Employment Relationships
Independent contractor and non-compete contractual agreements are types of employment relationships used in business. Herein is a description of their similarities and differences between the two. Also included is an explanation of which relationship benefits employers more and its impact on the willingness of employees to work in an organization utilizing it.
Independent contractors and non-compete contractual agreements have both similarities and differences. In both contracts, the employment relationship is in effect for a specified duration of time for a specific job (Lawlor & Willey, 2017). Thus, when the work is finished, the relationship ends. In both relationships, the working terms are decided by the agreement. In most cases, the terms of the agreement are a formal written contract, but in other cases, they can be verbal agreements. With independent contractor relationships, individuals can compete with their employers but, with non-compete contractual relationships, employees cannot engage in similar trade with the employer. While an independent contractor agreement does not compensate the employee for agreeing to the terms of the contract, a non-compete contractual agreement pays the employee for accepting not to compete.
The non-compete contractual agreement benefits the employer the most by offering them protection against competition. With this type of relationship, employers can operate their business without fearing that their business advantages will be used against them. The reason is that it prohibits the employee from opening similar trades to their employees as well as revealing sensitive information such as marketing plans, future products, pricing strategy, and production methods of the employer.
The non-compete contractual agreement has adverse effects for wanting to work for a company that follows it. Non-compete contractual agreements are a turn off because they restrict an individual’s right to work(Aobdia,2017). Employees feel that signing a non-compete contractual agreement makes getting another job difficult. Thus, most people may choose not to sign such a contract even if it means walking away from potential opportunities so that they don’t put their future job prospects at risk.
References
Aobdia, D. (2017). Employee mobility, non-compete agreements, product-market competition, and company disclosure. Review of Accounting Studies, 23(1), 296–346. doi: 10.1007/s11142-017-9425-z
Lawlor, L. G., & Willey, S. L. (2017). Are your workers employees or independent contractors? Three exercises to help students accurately classify workers. Journal of Legal Studies Education, 34(2), 167–205. doi: 10.1111/jlse.12060