employment is as a result of a number of factors, including greater flexibility, reduced overall costs and greater specialization that outsourcing can bring to the table. The reality is that in as much as an employer will need human resources to meet or exceed shareholders expectations, the employer will try to do so with the most efficient resources available to him. It is no secret and especially with globalization and the economic recession most companies no longer feel obligated to provide a ‘family’ environment for their employees. They no longer have the need to give a ‘life-time’ of employment security. In fact, because of the economic uncertainty, there is a growing trend for restructuring, outsourcing and downsizing that is now seeing an increase in the number of contracted employees and more instances of staff changes as was mentioned with Jamaica Broilers. This new trend of hiring contracted persons one can argue is based solely on the company’s strategic objectives of achieving operational efficiencies by cutting costs and hitting key productivity ratios such as increased productivity and the return on investment. If handled properly, contracted workers can be cheaper and much more productive than their permanent counterpart. For a company to thrive it is this author’s opinion that flexibility is key in all areas including contract types but it must be managed in such a way with the necessary legislation in place to protect the rights of all parties concerned. For the purposes of this assignment, this writer will define the key terms; types of employment contract; contract of services and contract for services, the differences between them and also discuss the labour relations implications for this growing trend.

The contract of employment is the foundation of the relationship between an employee and his employer. The contract links the employer and the employee in an employment relationship. In investigating the nature of contract employment in Jamaica in as much as there is limited and current quantitative data, the use of contract labour is an increasing common feature amongst Jamaican enterprises. A study by the Jamaica Employers’ Federation (2002) indicated that 83 percent of the responding enterprises engage in contract labour. Extract from STATIN’s publication of The Labour Force was used to determine the proportion of part-time and full-time employees. Persons classified as part-time employees were those who worked for less than 33 hours who indicated that: • only part-time work was available; and

• they did not want to work more hours.
The statistics suggest that the percentage of persons in these two categories increased during the period 1999 to 2003 with proportions ranging from 4.7 percent to 7.2 per cent of the employed labour force (See Figure 1 below). The percentage for 2004 was the same as the upper limit of the range for the five-year period (7.2 per cent)

Figure 1.

Breakdown of Contract Types in Jamaica
In this Jamaican labour market environment, two types of contracts exists; Contract of service and Contract for Service. Contract of Service:
This is the traditional type of employer/employee relationship as defined by the 2002 amended Labour Relations &...
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