Employment Contracts and Organizational Structure for Businesses
Understanding Employment Contracts and Organizational Structure
Employment Contracts: Types and Termination
An employment contract is a formal agreement between an employer and an employee, where the employee is obliged to provide specific services on behalf of the employer and under their direction, in exchange for remuneration.
Types of Employment Contracts
- Indefinite-Term Contracts: These contracts do not specify a fixed duration.
- Fixed-Term Contracts: These contracts have a limited duration. There are various forms, and they can be used to fill a temporary job, as a substitute for an employee entitled to reserve their position, for the completion of specific works and services with an uncertain duration, or to meet market requirements or the accumulation of tasks within a company.
- Training Contracts: Although there are several types, they generally aim to facilitate appropriate professional experience at a study level (in practical training contracts) or to provide technical training and practice (in apprenticeship contracts).
- Part-Time Contracts: This mode is used for services rendered during a specific number of hours per day, per week, or per year. They may be indefinite or fixed-term.
Major Causes for Contract Suspension
Employment contracts can be suspended due to various reasons, including:
- Mutual agreement of the parties.
- Temporary labor disability.
- Maternity or paternity leave.
- Suspension of employment and wages for disciplinary reasons.
- Forced leave if the employee is elected to public office or performs certain trade union duties.
- Exercise of the right to strike.
- Company closure due to legal economic, organizational, technical, or production causes.
Leading Causes of Contract Termination
Contracts can be terminated for several reasons, such as:
- Mutual agreement of the parties.
- Causes described in the contract itself.
- Expiration of the term or completion of the work or service object of the contract.
- Death or retirement of the employer.
- Resignation, death, or retirement of the employee.
- Force majeure preventing job performance.
- Redundancy based on economic, technical, organizational, and production reasons.
- Legally unfounded objective causes.
Organizational Structure: Principles and Importance
The average maturity of a business is often formed by the average period of storage of raw materials, manufacturing, finished product storage, sales collection, and customer service.
The organizational structure, or internal organization, is the form of integration and coordination of different elements that make up a company. It is essential to ensure workers are coordinated, assigned tasks, and avoid duplicated efforts. Furthermore, the organizational structure determines the level of authority and responsibility of each member of the company according to the function they perform.
Foundational Principles of Organizational Structure
Organizational structure rests fundamentally on two kinds of principles:
- Vertical Development Principles: These relate to authority and responsibility, hierarchy, unity of command, and decentralization.
- Horizontal Development Principles: These relate to the division of labor, specialization, coordination, and grouping units.
Key Concepts in Organizational Design
- Hierarchy: Refers to the different levels at which authority is based, i.e., the ability of one person to make decisions and give orders. The concept of authority is understood today as leadership ability, based on competence and acceptance by subordinates.
- Responsibility: Every level of authority carries with it a level of responsibility, i.e., the ability to undertake tasks that correspond to each level. In an organizational structure, it must be clear what degree of authority and responsibility is assigned to each level.
- Unity of Command: Means that any subordinate depends only on one chief.
- Decentralization: Decentralization of tasks can be established by delegating much of the authority associated with roles. Delegation of authority involves assigning a command function to a subordinate.
- Division of Labor: Regarding the division of labor, it involves organizing and dividing work among individuals and coordinating their group activities. In this sense, the simplest criterion of organization is specialization.
- Grouping Units: Having defined the positions of work through specialization, the next step is grouping units under the direction of a person.
In short, in a well-organized company, everyone knows their job, and all parts fit perfectly to develop the system’s functions and achieve its goals.