HRM Presentation: Permanent vs. Short-Term Employment Contracts

This presentation provides an overview of employment contracts, focusing on the differences between permanent and short-term contracts within the context of Human Resource Management (HRM). It highlights the importance of both types of contracts, discussing their trends, advantages, and disadvantages. The presentation explores why companies engage permanent employees, emphasizing job security and commitment. It also examines short-term recruitment practices, citing BMW as an example. The conclusion underscores the increasing trend of companies adopting short-term recruitment processes. The presentation also includes real-world examples of companies using long-term contracts in the United Kingdom and a reference list of relevant academic sources. Desklib provides access to this and many other solved assignments to aid students in their studies.

HRM Presentation

Table of Contents
• Introduction………………………..3
• Employment Contract…………..4
• Importance of both the permanent and short-term employment contract……5
• Trends in employment contracts: Permanent vs. short term.............................6
• Permanent contract....................7
• Why a company engage permanent employees
...................................................8
• Advantages and Disadvanatges of the permanent
contract.......................................9
• Companies using long-term contracts in United
Kingdom......................................10
• Short-term recruitment of BMW...11
• Conclusion…………………………………..12
• Reference List……………………………….13

Introduction
• The HR department is the core department of an
organization be it a big or a small organization
• Recruitment and selection is one of the important
functions of the HR department of an organization
• The names of some companies in different countries that
are following both the contracts have been mentioned in
this project
• The name of the automobile company ‘BMW’
headquartered in Germany has been cited and it has been
shown how the company adopts the short-term
employment contract

Employment contract
• An employment contract is a contract binding
between an employer and employee.
• An employment contract implies all the
important aspects – employee benefits,
employment contracts, terms of contracts,
duration of the contracts and some others

Importance of both the permanent and
short-term employment contract
• There are both long-term employment contract and short-term
employment contract for engaging employees in an organization
• First, both the employer and employee can know the terms and
conditions of the employment
• The employment terms are necessary for the cooperation
between the employer and employees.
• Secondly, the agreement in the employment contract is an
urgent one for settling any dispute between the employer and
the employee in the organization
• The written agreement can be used as a tool of evidence to
negotiate or settle a dispute.

Trends in employment contracts: Permanent vs. short term
• Firstly, through temporary employment no permanent
relationship between the employer and the employee
is established
• It is beneficial for both the employers and the
employees and hence, both the parties are interested
in the short-term employment
• The temporary employment has risen due to the non-
availability of various human resources like medical
sickness, vacations that are planned and unplanned,
lack of competent employees and some others.

Permanent contract
• In a permanent contract, a fixed number of employees
are engaged in a company on the company’s payroll
• A company pays directly to the permanent workers
• The permanent employees are subject to national
insurance and income tax of the country
• . In the previous times, most of the big companies
used to took the employees in company under a long-
term employment contract

Why a company engage permanent employees
• Firstly, a permanent employee works better with
satisfaction rather than a short-term employee
because he feels job security
• Secondly, a permanent employee is able to commit
to his or her employer rather than a short-term
employee as he or she feels security in his service
• Finally, the permanent staffs are more aware of the
goals and objectives of the company and hence,
they can provide more productivity to the company

Advantages and Disadvanatges of the
permanent contract
• More return can be achieved from a permanent employee rather than a
temporary employee
• A permanent employee is considered an asset of an employer as he sustains
long time in a company
• employee turnover costs a company and hence, engaging an employee for
long time saves the costs of interview, screening, recruitment and selection
• Sometimes, an employer has to bear a permanent employee with high
salary if there is no need of it
• sometimes an employee, who has been in a company for long time, commits
nothing to its employer due to over confidence of his or her job security
• The employees under a permanent employment contract cannot leave
organization instantly because he or she is bound to some terms and
conditions.

Companies using long-term contracts in
United Kingdom
• McCarthy Recruitment Ltd
• Foundation SP
• Opinium Research

Short-term recruitment of BMW
• ‘BMW’ has recruited 39,000 engineers in the company
in the past ten years on short-term basis
• The company is following advance recruitement
process to make the recruitment more sophisticated
• The company ‘BMW’ is finding energetic, disciplined
and promising employees from India also and the
Indian citizens are joining BMW to build their career
• The company is picking employees up through walk-in
interview, campuses taking the students and online
recruitment process too

Conclusion
• HR department in an organization is the core
department and there are many activities in the
HR department in an organization
• In recent times, it is a trend of the pioneers of all
the companies to apply the short-term
recruitment process rather than the long-term
recruitment process
• This project is based on the discussion of the
short-term and long-term employment contract