Abstract:

The economist believe that the contract labor is cost effective and a competitive advantage for the organizations, Human Resources professionals are concerned about high turnover of the contractual employees leading to additional cost incurred on hiring and training of replacements and making them productive. The legal activists and the superior courts in Pakistan consider employing workers on contractual basis and denying the rightful benefits as applicable on permanent workers is bad in law and against the fundamental constitutional rights.  
The purpose of this research was to study the contractual employees morale, job satisfaction, uncertainty, loyalty, benefits (incentives) and unscheduled turnover and explore its impact on employee productivity and overall organizational performance. The study concludes that contractual employment results in low staff morale, low employee commitment and low job satisfaction leading to unscheduled turnover in an organization. The researcher also noticed that the very nature of temporary employment increases feelings of divided allegiance on the part of contract workers. This reduces their level of commitment and hence their productivity.  In view of the earlier research studies and the results of this empirical study it can be concluded that the contractual employment is counter productive and neither in the interest of the employees nor beneficial for the organizations.  The research findings can be used to workout the mechanism to calculate the impact of contract employees low moral, insecurity, low commitment and high turnover on productivity and overall organizational performance. The organizations need to consider the legal framework on contractual employment and study the legal risk associated with hiring the employees on contract. In Pakistan context, the hiring of employees on contract, through the contractor or otherwise have already been declared by the superior courts as permanent employees.