A job order contract (JOC) represents the contract between a contractor and an owner, which may include other parties such as sub-contractors. The JOC allows the company to keep track of all jobs, payments and deliveries. It also allows the owners or their representatives to monitor the progress of projects. JOCs are important to businesses because they allow companies to save money and be more efficient in managing their resources. An example would be using a carpenter’s labor instead of hiring a full-time employee. Many small businesses offer a JOC type of service where the owner sends out bids for certain projects or services and then waits for contractors to submit the lowest-priced bid.
What is a Job Order Contract?
Job order contracts come from a different part of the process than other employment contracts. They were designed specifically to protect employers who needed temporary employees on a short-term basis. When an employer needs someone for a specific project or need, they can request that their contractor provide them with a list of potential workers to choose from.
The employer selects the best person from the list given by the contractor, and they sign both the written agreement and the contract as proof of payment. In exchange for being paid, the contractor agrees to fulfil all contractual obligations and complete the task required within the agreed time frame.
This type of contract allows the employer to avoid paying any taxes related to payroll or benefits because the worker is not technically employed at the company. A job order contract also makes it easy for the employer to fire the employee without paying anything – since he doesn’t have to go through the hassle of giving notice.
Organizations use the Job Order Contracting (JOC) project delivery technique to complete multiple, often occurring construction projects swiftly and simply through multi-year contracts for various rehabilitation, repair, and small construction projects. JOC is most frequently used to complete construction projects, respond quickly to recurrent project demands, and clear backlogs of delayed maintenance.
Benefits of JOC contracting
1. More Projects Completed On-Time and On-Budget
JOCs decrease the amount of idle time between projects by reducing the overall cost associated with maintaining inventory stock, scheduling people, advertising, and finding sub-contractors and suppliers. That’s why JOCs are most commonly found in the construction world.
2. Reduced Labor Costs
Since JOCs give clients more control over hiring decisions, they also reduce labor costs. The reason is that JOCs are typically shorter term and thus less expensive than permanent positions. It saves the client money while still getting the work done.
3. Improved Project Management
When working under an open-ended contract, there’s no guarantee that you’ll get the same results for every project. With JOCs, managers can set realistic goals, manage risk, and ensure the completed product follows the specifications.
4. Long-Term Relationships
If your company has a history of returning to the same contractor on various occasions, you might consider signing them up for a long-term relationship. This way, if something happens unexpectedly, you know who to call!
5. Transparency
Transparency is key in this industry. If you, as the employer, won’t know exactly how much the JOC will cost, you may end up being stuck with a higher price tag. This isn’t always fair to either party. You should always know the total cost before deciding whether or not to sign the contract.
6. Reduced Legal Fees
Most jurisdictions have laws to protect the public from unscrupulous individuals. These laws include laws about minimum wage requirements and workers’ compensation insurance. There are also regulations designed to prevent fraud. Some regulations require that these documents be filed and updated throughout the project. Having your legal team may help avoid costly fines and delays.
Conclusion
Contracting out jobs offers many advantages for both the employer and the employees. For employers, it helps them save money without investing in staff. Employees benefit because they have better job security and increased opportunities for advancement.
