Contract Of Service Case Study

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A contract of service is an agreement where one person agrees to employ another as an employee and the other agrees to serve his employer as an employee. Under a contract of service, the employer must contribute to CPF and provide relevant statutory benefits such as annual leave, sick leave etc. for his employees.
Permanent employees have a contract of service with their employer. By definition, if a worker has a contract of service with an organisation, they are an employee. The key rights and responsibilities of employee status under a contract of service are:
• The worker is controlled by their employer – they must perform the tasks they are instructed to by a line manager according to their job description [Carmichael v National Power …show more content…

Under such a work arrangement, there is no employer-employee relationship, and the employee is not covered by the Employment Act.
A contract for services is a strictly business to business contract between two firms on a buyer and supplier basis. The client, or agency, is a buyer and the contractor’s limited company or Umbrella Company is the supplier. There is no question of any employment relationship.
Contractor’s companies that enter into a contract for services with another organisation (including public sector organisations or not-for-profit companies) have clear rights and obligations. A person who works under a contract for services, i.e. a self-employed person, is neither an employee nor a worker. There is no entitlement to any of the employment rights available to employees and workers.
The key rights, obligations and responsibilities that a contractor’s limited company or umbrella company have under a contract for services include:
• A requirement to supply services to the client according to the contract schedule’s specification
• A requirement to complete the project, and any milestones, according to the contract

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