HR Toolkit


Getting the Right People

Non-standard Employment Relationships

Non-standard work has advantages and disadvantages from the perspectives of both employers and employees. Employers gain flexibility, access to specialized talent and cost savings by engaging contingent workers. On the downside, they lose out on the engagement and loyalty that come with a long-term attachment. Employees can have more flexibility and they can make more money (particularly as independent contractors), but they lose economic stability.

Employment relationships in nonprofit organizations are increasingly varied and complex. In addition to regular or permanent full-time and part-time employees, organizations often have a mix of employment arrangements for fixed term employees, independent contractors, temporary project staff, interns and co-op students.

 

Non-standard employment: overall trends and issues

Perhaps the single most striking change seen in the nature of work over the last couple of decades has been the global shrinkage of full-time paid employment. In the 1990s, full-time paid employment in Canada grew by only 18%, compared to a 58% increase in non-standard or contingent employment (part-time and temporary employment and self-employment). By the end of the decade one-third of Canadian workers were in non-standard jobs (Lowe, 2003; Townson, 2003).

The growth in non-standard work is widely seen as serving employers' needs for flexibility. It provides them with access to specialized skills - for example, to launch or carry out a particular project. It is also a way to reduce labour costs because workers are there "as needed".

 


Non-standard employment in Canada's nonprofit sector

Studies about the growth in non-standard work do not pay particular attention to the nonprofit sector. This makes it difficult to say how the overall trends play out in this sector.

On one hand global competitiveness does not generally apply to nonprofit organizations and it may have little bearing on employment patterns in the sector. On the other hand, the emphasis on doing more with less is a prominent, perennial challenge for organizations. And we know that workers in the sector value the flexibility that working in the sector offers them. These two factors may be contributing to growth in non-standard work in the sector - along with the nature of funding.

Data on work patterns in the sector is sketchy, particularly information that shows trends in non-standard employment. However, recent studies shed some light:

  • McMullen and Schellenberg (2003) found that part-time and temporary work is more common in the nonprofit sector than in the for-profit sector
  • Warren Dow's (2001) background research for the Voluntary Sector Initiative suggests that the incidence of contract work is growing throughout the sector
  • In some sub-sectors of Canada's cultural sector, full-time employees are the minority. As a result, the cultural sector has paid considerable attention to issues related to self-employment and seasonal and contract work (Mercadex International Inc., 2002)

 

A reflection of the nature of funding for nonprofit organizations

In a report from the Canadian Council on Social Development, Katherine Scott (2003) connects changes in voluntary organizations' funding to increasingly commonplace precarious attachments between employers and employees. Project and short-term funding make it difficult for many organizations to engage employees on a permanent basis. In addition, subsidies that are available for internships and work placements encourage organizations to hire workers for shorter and fixed duration (youth internships, etc.).

This connection between the nature of funding and employment in voluntary sector organizations is very evident in a Report of Human Resource Needs in the nonprofit Sector produced by the Social Planning Council of Sudbury, Ontario (2001). Their survey of nonprofit organizations in Greater Sudbury, all of whom reported using wage subsidy programs, showed that at least six in ten employees classified themselves as part-time or contract workers. Agency managers reported a 66% decrease in full time staff and an 83% increase in part time staff over the previous five years.

 


Types of employment relationships

The common types of employment relationships in the sector include:

 

Permanent employment

A permanent employment agreement is a contract with an employee for full time or part time work for an indeterminate period. Having a permanent contract does not mean a job for life, as employees can be dismissed or laid off. Permanent workers have protections offered by federal and provincial employment legislation and their contracts are generally considered to be the most secure.

 

Fixed term contracts and specified purpose contracts

These are contracts that end when a specific period expires or a specific task is completed. In organizations that rely on project or program based funding, this is a fairly common arrangement. If an employee has such a contract and it expires, often the employee is rehired under another such fixed term/specified purpose contract where the job description is the similar to the first contract.It is wise to consult with a lawyer when using a series of fixed term contracts since the employee who is on a serious of contract may ultimately be considered akin to a permanent employee.

 

Important

Courts will often consider an employee who has been employed under a series of fixed contracts to actually be a permanent employee.


Temporary employment agency contracts

Employment agency workers are the employees of the agency. They are not considered to be employed by the voluntary sector organization itself for the purposes of benefits and employer costs and obligations. Some obligations continue to flow to the employer, such as the obligation that the employee be free of harassment, or that the employee work in a workplace that complies with health and safety legislation

 

Independent contractors

Self-employed independent contractors generally have a different tax and legal status from employees and organizations have different obligations to them than to employees. The contractor is providing a service or developing a product for the organization but her/his day-to-day work is not controlled by the organization.

 

Borrowed, loaned and shared employees

Some employees are paid by a "home" organization and spend their work time and effort at another organization. Typically, a borrowed employee serves the goals of both of the partner organizations. They contribute to day-to-day operations of the host organization and participate in its culture. Borrowed employees carry out their work according to arrangements between two or more organizations. Management of the two organizations may share certain responsibilities to the employee - for example, annual performance review.

 

Internships and co-op placements

 

Important

Discussions of non-standard work arrangements do not generally cover internships and co-op placements. However, because these arrangements are increasingly common in nonprofit organizations and they present some similar management challenges they are included here.


Employees who seek work experience come to nonprofits from colleges, universities and secondary schools or through government supported programs (often with a wage subsidy). In either case the nature of the employment relationship depends on the program. The arrangement between the organization and the employee is spelled out in more or less detail in the agreement between the educational institution or the funder and the organization that hosts the intern or co-op student.

 

Important

 


Implications for nonprofit organizations

 

Employee loyalty and organizational commitment

Employers in all sectors have generally found there is a trade-off for the flexibility and cost savings from contingent work: the erosion of loyalty and commitment that come with a permanent attachment to the organization.

 

Retention/turnover

The challenge to keep employees in part-time and non-permanent positions could become greater if organizations in the sector face growing competition with other sectors for a shrinking number of workers.

 

Legal obligations

With the growing use of non-standard employment relationships, it is not always clear what the law requires of organizations.

Permanent employees, and individuals with fixed term or specified purpose contracts are employees of the organization as define in law and are protected by all employment legislation.

Individuals working for your organization through an Employment Agency are employees of the agency, although the employer continues to have certain obligations.

Independent contractors, if they are truly independent from the organization, are self-employed. However, an organization should not employ  people as self-employed contractors for the purposes of  avoiding the obligations it would have to an employee (for example, benefit coverage, CPP and EI contributions, income tax deductions).  An employer can face significant financial penalties for doing so.

To determine if a person is a self-employed independent contract see the publication Employee or Self-Employed from the Canada Revenue Agency.

 

Important

Designating a person as self-employee when indeed they are not has serious legal and financial ramifications for the organization.

Legal questions can also arise when a worker has a relationship with more than one employer - for example, a temporary agency and its client organization or a loaned employee's home organization and their host organization. It is important for all parties to a "joint employment" or "co-employment" arrangement to understand their obligations and responsibilities.


Worker engagement and inclusion

Short-term team members need to be integrated in the organization and permanent employees need to be valued. There are also implications for exchanging and maintaining information and knowledge as people come and go.

 

Effort required for successful mentoring and internships

Many organizations are understaffed, and the additional responsibility for training, supervising, and mentoring an intern can result in an unsatisfactory experience for both parties.

 


Management strategies

 

Human resources policies

All organizations should have policies to guide their HR practices. It is helpful to have definitions of the kinds of employment relationships that exist in the organization and to spell out the terms and conditions for hiring and employing people in the various categories. In unionized workplaces, negotiated collective agreement(s) may set out when it is appropriate to use temporary, part-time and contract workers.

 

Strategic HR planning

Be deliberate. Think about what kind of employment relationship will get the job done and serve the organization well. Refer to the organization's vision, mission, values as well as the work at hand. Consider whether the project requires specialized knowledge for a limited period of time. Or, do you need to build a new capacity in the organization?

 

Written agreements to clarify employment relationships

If your organization's HR policies are clear, complete and up-to-date, understood and signed off by employees, it may be sufficient to have an employee who is taking up a permanent position sign a letter of offer to confirm the terms and conditions of employment. This is rarely the case for a temporary or contract position. Written agreements, whether they are full-fledged contracts or simpler statements signed by the employer and the employee should spell out the responsibilities and obligations they have to each other. If more than one employer is a party to the relationship with the employee, it is important to document the responsibilities each of the parties has to the others.

 

Important

Ask legal counsel to review your contract letters.


 

Management and operations practices

Organizations can compensate for non-permanent relationships with employees by paying attention to factors that motivate employees to do high quality work and to engage in the organization, its mission and mandate. For example:

  • Deliberate, frequent communication
  • Inclusion of part-time and temporary employees in meetings
  • Creation of an open, interactive work environment
  • Inclusion of part-time and temporary employees in performance management processes

  • Thorough orientation for all employees

 

Links and Resources

Dow, Warren (2001) Backgrounder on Trends in the Changing Workforce and Workplace, Human Resources Committee of the Capacity Joint Table of the Voluntary Sector Initiative (VSI)

McMullen, Kathryn and Grant Schellenberg (2003) Job Quality in Nonprofit Organization, Ottawa: Canadian Policy Research Networks. Available online at http://www.cprn.org

Townson, Monica (2003), Women in Non-Standard Jobs - The Public Policy Challenge, Ottawa: Status of Women Canada. Available online at: http://www.swc-cfc.gc.ca/pubs/0662334809/index_e.html