Employment contracts and types of working
A contract of employment is a legally binding agreement between employer and employee that sets out terms such as pay, hours, holiday entitlement and notice period. Full-time work usually means a permanent contract for around 35 or more hours a week.
Method
- Identify the type of contract described in the case from its features: guaranteed hours suggest full-time or part-time; no guaranteed hours suggests a zero-hours contract.
- Learn the benefits and drawbacks of each contract type for the EMPLOYER, for example zero-hours contracts give flexibility and lower cost when demand is quiet, but can make it harder to guarantee enough staff at busy times.
- Learn the benefits and drawbacks of each contract type for the EMPLOYEE, for example zero-hours contracts give flexibility, but no guaranteed income.
- For explain questions, always check whose perspective the question asks about, employer or employee, and keep both the point and its consequence from that same perspective.
- For evaluate or justify questions on which contract type a business should use, weigh cost and flexibility for the employer against staff motivation and retention, referring to the case's demand pattern, whether it is seasonal or steady.
Worked example
A garden centre's sales are far higher in spring and summer than in winter. Explain one reason why the garden centre might employ some staff on zero-hours contracts.
- Identify the demand pattern described: seasonal, much higher in spring and summer than in winter.
- Identify what a zero-hours contract lets the employer do: offer work only when it is needed, with no obligation to guarantee hours.
- Link this to the seasonal pattern: in winter, when trade is low, the garden centre does not have to pay staff for hours with little work to do.
- State the consequence: staffing costs can flex up in the busy months and down in the quiet months, matching costs to demand.
- Write the explained answer, combining the seasonal demand pattern with the flexibility a zero-hours contract gives the garden centre.
Practice questions
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Q1State what a contract of employment sets out.Show answer
Answer: The terms of the job, for example pay, hours of work, holiday entitlement and notice period.
Q2Identify the type of contract that has no guaranteed minimum hours.Show answer
Answer: A zero-hours contract.
Q3Give one advantage to an employer of part-time contracts.Show answer
Answer: They can be used to cover peak trading times without paying full-time wages when trade is quiet.
Q4State one disadvantage to an employee of a zero-hours contract.Show answer
Answer: Income is insecure and unpredictable, because hours are not guaranteed from week to week.
Q5Explain one advantage to an employee of flexible working.Show answer
Answer: It lets them fit work around other commitments, such as childcare, which can improve motivation and work-life balance.
Q6Identify one item usually included in a contract of employment.Show answer
Answer: Notice period, rate of pay, or hours of work.
Q7State one reason a business might prefer full-time contracts for its key staff.Show answer
Answer: Full-time staff are more likely to be consistently available and build up more experience and loyalty in the role over time.
Exam-style questions
Written in the style of a GCSE Business exam paper, with a full mark scheme.
Explain one advantage and one disadvantage to a business of using zero-hours contracts for its staff.
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A call centre handles a steady, predictable volume of calls all year round. It currently employs all its staff on zero-hours contracts to keep costs flexible, but staff turnover is high, and new staff need two weeks of paid training before they can work unsupervised. Evaluate whether the call centre should continue to use zero-hours contracts for all its staff.
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See real GCSE Business past-paper questions, with official mark schemes →
Free printable worksheet
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