Content uploaded by Andrea Pinna
Author content
All content in this area was uploaded by Andrea Pinna on Mar 07, 2019
Content may be subject to copyright.
Content uploaded by Andrea Pinna
Author content
All content in this area was uploaded by Andrea Pinna on Nov 30, 2018
Content may be subject to copyright.
A blockchain-based Decentralized System for
proper handling of temporary Employment contracts
Andrea Pinna, Simona Ibba
Department of Electrical and Electronic Engineering (DIEE)
University of Cagliari
Piazza D Armi, 09100 Cagliari, Italy.
Email: a.pinna@diee.unica.it, simona.ibba@diee.unica.it
Abstract—Temporary work is an employment situation useful
and suitable in all occasions in which business needs to adjust
more easily and quickly to workload fluctuations or maintain
staffing flexibility. Temporary workers play therefore an impor-
tant role in many companies, but this kind of activity is subject
to a special form of legal protections and many aspects and
risks must be taken into account both employers and employees.
In this work we propose a blockchain-based system that aims to
ensure respect for the rights for all actors involved in a temporary
employment, in order to provide employees with the fair and
legal remuneration (including taxes) of work performances and
a protection in the case employer becomes insolvent. At the
same time, our system wants to assist the employer in processing
contracts with a fully automated and fast procedure. To resolve
these problems we propose the D-ES (Decentralized Employment
System). We first model the employment relationship as a state
system. Then we describe the enabling technology that makes us
able to realize the D-ES. In facts, we propose the implementation
of a DLT (Decentralized Ledger Technology) based system, con-
sisting in a blockchain system and of a web-based environment.
Thanks the decentralized application platforms that makes us
able to develop smart contracts, we define a discrete event control
system that works inside the blockchain. In addition, we discuss
the temporary work in agriculture as a interesting case of study.
Index Terms—blockchain, temporary employment, smart con-
tracts, discrete event model
I. INTRODUCTION
Temporary work contracts play a critical role in the current
world economic and social context. Increasing international
competition, slow economic growth and high unemployment
rates have lead to the creation of greater job flexibility
in many countries and institutions. The diffusion of non-
standard contractual arrangements is also largely facilitated by
technological innovations. In a global economic context, the
competitiveness of companies is closely linked to the ability
to adapt rapidly to new challenges and changes. Temporary
employment could be an important and flexible business
tool, in order to react to the market fluctuations, affected by
economic policies and some seasonal conditions. As a result,
according to International Labour Organization [1] atypical
contractual arrangements are a feature of the contemporary
world of work.
However non-standard work contracts are often character-
ized by a lack of workers’ guarantees, insecurity, low wages,
limited growth prospects, lack of vocational training and less
access to social security systems. Moreover young people,
regardless of the level of education they have and the skills
they possess, are engaged in non-standard jobs more frequently
than other groups of the population.
In addition to this labor flexibility is also often associated
with the absence of a development model combining the
social quality and sustainability of new forms of work to
economic growth and enabling transition from one job to
another and more generally, a full acquisition of human rights.
It is therefore necessary to build social protection instruments
that do not only protect workers from the risk, but also from
the charm of flexibility.
In our work we want to show how blockchain technology
can be used to address the fundamental problems that occur
around temporary employment, in order to protect employees
and to prevent that the competition being distorted in the
benefit of those companies that wish grow on the backs of
exploited illegal workers.
Both businesses and employees need the recognition of the
value of their work, and, in this complex scenario of non-
standard work contracts, the use of blockchain technology of
may be an excellent solution in order to ensure reliability,
transparency and security. Blockchain technology indeed is
based on a decentralized technical database to efficiently
manage transactions. It stores these transactions in a Peer-to-
Peer network. Blockchain technology is also a public registry:
transactions consist of encrypted data that are verified and
approved by the nodes participating in the network, and,
subsequently, added in a block and recorded in the blockchain.
The blockchain is shared between all nodes of the network.
The same information are present on all nodes and therefore
becomes unmodifiable unless through an operation that re-
quires the approval of the majority of the nodes in the network.
In any case, it will not change the history of these same
information. Therefore this technology introduces a new level
of transparency and efficiency, by allowing the network to
manage the transactions and creating confident transactions in
an untrustworthy environment.
Blockchain technology allows to quickly register work
contracts with full protection of the rights both of the worker
and of the employer, in compliance with the legislation. Smart
contracts are immutably saved on the blockchain and can
be observed and checked for compliance at any time by the
competent authorities.
1 1 |Page
arXiv:1711.09758v1 [cs.CY] 23 Nov 2017
The remains of paper is structured as follows. Section II
presents the related works. Section III describes the proposed
system, the methodology that we have taken and gives the
reasons why we chose the blockchain technology. In section
IV we show an application of our methodology and in section
V we discuss about this. Finally, in section VI we present the
conclusions and some future implementations.
II. RE LATE D WO RK S
Blockchain technology can be used in all contexts where
a decentralized system is necessary in order to ensure the
involvement of many actors in the same network and guarantee
a full transparency and reliability between people who do
not know each other. Therefore blockchain technology is not
only useful for creating digital currencies or new financial
technologies, but can be applied for a wide variety of applica-
tions, such as protection systems of digital identity, provenance
of documents, organizational data management, digital and
physical assets. An important research is that carried out by
[3]. They, designing an interdisciplinary approach, analyze
legal aspects and consequences of the use of blockchain for
job organizations that want to challenge the law and the labor
market.
[2] instead examines the use of smart contracts, combined
with intelligent multi-agent systems and Internet-of-Things
devices, in order to deliver self-aware contracts with a high
degree of automation for peer-to-peer collaborations. They
apply a smart contract, mapped onto an automated protocol,
for initiating and terminating a rental contract.
An innovative regulation of labour hours and the associated
payments, is proposed by [4]. They apply recent advancements
in blockchain and cryptographic technologies in order to
develop a non-volatile and inflationary resistant digital asset.
The transfer system considers the average hourly rate of human
labour as the most fundamental unit of economic value.
The Blockchain Research Lab [5] developed a prototype
to manage a smart contract between agency, manufacturer
and worker. They focus on the case of the necessity to
create a valid contract between the agency and the worker
considering that the agency needs a leasing permission and
the manufacturer needs enough funds to pay the agency. The
system, through a smart contract, checks the coexistence of
all these requirements.
The blockchain technology is also a promising technology
for the implementation of several typology of decentralized
systems. In particular, in the field of a public and collaborative
smart city system, blockchain represents a smart solution.
In [6]ibba2017 thanks to the use of smart contracts and an
Agile Involvement of Citizens, is proposed a shared and public
database of eviormental signals. In [7] and [8] the blockchain
is used to implement a smart, decentralized, and free energy
market. The proposed system aims to promote the installation
of renewable energy domestic plants.
III. THE P ROP OS AL
In this section we describe the technical aspect of the
proposed Decentralized Employment System (D-ES).
The proposed system is a solution that makes transparent
and traceable any employment relationship, established for
the temporary work. The system simplifies the recruitment
procedure, and it is a useful tool to prevent the black labour.
In order to model the system, we first identify the actors
which will be considered in the development. The model
considers four typology of actors. Two typology of actors
represent human users. The first is the Employer, who creates
the work activity and announces the availability of vacant
posts. The second is the Worker, who applies for a temporary
job.
The other two typology of actor are components of the
system. Because the technical difficulty of putting directly the
hands in the blockchain, the DES will provide a simplified
user interface, in the form of web platform. The Platform is
the actor that makes users (Employers and Workers) able to
create new works, to apply for them, and to access further
information about the employment relationship. And finally,
the last actor is the Blockchain. The system will be based on
the blockchain technology because its capability to provide
trust and security, and for the possibility of developing decen-
tralized application we will exploit to implement the D-ES.
In the system, the blockchain has the double role: the role
of ledger, public and unchangeable, and the role of control
system which safeguards workers and prevents scams. In fact,
thanks the availability of a decentralized virtual machine,
the blockchain is not only a database but also a computing
resource.
In the remainder of this section the whole model will
be discussed. In particular, at first, an introduction of the
blockchain technology will be provided. Then, the technical
aspects will be exposed.
A. Blockchain: overview
In order to implement the D-ES, we will use the blockchain
technology. In the following we will introduce the blockchain
technology and will explain the motivation of our choice.
A blockchain is a decentralized data structure, reachable and
shared by the nodes of a peer-to-peer network. From a high
level point of view, the blockchain (also called Decentralized
Ledger Technology, DLT) can be seen as a ledger in which
several typology of transaction are stored. Basically, with
the blockchain technology a transaction is an information
package in which specific data are recorded. These data
include a sender and a recipient, a monetary amount, and some
additional properties regarding the exchange.
The blockchain is composed by blocks. Each block is
a list of validated transactions, according with a consensus
algorithm. Blocks are chained thorough a cryptographic code,
called hash, computed basing on the code of the previous
block and the overall digital information that compose each
new block. These properties make the blockchain data un-
changeable, because just a little modification will make the
cryptographic codes inconsistent with the consensus algorithm.
Senders and recipients of transactions have to be accounts
2 2 |Page
of the blockchain, defined by an alphanumeric code called
address.
Second generation blockchains (e.g. the Ethereum
blockchain) provide a computational environment,
programmable by means the developing of decentralized
applications called smart contracts (SC). Each SC can store
data and execute function, and functions can be called by
means an appropriate transaction addressed to the SC. In
other words, a blockchain is a state machine, in which the
state transition function is represented by the execution
of transactions and SC. A new state depends on the data
recorded in the previous state, composed of the information
stored in the blockchain.
One of the most important aspect related to the blockchain is
the possibility of move value or write a contract that involves
a group of people, in the absence of a regulator organism.
The point is that the blockchain creates the necessary trust,
by means the consensus algorithm which rules the peer-to-
peer network. In a fair employment relationship, employer and
workers need to guarantee honesty each other, and the forma-
tion of mutual trust. Actually, if this were always true, people
couldn’t need of regulator organisms. The D-ES will use the
blockchain technology in order to make clear, transparent and
trusty the employment relationship between people who, at
least initially, don’t need to trust each other.
The blockchain will be used to implement a transparent
work ledger, and to implement the model of employment
relationship described in the following.
B. The D-ES state system
In this proposal, we model an employment relationship as
a state system in which states describes the current phase of
the relationship.
Taking in account the need of a legal recognition and
authorization, we suppose actors of the system able to create
legal employment relationships. For instance, the Employer
should have the legal rights to hire people. At the same
time, a Worker should be legally recognized to be able for
a specific job. We represent this point defining a background
system representing a generic Central Authority. The Central
Authority, in order to supervise the employment relationships,
could take advantage of the transparency property of the
blockchain. In the section V provide further details of this
aspect.
In order to describe the model, we first specify states, the
events that change the state, and the role of the actors. Fig.1
shows the D-ES state diagram. The initial state, S0, is an idle
state. The D-ES is ready for the creation of a new employment
relationship.
The first event is called new job offer and it consists in
the creation of a new job offer. It happens when a Employer
completes the procedure to setting up a job offer, aided by the
platform. The Employer uses the interface provided by the
platform in order to specify all the property of the new open
position: the number of working hours, the time wage, the job
Fig. 1. The state diagram describing the employment phases controlled by
the D-ES.
title, etc. In addition, the Employer deposits the amount of
digital asset in order to cover the value of the wage. When
all is done, the platform create and sends to the Blokchain
some ready-made message. That messages include all the
information required to create the set of smart contracts with
which the D-ES will control the employment relationship.
Technical detail of smart contracts will be discussed in the
following.
The new job offer event change the state from the initial
state to the state awaiting appliers. In this state, the D-ES
is configured to accept the application of new workers. Now,
Workers can apply for the open position. In this state, the
platform shows the job offer to the workers. A internal event
application describes when a worker applies for the job offer.
The worker has to send a message to the blokchcain, or
precisely, to a smart contract. That smart contract is charged
to acquire the application request, and to compute and return
to the Worker, an applicants identification code.
When an applicant Worker meets the Employer, they can
give rise the hiring event. The Employer now being in
posses of the applicant identifier. He sends a message to the
blockchain in order to start the employment relationship.
Now the system is arrived to the relationship state. In this
state, the Worker can check, at any time, its working situation
and verify the number of the matured work hours. An internal
event workday describes the maturation of a daily number of
work hours, and occurs when the Employer sends a message to
the blockchain in order to certify that the worker has completed
a work day.
Automatically, when the stipulated working hours are over,
the contract declares the end of the relationship and occurs the
payment” event. During this event, the system moves the wage
deposited by the Employer in the account of the Worker. This
event moves from the relationship to the conclusion state.
C. Implementation of the decentralized system
In our proposal, the blockchain has an active role and it
is a real actor of the system. Summarizing, the blockchain
will identify the Employers, identify the Workers, record every
3 3 |Page
employment relationship, control and compute the evolution of
the employment relationship, and, finally, compute and transfer
the wage from Employers to Workers.
All these actions will be done by means the execution
of a decentralized computer programs called smart contracts.
The D-ES works through an decentralized ecosystem of three
typology of smart contract. They are named: sc deposit,
sc application, sc relationship. In order to automate the cre-
ation of new employment relationship, the three typology of
smart contract will be recorded ready-made in the Platform
system.
According with the state system described before, the
Platform customizes the three smart contracts with the job
description data provided by the Employer. At the event new
job offer, the three smart contracts are created, configured and
written inside the blockchain. Each one of the three smart
contracts knows the address of the other two.
The contract type sc deposit implements a token deposit.
Token and coin deposits are a popular application in the
Ethereum system. In our system, the sc deposit includes a
payment function programmed to transfer the deposited wage
to a specified Worker’s address. This function can be called
only by the sc relationship contract which address is recorded
in the sc deposit memory.
Each contract type sc application provides the application
function. This function is programmed to be called by Work-
ers’ addresses and returns a cryptographic identification code,
valid only for the employment relationship that it represents. In
addition, that smart contract records and provides information
about the job offer.
Finally, a contract type sc relationship provides the hiring
function. This function is programmed to create an employ-
ment relationship. It receives messages from the Employer
address, containing the blockchain address of the Worker
and his identification code as produced by the associated
sc application. The contract checks the validity of the iden-
tification code. In addition, the contract stores the current
number of work hours matured by Workers. This contract is
also able to ask sc application for the agreed number of work
hours. A second function workday updates of the number of
work hours when receives the appropriate message from the
Employer. This function automatically computes the end of
the employment relationship. In that case, in order to call
the payment function, it sends a message to the sc deposit,
specifying the address of the Worker.
D. The role of the Platform
In this proposal, we anticipate the need for a Platform (that
can be seen as an user interface), responsive and easy to
use. This Platform provides forms and instructions that makes
simple the creation of the blokchain system and the control
the employment relationship. The Platform creates the three
smart contract. It simplifies the creation of a new job offer
and provide a friendly interface for the applicant workers.
Furthermore it provides the visualization of the state of the
employment relationship.
IV. D-ES IN FARMING:A CASE STUDY
Temporary work can be defined as an employment rela-
tionship or an agreements between two or more parties that
are not explicitly governed by civil law. Their contracts are
created between the parties on the basis of mutual needs
that emerge during the negotiation phase. Our system want
to ensure respect for the rights for all actors involved in
these employment relationship. In the agricultural sector, the
problem of temporary work is greater than others sectors and
in some countries, such as in Italy, the rules of occasional
work in this context are different from those set out in the
other production sectors.
Given that the protection of workers in the agricultural
sector is a relevant social issue we decided to focus on this
aspect as main use case.
In fact, the exploitation of labour in agriculture offends
one of the most important activity for humanity. Criminal
organizations exploit the work force of the weakest members
of society, like irregular immigrants, and acts as temporary
workers’ agencies, for the benefit of industrial agriculture.
Illicit brokering and exploiters of labour are punished with the
jail, according to the Law. Order forces hardly find criminals
acting the exploitation of labour.
With the term caporalato it is identified a illegal activity
that concern the agricultural work. That consists in a organized
form of the exploitation of labor.
In this case study we face such problem proposing a model
to prevent the black labor. In particular, this D-ES application
works by means a traceability system that obliges farm em-
ployers to make transparent all the working activity, starting
from the employment phase and arriving to the payment phase.
In addition, in this particular application, the goods produced
by the work will be considered legal only if the safeguarding
system produces the certification of saleability. Just like for the
general case, in order to record and control the procedure we
will use the innovative computer technology called blockchain.
A. The D-ES discrete event model in farming
In this case study we consider that a farming activity could
need several workers. For instance, traditional harvesting of
vegetables, involves generally several temporary farmers. For
this reason, the sc relationship will be configured to accept
more than one Worker.
In order to describe the model of the case of study, the
following simplifying assumptions was made:
•Farmers and Employer are legally enabled by a central
authority (i.e. an authorized employment office)
•exists only one typology of job and wage.
•Farmer always completes the job,
•works can be described with the number of work hours
The D-ES state system described in the section III-B stills
valid. In this case, a In order to obtain a high-level description
of the dynamic evolution of the employment relationship, we
provide a Petri Net model in which the state of the system is
described by the marking. Squares represents the transitions
4 4 |Page
Fig. 2. A representation of the D-ES applied to farming temporary work.
The Farm Employer create a new job offer and hires workers aided by the
employment platform. The platform creates the blockchain based decentral-
ized system which control the employment relationship. In this case study,
the system not only automatically pay the salary to the workers, but provide
the saleability certification of the agricultural products.
and circle the places. Places can hold the marking. When a
transition fire, the marking move from the precedent places to
the following places, according the weight and the direction
of the arcs that connect the two typology of nodes.
The Petri net conclude the evolution when no more tran-
sition can fire. In our case, the last transition represents the
certification process. In the following we report the transitions
description. T1: new job offer. The safeguarding system elab-
orated the request of a new farming work. Basing on the job
description (i.e. the number of work hours, and the expected
work product), the system created the three contracts described
in section III-B and collect the wage deposit.
T2: hiring. An applicant Worker applies meet the Employer
and been hired.
T3: workday. A worker finish a work day and the contract
sc relationship update the amount of matured work hours.
T4: certification. This final transition is peculiar of the
farming case study. Whit the firing of this transition, the sys-
tem represent the occurrence of the conditions that certificate
the conclusion of the work, the correct conclusion of the all
temporary employment relationship and the transfer of the
wage to farmers accounts. In addition, the firing of T4 create
the cryptographic certification code with which the Employer
can sell its farming goods to the market.
Places description.
P1: new job. Token in this place are the representation of a
work description. In this proposal, each token describes two
feature, namely the expected work result (i.e the approximate
quantity of goods) and the expected need of men hours. In
this simplified model, P1 is marked with only one token.
P2: deposit. This place represent the existence of a deposited
wage in the sc deposit contract. The marking could represent
the number of daily wage deposited, according with the
specification defined in the creation event of the new job offer.
P3: available positions. When a marking is present, at least
one open position is available. The marking value represents
the total number of work day of the open positions.
P4: applicant Workers. This place marking represents the
number of workers that could apply for the job offering.
p5: working. This place represents the number of farmers
currently hired by the Employer.
P6: matured work hours. The marking in this place repre-
sents the total number of matured work hours by the hired
workers.
P7: salable goods. This place represents the correct end of
all employment relationship and of the farming activity and
the creation of a legal certification of saleability.
The initial marking is equal to zero in all places except
places P1 and P4. The marking in P1 represents the will to
create a new job offer. The marking Min P4 represents the
number of farmer able to apply for the job offer. In Fig. 3 we
represents the Petri Net of the D-ES in farming considering
the case of only one applicant Worker M(P4) = 1. Note that
the weight of some arcs is equal to n=2. With n we represent
the number of workdays (or the number of work hours) of the
job offer.
The reachability graph shown in Fig. 4 of this Petri Net
has seven states. In particular, the last state is characterized
by a marking in the place seven M(7)=1 and in the place four
M(4)=1. The last state is reachable only after the firing of T4,
as described above.
V. DISCUSSION
Traceability is one of the most promising application of the
blockchain technology. Our system provides high-performance
in managing temporary contracts by addressing some of the
key aspects that make them unsuitable for being applied to
the the present working context. It aims to protect the rights
of workers and enterprises at the same time, but also to
ensure full control of the competent authorities during the
verification of the necessary requirements for signing of the
contract (the conditions related to employer and worker must
be fulfilled at the same time) and during the verification of
proper performance of the contract. In fact, the competent
authorities are not always able to detect illegal actions in
terms of taxation and protection of workers in real time, and
generally do not have the capacity to carry out constant and
complete monitoring. The benefits of applying our system
can thus be summarized as follows. In the temporary work
contracts based on blockchain and smart contract, employee
and business data and agreements between them are analysed
automatically in order to facilitate the processing of contracts,
make this procedure fully automated, increase the accuracy
and processing speeds and allow full compliance with existing
contractual contract law. It can cancel the time to verify
the contract’s correctness by the competent authorities: if a
contract was concluded, the requirements of the employer
and the employee were correct. In addition, the competent
authority can carry out constant checks in real time by simply
accessing data recorded on blockchains. Contracts may also
5 5 |Page
Fig. 3. Petri net of the safeguarding system. The marking M(4) of the place p4 represents the number of Workers who apply for the job offer. In this case,
M(4)=1 or rather only one worker applies for the job. The weight of the arcs represents the number of work hours expected for the job. In the represented
case the weight is equal to 2.
Fig. 4. The reachability graph of the Farming Employment relationship Petri
Net in Fig3
be dispatched automatically to the competent authorities. The
immutability of the data saved on blockchain makes the
payments that are consistent with what is stated in the contract
terms. Contractual terms must match payment execution and
must be based on hours worked.
VI. CONCLUSION
The paper proposed the use of blockchain technology to
manage temporary employment in order to protect workers’
rights and make things easier for undertakings that want to
operate in a context of trust and security and fully within the
law. We modeled an employment relationship as a state system
in which states describe every phase of relationship. We have
taken into account all actors of system. One of these actors is
the blockchain that has the double role: it is a ledger, public
and unchangeable where we the contracts can be registered,
and at the same time it has the task of managing, controlling
and monitoring the proper execution of employment contract
in order to safeguard workers, prevents scams and make the
task of businesses and controls by the authorities easier. In
fact, thanks the availability of a decentralized virtual machine,
the blockchain is not only a database but also a computing
resource. In order to keep the model clear and simple, in
this proposal we have not considered some kind of events
that can happen in working life. In facts, in our work we
supposed the employment relationship concludes every time
in the complete satisfaction of contractual terms and in the
time stipulated. Actually, the employment relationship could
be concluded differently or end prematurely. For instance, the
early conclusion case could occurs when the worker does not
reach the workplace, if the employee is made redundant in
proper circumstances or when he is not able to complete the
assigned job. In future, we want to describe and model those
cases with the use of blockchain.
REFERENCES
[1] International Labour Organization (2016) Non-standard forms of employ-
ment, a feature of the contemporary world of work. Available online:
http://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS 534122/
[2] Norta, A., Vedeshin, A., Rand, H., Tobies, S., Rull, A., Poola, M., &
Rull, T. (2017). Self-Aware Agent-Supported Contract Management
on Blockchains for Legal Accountability. Available online: URL:http:
//whitepaper.agrello.org/Agrello Self-Aware Whitepaper.pdf
[3] Faioli, M., Petrilli, E., and Faioli, D. (2016). Blockchain, contratti e
lavoro. La ri-rivoluzione del digitale nel mondo produttivo e nella PA.
Economia and lavoro, 50(2), 139-158.
[4] The Chronobank Team (2016) CHRONOBANK - PHASE 1: A non-
volatile digital token backed by labour-hours Available online: https:
//chronobank.io/files/whitepaper.pdf
[5] Steinmetz F. (2017) Blockchain Technology and the Future of
Temporary Employment Available online: https://blog.hacking.law/
blockchain-technology- and-the- future-of- temporary-employment- 51ff7062b6
[6] Ibba, S., Pinna, A., Seu, M., & Pani, F. E. (2017, May). CitySense:
blockchain-oriented smart cities. In Proceedings of the XP2017 Scientific
Workshops (p. 12). ACM.
[7] Mannaro, K, Pinna, A.& Marchesi,M. (2017) Crypto-Trading:
blockchain-oriented energy market in AEIT 2017 - International Annual
Conference.
[8] Mihaylov, M., Jurado, S., Avellana, N., Van Moffaert, K., de Abril, I.
M., & Nowe, A. (2014, May). NRGcoin: Virtual currency for trading of
renewable energy in smart grids. In European Energy Market (EEM),11th
International Conference (pp.1-6). IEEE
6 6 |Page
