Contract of service and contract for service

It is indeed important to make a distinction between a contract of service with a contract for service.

A contract of service is basically refers to a contract between an employer and an employee under which the employee agrees to work for the employer. The Employment Act 1955 defined a contract of service as "any agreement whether oral or in writing and whether express or implied, whereby one person agrees to employ another as employee and that other agrees to serve his employer as employee and includes an apprenticeship contract."

By the definition stated above, it can be seen that only a contract of service can give rise to an employer/employee relationship, which is regulated by the Employment Act 1955 and Industrial Relation Act 1967. Such employer/employee relationship must exist before an employer can be made vicariously liable for the negligent act of his employee in the course of his employment.

A contract for service, on the other hand, is essentially different from that of the contract of service. It does not create an employer/employee relationship and does not therefore come within the purview of the Employment Act 1955 or Industrial Relation Act 1967.

Instead, it creates a contractual relationship between an employer and an independent contractor. Thus, it is very important to distinguish between these two categories.

In practice, it is quite difficult in determining whether the exist of a contract of service or a contract for service. In order to alleviate this problem, the court has developed the following tests:

1.Control test

2.Integration test

3.Multiple test

1. The control test relied upon the extent of control of which an employer had over the employee in relation to the manner which the employee was to do his work.

-The greater the control, the greater the possibility of there was a contract of service.

-However, it has been seen as inadequate especially in occupation of a skilled or professional nature because the employer may be unable to exercise such control.

2. The integration test relies on the extent to which a person can be a part or parcel of the organisation.

-The greater the integration with the organisation, the greater the possibility of a contract of service.

3. The multiple test, which is more relied upon nowadays, takes into account multiple consideration in order to determine whether a contract of service exist.

-Among other things, the court will take into consideration the extent of control, the power of selection and appointment, the power of suspend and dismiss, the intention of the parties and the agreement between them.