Contract Administration

Posted in Human Resource Terms, Total Reads: 602

Definition: Contract Administration

In Industrial Relations, the term ‘Contract Administration’ often means grievance handling. Unionised companies acknowledge the fact there exists no contract which is so comprehensive that it covers all aspects and job-related contingencies.

For example, if the contract of employment of Organisation X states that an employee can be discharged on the basis of ‘disciplinary issues’. Suppose Mr. ABC of Organisation X indulges in gambling within the office premise and is fired when the supervisor finds this out, but it is not mentioned in the contract. Mr. ABC’s grievance will be handled under ‘contract administration’. It usually involves but not limits itself to interpretation of the contract. Renegotiation of all or part of the contract is generally not done under contract administration.

Almost all contracts contain a framework for grievance redressal mechanisms that are related to contract interpretation and its application. It is said that this phase is the actual test of the worth of any collective bargaining process.

Nowadays, organisations can hire a third-party contract administrator to ensure the entire process is carried out smoothly and the concerned parties stick to their due diligence. Such portfolios require skills like introduction of value adding services to the client. The traditional Contract administration starts from the time a newly formed contract is launched. It involves training of relevant personnel like the line managers and supervisors of the changes in the contract structure and educating the workforce about the same. For example, any change in the leave policy or the changes in the payroll system as per the newly rolled-out tax rates must be agreed to by all the parties.

However, there are often several glitches during this process and hence continued negotiation and exchange of dialogue is required between the two parties. One commonly used method for this is a labour management committee.


Hence, this concludes the definition of Contract Administration along with its overview.


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