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STRATEGIES OF MANAGING CONTRACT EMPLOYEES ( A CASE STUDY OF CONTRUCTION COMPANIES IN PH)

                                         ABSTRACT

A person who contracts to do work for another person according to his or her own processes and methods; the contractor is not subject to another’s control except for what is specified in a mutually binding agreement for a specific job. An independent contractor contracts with an employer to do a particular piece of work. This working relationship is a flexible one that provides benefits to both the worker and the employer. However, there are drawbacks to the relationship as well. The decision to hire or work as an independent contractor should be weighed carefully. Properly distinguishing between employees and independent contractors has important consequences, and the failure to maintain the distinction can be costly. Contract management or contract administration is the management of contracts made with customers, vendors, partners, or employees. Contract management includes negotiating the terms and conditions in contracts and ensuring compliance with the terms and conditions, as well as documenting and agreeing on any changes or amendments that may arise during its implementation or execution. It can be summarized as the process of systematically and efficiently managing contract creation, execution, and analysis for the purpose of maximizing financial and operational performance and minimizing risk.[ Common commercial contracts include employment letters, sales invoices, purchase orders, and utility contracts. Complex contracts are often necessary for construction projects, goods or services that are highly regulated, goods or services with detailed technical specifications, intellectual property (IP) agreements, and international trade. A study has found that for “42% of enterprises…the top driver for improvements in the management of contracts is the pressure to better assess and mitigate risks” and additionally,”nearly 65% of enterprises report that contract lifecycle management (CLM) has improved exposure to financial and legal risk.” The issuance and implementation of Labor Contract Law and Implementing Regulations of Labor Contract Law have exerted a direct effect on the establishment, fulfillment, change and termination of enterprises’ labor contracts, hence influencing their employment forms and costs. Therefore, it has been an urgent and practical issue for enterprises’ human resource management how to adapt their employment system to the new labor regulations. From the perspective of human resource management, this article aims at exploring into some possible legal problems during the course of recruiting, employing and dismissing employees as well as coming up with some suggestions on how to adjust and perfect the present employment system. The management of contract staff in the construction industry is critical for economic development of a developing economy like Nigeria. This empirical research studied 130 construction firms in Nigeria. Our analyses aided with tables, simple percentages and Chi square shows that the important variables that make up contract staff management system significantly affected the performance level of contract staff in the construction industry in Nigeria. We recommended, among other things, the transparency in contract administration. This will lead to stable contract administration and aid human resource planning in the construction industry.

CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF THE STUDY

An agreement entered into between an employer and an employee at the time the employee is hired that outlines the exact nature of their business relationship, specifically what compensation the employee will receive in exchange for specific work performed. Hiring employees is a fairly straightforward task–at least, most of the time. Most states assume an “at will” relationship, under which you can terminate an employee at any time for any reason or no reason. (Or alternately, your employee can quit for any reason.) But there are circumstances under which employment contracts make sense. First, the advantages. An employment contract can help you attract and retain key employees. While you can’t force employees to stay, a contract can ensure that they’ll provide reasonable notice prior to departure–typically 60 to 90 days. Employment contracts also help protect critical trade secrets, and are especially critical in high-tech companies. An employment contract can prohibit employees from revealing company secrets, working for the competition or soliciting customers. Noncompete agreements can be difficult to hold up in court, so you must be careful in drafting them. Because it’s anticompetitive to prohibit people from earning a livelihood in their field, courts generally will enforce noncompete agreements only if they’re reasonable. You can’t prohibit employees from ever working for a competing business anywhere in the country, but you might be able to enforce an agreement that they not work for a competing business within a 30-mile radius of your company for two years, or that they not solicit your company’s customers for a year.

Employment contracts are also useful when you’re buying or selling a business to make sure key people don’t leave. You can offer employees a retention bonus for staying or let them know they’ll be forfeiting a valuable severance package if they leave.

Contracts also clarify individual jobs by spelling out employees’ responsibilities, compensation, bonuses, stock options, rights to any inventions and patents, expense accounts and more. You can include an “evergreen” clause stating that the contract automatically renews on a given day each year if neither side provides notice of termination. And an arbitration clause can ensure that any employment-related dispute will be subject to binding arbitration rather than played out in court, which can be expensive and time-consuming. Now the downside. Employment contracts change the “at will” relationship, restricting your ability to terminate employees who aren’t working out. Typically you agree only to terminate “for cause” unless you’re at the end of the contract term, which opens your decision to second-guessing by the courts as to whether your cause was adequate. When employees believe that an organization has not fulfilled previously established obligations to its workforce, this may result in negative consequences for the organization. One major negative outcome, absenteeism, can significantly affect the bottom line of the organization. Absent employees cause lower productivity, and absenteeism can then result in lower morale for other workers, setting a precedent of absence in the workplace. This study investigated the link between employer/employee psychological contract breach and employee absenteeism for customer service employees at a large contruction industries. The researchers found a link between employer/employee contract breach and trust in the organization. Employees that perceived the organization had failed to deliver on obligations such as training, pay for performance and job security were less likely to trust the organization. This lack of trust then led to uncooperative employee relations and, ultimately, to greater absenteeism. Based on these findings, the researchers suggest that organizations should work to ensure that established obligations on the part of the employer are clearly defined and met by the leaders of the organization. If obligations cannot be met due to unforeseen business or economic changes, HR should provide employees with honest explanations about why the obligation cannot be fulfilled.

1.2 PROBLEM OF THE STUDY

One important disadvantage of working as an independent contractor is that standard employment benefits—such as health, life, dental, and disability insurance; funded retirement plans; paid vacation time; and paid maternity or Paternity leave—are not available. Independent contractors may fund their own benefits, but not on a tax-free basis—whereas many benefits provided by employers to employees are, by law, tax free. independent contractor n. a person or business which performs services for another person or entity under a contract between them, with the terms spelled out such as duties, pay, the amount and type of work and other matters. An independent contractor is distinguished from an employee, who works regularly for an employer. The exact nature of the independent contractor’s relationship with the party hiring him/her/it has become vital since an independent contractor pays his/her/its own social security, income taxes without payroll deduction, has no retirement or health plan rights, and often is not entitled to workers’ compensation coverage. Public agencies, particularly the Internal Revenue Service, look hard at independent contractor agreements when it appears the contractor is much like an employee. An independent contractor must be able to determine when and where work is performed, be able to work for others, provide own equipment, and other factors which are indicative of true independence. The psychological contract has important implications for the employment relationship. Further, due to the nature of the current employment relationship, employee retention is important in order to remain competitive. A breach in the psychological contract can lead to decreased performance, work withdrawal and, eventually, turnover. Therefore, HR practitioners should train managers on the importance of communicating the employment expectations as well as benefits of employment to their employees. By maintaining a healthy employment relationship, organizations will sustain high performance and decreased work withdrawal from employees.

1.3 OBJECTIVE OF THE STUDY

1. To know the contribution of contract employee in growth of organizations especially construction industries.

2. To explore  the areas of contract management

3. To know the strategies involve in managing contract employee in organization.

4. To understand the method of contract negotiation especially on independent basis.

5. To explore into some possible legal problems during the course of recruiting, employing and dismissing employees as well as coming up with some suggestions on how to adjust and perfect the present employment system.

RESEARCH QUESTION

1. Do contract employees contribute immensely to growth of organizations especially construction industries?

2. How can one explore  the areas of contract management?

3. What are the strategies involve in managing contract employee in organization?

4. Are there some methods involve in contract negotiation especially on independent basis?

1.5 RESEARCH HYPOTHESIS

H0: Contract employees do not contribute immensely to growth of organizations especially construction industries.

H1: Contract employees contribute immensely to growth of organizations especially construction industries.

H0: One cannot explore  the areas of contract management.

H1: One can explore  the areas of contract management.

H0: There are no strategies involve in managing contract employee in organization.

H1: There are  strategies involve in managing contract employee in organization.

1.6 SIGNIFICANCE OF THE STUDY

The primary significance of this study is for partial fulfillment of the requirements for the award of  BSC in public administration. The secondary significance is also geared towards exploring the academic relationship between classroom theory and what is practically attainable in industries and government establishment thus the carefulness in choosing the research topic.

The third significance of the project is to help and guide the younger engineers who will become contractors in the future to know the strategies of  contract bargaining with organization.

The fourth significance of the project is to guide industrial organizations to effective and efficient manage contract employees to enable them to obtain the “best from  which is the ultimate goal of  organization.

  1.   SCOPE OF THE STUDY

This study is centered on strategies of managing contract employees using construction companies in PH as a case study.

1.8  LIMITATION OF STUDY

Despite the limited scope of this study certain constraints were encountered during the research of this project.  Some of the constraints experienced by the researcher were given below:

i.     TIME: This was a major constraint on the researcher during the period of the work. Considering the limited time given for this study, there was not much time to give this research the needed attention.

ii.    FINANCE: Owing to the financial difficulty prevalent in the country and it’s resultant prices of commodities, transportation fares, research materials etc. The researcher did not find it easy meeting all his financial obligations.

iii.  INFORMATION CONSTRAINTS: Nigerian researchers have never had it easy when it comes to obtaining necessary information relevant to their area of study from private business organization and even government agencies. Contruction industries like Bulletin finds it difficult to reveal their internal operations. The primary information was collected through face-to-face interview getting the published materials on this topic meant going from one library to other which was not easy.

Although these problems placed limitations on the study,  but it did not prevent the researcher from carrying out a detailed and comprehensive research work on the subject matter.

1.9 DEFINITION OF TERM

CONTRACT: An agreement entered into between an employer and an employee at the time the employee is hired that outlines the exact nature of their business relationship, specifically what compensation the employee will receive in exchange for specific work performed. Hiring employees is a fairly straightforward task–at least, most of the time. Most states assume an “at will” relationship, under which you can terminate an employee at any time for any reason or no reason. (Or alternately, your employee can quit for any reason.)

CONTRACT EMPLOYEE : The title “contract employee” is essentially a contradiction in terms. Technically, a worker can be a contractor or an employee, not both. The Internal Revenue Service spells out the differences between a contract worker and an employee, and employers should be aware of these differences to avoid misclassifying those who work for them.

Principal Contractor

A person who is appointed to manage, coordinate and/or implement the work or service involved in the contract and/or any subcontractor.

Contractor

A person or company(s), including subcontractors, who are engaged by Company Transport to perform work or carry out a service.

Short term contractor – where contractors carry out a specific task in a short period of time , e.g. forklift repairs, electrical repairs; plumbing repairs completed in a period hours or a day.

Long term contractor – where contractors are engaged on a full time or regular part time basis to carry out tasks which are integrated with the business, e.g. subcontract drivers, container refrigeration maintenance completed in a period of greater than one day

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