Employment is a complex topic to cover since there are numerous statutory laws associated with it. As a result, based on several characteristics or key ways of the job, there are multiple types of employment according to the employment law. When people usually refer to employment status, they mainly discuss full-time employees and part-time employees.
They may even be talking about the self-employed group or individual employee contributions. However, it is essential to understand the classification of workers to ensure that the employees, especially the older workers, are receiving the benefits they are entitled to.
If you are an HR, you would already be familiar with the eight major types of employment available in India. However, certain nuances differentiate one type of employment from the other, and failing to provide a specific kind of benefit for a certain type of employee could put you in legal trouble.
Hence, it is essential that you put your managerial skills to use and get to know the different types of employment, and understand the numerous statutory concerns related to them.
On the other hand, if you are an employee, you should read this blog to understand whether your business is treating you fairly and providing all the benefits that you are entitled to. On that note, let us check out the 8 types of employment in India and understand their differences.
8 Types of Employment in India
The 8 different types of employment in the labour market in India include the following:
- Full-time Employees
- Part-time Employees
- Employment Contract
- Commission-based Employment
- Casual Employment
Let us understand these employment types in detail:
➔ Full-time Employees
Full-time employment is the most common employment type as it provides the employees with a consistent source of income, while also providing the employer with a permanent staff member to undertake a specific duty steadily. Typically, the permanent employee works for a fixed term of 38 to 40 hours per week.
In India, the working hours of a typical full-time employee are restricted to a maximum of 48 hours per week and 9 hours per day to ensure compliance with the Shops and Establishment Act as well as the Factories Act of 1948.
Since full-time employment requires the employee to work for their employer throughout the period of employment, they are also granted special benefits as well as access to paid leaves, superannuation payments, registered agreements, parental leave, unpaid leave, etc. They also pay payroll tax and other deductions set by the employment law.
Since full-time employment is based on the employment contract signed by the employee and then the employer, it stipulates in a written contract that the employer, as well as the employee, provide a specific duration for each other while terminating the contract. Such provisions ensure that the employer retains control and the staff stays longer with the business.
➔ Part-time Employees
Part-time employment is similar to full-time employment with the difference for part-time employees being the working hours. While full-time staff work for 38 to 48 hours weekly, part-time workers undertake their duties for up to 30 hours per week.
Usually, they are provided with the same benefits as the full-time staff, with the difference being that they are paid proportionately to their working hours in the business, which can also include irregular shifts as well as working, even if a public holiday falls on their working day. In some companies, they are required to work for a specific number of hours in a calendar month, which also includes irregular hours, to be eligible for leave and other similar benefits.
The leaves are also provided to contingent workers on a pro-rata basis and they may not be eligible for all kinds of leave entitlements and leaves which are provided to the full-time staff member. Hence, people who are unable to work complete full-time work often opt for part-time work.
Similarly, parents, old-timers, and students often opt for part-time work, which enables them to undertake their daily duties along with their work.
➔ Employment Contract
As the name suggests, contract-based employment refers to employment based on a fixed-term contract between the employee and the employer. Such full-time employment contracts are bound by both start and end dates, and hence, it is usually used by an independent contractor, who undertakes specific projects.
Some companies also hire fixed-term contract-based independent contractors to complete tasks on time if they are facing employee shortages due to the absence of their regular employees due to paternity, maternity, sabbatical or medical leaves.
Since this kind of employment is based on a part-time contract, companies offer limited to no extra benefits such as public holiday pay, to such employees under contract employment. As a result, they are also called temporary employees or contingent workers.
On the other hand, if contingent workers prove to be good at their job, the business can convert their fixed-term employment to either part-time employment or full-time position at their organization, which will entail all the benefits associated with the position, such as fixed hourly wages, notice periods, sick leave, etc.
Additionally, contract-based contingent workers can be allowed to work full-time or part-time based on the terms of their contract. They may or may not have paid leaves depending on the contract terms and conditions and the labor market.
➔ Commission-based Employment
Commission-based employment usually refers to the employment provided to an individual for undertaking a specific task or business and the remuneration offered is called commission. Companies usually hire commission-based staff for jobs that require special abilities and are usually non-repetitive in nature.
For example, one employer can hire a celebrity to endorse their product, and based on the number of products they sell based on the ad campaign with the celebrity, they would pay a specific percentage of the sales as a commission. For the next ad campaign, they may hire a different celebrity.
Individuals who work on commission-based employment do not receive any additional benefits apart from the commission for their work, as they are also considered contingent workers. However, they also usually have complete freedom over how they undertake their work.
They can have flexible schedules as their employer will be concerned only with the result. They can also opt for remote working if they wish so, depending on the nature of their work and their employer’s acceptance of the practice.
➔ Casual Employment
Casual employment refers to the practice of employing casual employees, especially during peak seasons, who may have other obligations, which prevent them from working as full-time employees or as contingent workers with a business.
Since this employment type has open-ended contracts which provide the employees with lots of flexibility, it is likely employees who chose it include students, parents, as well as individuals who need to look after their old-age parents, or people with physical disabilities.
Since the relationship between the employee and the employer in this employment is ‘casual’ in nature, seasonal employees are not obligated to have set hours or follow the standard business roster. Instead, they can choose to undertake their tasks at their convenience, while the employer is also not obligated to provide them with designated shifts.
Because of their casual nature, they are not provided with any paid leaves and paid holidays; however, they are eligible for ‘casual loading’ which provides them additional salaries for maintaining pay parity with other employees.
Casual loading is the additional payment provided to casual employees as they do not get any additional benefits enjoyed by the full-time and part-time staff such as leave entitlements.
Apprenticeship refers to the type of employment provided to newly trained candidates who are very new to their chosen profession. Since they are not proficient as their full-time counterparts, apprentices are paid lesser than them.
You can observe apprenticeships where skilled manual labourers are required as such skills require practice and experience to be undertaken well.
Apprenticeship also provides temporary employees with paid leaves while avoiding other common benefits enjoyed by the permanent staff. It can also be either full-time or part-time, which would be defined in the apprenticeship contract.
Some training schools provide full-time apprenticeships since it makes it easier for the new trainee to find an apprenticeship opportunity, while the school can train them well with hands-on practice on live projects.
Apprentices are paid based on various factors such as their age, skillfulness, job sector, etc. If the business hiring the apprentice finds that the employee is highly skilled in their chosen profession, they may also decide to hire the employee as a full-time employee.
A traineeship can be a synonym for an apprenticeship if we ignore the difference in the duration and the industries where both practices are employed.
While apprenticeship is mostly related to manual labour tasks such as hairdressing, electrical work, plumbing, etc., traineeship mostly deals with non-trade sectors and industries requiring white-collar work such as IT, doctors, etc.
The employers keep a close watch on the trainees since they are given more responsibilities and any problems should be resolved at the earliest.
Similarly, traineeships can last anywhere between a few months to 2 years, while apprenticeships are usually shorter in duration. Hence, they are also considered to be contingent workers and are paid wages accordingly.
Due to the longer nature of the traineeship programs, employers usually retain their top performers for long service. Additionally, they are also eligible for leaves as well as rewards for their work, making traineeship a better prospect than apprenticeship. However, the employee gets to learn more in apprenticeship too.
Probation refers to the initial period of employment in an organization when a new employee is scrutinized thoroughly for their work and behaviour. It can last from a few weeks to a few months.
During the probation period, the HR and management maintain a strict vigil over the work performed by newly appointed members to ensure they are undertaking their duties responsibly.
During the probation period, employees are still considered contingent or temporary workers; hence, they are entitled to a lesser number of employee benefits, than a full-time staff member. For example, an employee on probation may not have any paid-offs and a shorter notice period.
The probation period also provides the employee with enough time to understand the organization ad decide whether it is a good cultural fit for them. Employees can also leave the organization without providing any reason during their probation since they have not yet become full-time employees.
Classifying employees is an essential aspect of maximizing your workforce. By classifying the staff, you can boost the overall productivity of the company. While there are several types of employment in India, all of them are sub-types of the 8 major ones which we discussed in this article.
Having different types of employment also provides the added flexibility required by the employees and the employers, which ensures a good balance of talent.
Having multiple employment options helps the company hire only the required type of employee for a specific task, while also allowing the staff member to find the right job as per their personal preferences and requirements.
It is vital to find the right kind of employment, as it satisfies the employees’ needs, helping them stay engaged with their company. Having temporary and casual kinds of employment would also result in all kinds of productive staff staying employed, which may not have been possible if India had only full-time employment.