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AGC Portal Pautan Segera admin ag Contract “...” Service – “of” or “for”?

Contract “...” Service – “of” or “for”?

Emel Cetak
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To some people, contract for service and contract of service do not make any difference so long as they are employed. They might think that most probably the two terms differ only on the word “of” and “for”. In actual fact, these “of” and “for” carry a lot more weight rather than pure choices of words. Contract of service and contract for service provide different rights and obligations of the contracting parties. Hence, it is vital to determine the demarcation between contract of service and contract for service.  

Dr. Peter E. Nygh and Peter Butt in Butterworth Concise Legal Dictionary defined contract for service as “a contractual arrangement by which one person agrees to provide workplace services to another. The contract is between two principals and neither is the employer or the employee of the other. The person providing the services is an independent contractor. A contract of service then means a contract under which a person is engaged in the service of an employer to do such work as is contracted for and where the employer directs what it is to be done.” These definitions are indeed open to interpretation and various mechanisms have been introduced to identify such a contract. One of the earliest mechanisms is the control test. The relationship between the contracting parties is determined based on whether there’s control on the employee by the employer. Nevertheless, the control test does not manifest a prima facie contract of service thoughonce the element of control is fulfilled. Hence, the courts are guided by various other tests such as the integration test (where if the person is integrated in the “employer’s” organisation structure, then most probably he is an employee) and the economic reality test (if such “employment” is an investment and entails financial risk, then it is not contract of service). However, the most significant mechanism is determination based on the intention of the parties when signing the contract.   

In conclusion, there is no conclusive mechanism in determining such contract is a contract for service or contract of service. The determination of whether a contract is contract of service or contracts for service is indeed a mixed question of law and fact.


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Jumaat, 27 November 2015, 23:44


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