Employment contracts define the relationship between an employer and an employee, so drafting one for a new hire sounds straightforward. But employers sometimes — intentionally or unintentionally — misclassify full-time employees as independent contractors, overlook local employee rights, or pick the wrong contract type. These mistakes waste valuable time, rack up fines, and can even lead to criminal penalties.

The right contract protects you, your business, and your team. Below, you'll see four common contract types, when to use them, and why each one might (or might not) fit your hiring needs.

1. Full-time contract

Full-time employment contracts spell out an employee’s work hours, salary, and benefits. They’re open-ended by default — the relationship continues until either party ends it.

When an end date is added, the document becomes a fixed-term contract (more on that in a moment).

Full-time employee contracts allow you to:

• Give employees more responsibility at work. You can entrust longer-term projects to employees with the confidence that they’ll see them through since a full-time contract signifies long-term commitment.

• Enjoy higher employee dedication and focus. Full-time employees are able to spend more time on your projects and give you consistent output as long as you have tasks for them.

Full-time hours vary between countries and even organizations. Some companies worldwide are joining the four-day workweek movement. Define your employees’ regular hours in your contract and indicate whether they need to work a standard 9-to-5 or can work flexible hours.

Your full-time employment contract should also mention employee compensation, notice period, paid holidays, vacations, and other company perks. Offer full-time employment contracts when you have long-term recurring tasks, and you want the security of having someone handle them continually.

2. Part-time contract

A part-time employment contract is an agreement where employees work fewer hours than their full-time counterparts. “Fewer hours” is relative; a part-time worker may work 20 hours in one organization and 30 hours in another, depending on a business’ needs.

The IRS says that a full-time employee is someone who works an average of at least 30 hours per week or 130 hours monthly. Part-time contracts in the Czech Republic, by contrast, are for seasonal jobs — employees cannot work for the same employer for more than 20 hours a week and 300 hours a year.

A part-time contract is useful when you want to keep your running costs low and can’t afford to pay full-time wages and benefits. It’s also useful when you don’t need to elaborately onboard or train new employees to perform their roles. For example, an administrative assistant will usually not need extensive training to perform their duties efficiently.

Part-time contracts work well when your company is growing rapidly but you’re not sure there’s enough work to justify hiring people full time. Hire new employees on a part-time employment contract until you’re certain there’s more work to delegate long term.

Depending on local laws, part-time employees enjoy all the benefits of full-time employees. Always do due diligence and seek legal advice to ensure you’re adhering to local government regulations.

3. Fixed-term contract

A fixed-term contract is ideal for work that has a clear end date—think seasonal peaks, project work, or maternity cover. Confirm local rules on how long the contract can last and whether you can renew it.

Fixed-term contracts are employment agreements in which the employer and employee agree to work together from a fixed start date to a fixed end date. In some countries, a fixed-term contract lasts more than a year, while countries like South Africa require justification for anything longer than 3 months. In general, many countries require a justifiable reason for a fixed-term contract.

Typically, local laws allow you to extend the contract if the project scope expands or timelines shift. However, the length of additional time is subject to local laws. For instance, under Indonesian employment law, fixed-term contracts, including extensions, can only last for a maximum of five years total, or until the worker has completed the project, for project-based contracts. Always check the local regulations or consult a legal advisor before finalizing any terms.

You can combine fixed-term contracts with other types of contracts for added flexibility. For example, your contract can state that employees will work part time or full time for the period outlined in the contract. Full-time, fixed-term employees enjoy the benefits of full-time employees. When the contract lasts less than a year, employers calculate benefits based on the number of months the employee works.

A fixed-term contract is suitable for when you need help for seasonal projects or specific one-time projects. For example, the end of the year might be a peak period for customer inquiries, but most of your support specialists will take time off to be with their families. Offer new incoming customer support specialists a fixed-term contract to cover for your employees on vacation. That’s why fixed-term employees are called temporary employees.

4. Casual contract

Casual employment contracts — sometimes called zero-hour contracts — require independent contractors to be available for work whenever they’re needed without any assurance of long-term engagement. Contractors don’t get a fixed wage because they’re only paid for the time or projects they actually complete, and they can decline work that’s offered. Independent contractors often use this structure, as do many freelancers and other self-employed pros.

If you’re hiring internationally, make sure to research how zero-hour contracts are treated in your country.

How to choose the right contract for each new hire

No contract is a one-size-fits-all solution to your employment needs. Resist the urge to choose a contract type just because it’s popular or your competitors are doing it.

Carefully consider your unique situation and decide what will work best for you. When you’re hiring internationally, it can get even more complicated. So don’t skimp on learning about local labor laws to protect yourself from future legal repercussions — you’ll avoid weighty fines and unpleasant sanctions.

True, all of this sounds like hard work, and it is, but you don’t need to do it on your own. Plane simplifies global hiring and helps you create employment contracts that meet local laws with the help of our legal team. We’ll also help you choose the suitable employment classification for your new hires. Try Plane now, and you’ll be on your way to seamlessly managing employee relationships no matter their contract type.

Frequently asked questions

What is the most common type of employment contract?

The full-time contract is one that many employers use. It typically covers 35–40 hours of work per week and outlines salary, benefits, paid time off, and how either party can end the agreement.

When should I use a fixed-term contract?

A fixed-term contract is ideal for work that has a clear end date — think seasonal peaks, project work, or maternity cover. Confirm local rules on how long the contract can last and whether you can renew it.

What details belong in any employment contract?

At a minimum include: job title and duties, work hours, pay and pay schedule, benefits, vacation and sick leave, notice period, confidentiality or non-compete clauses, how disputes will be handled, the start date, any end date, and signatures from both sides. Please note that contract requirements will vary by country.

Do part-time employees get the same benefits as full-time workers?

That varies by country and sometimes by state or province. Some laws require employers to offer part-time staff pro-rated benefits, while others let companies decide. Review local regulations before finalizing your policy.

What is a casual or zero-hour contract?

This contract engages a worker with no guaranteed hours. The company offers work as needed, and the worker can choose to accept or decline each task. Payment is made only for the hours or projects completed.

Legal Disclaimer:

The information contained in this site is provided for informational purposes only, and should not be construed as legal advice on any subject matter.