The main difference between Contract of Service and Contract for Service is the word ‘of’ and ‘for’. To understand this 2 Contract let us look into these scenarios.
Ms. D is a Sales associate in Y Boutique, she works in 2 shift which is either in morning shift from 10.00am till 6.00pm and afternoon shift from 1.00pm till 10.00pm.
Mr. F is a freelancer, He teaches children swimming with a fee of RM50.00 per class on any flexible day.
Ms. D’s contract with Y Boutique is a Contract of Service whereby Mr. F’s contract with the child’s parents is a Contract for Service.
These are the 5 main differences between Contract of Service and Contract for Service:
- Degree of control
The employer of Y boutique is able to regulate Ms. D’s salary and what shift is she supposed to work whereby Mr. F can arrange with the child’s parents on how he is to teach and the time can be rearranged by himself.
- Wages
Ms. D is getting paid every month by Y Boutique if she works according to the contract whereby for Swimming classes Mr. F is getting paid after each lesson he taught. The frequency of the payment differs in both Contract of Service and Contract for Service.
- Contribution to Statutory Organization
Y Boutique as Ms. D’s employer is liable to pay the Employees’ Provident Fund, Social Security’s fund and any other statutory organization fund required by the law in order to protect the employee. On the other hand, the child’s parents are not liable to pay all these funds to Mr. F.
- Services
Ms. D as an employee of the Y boutique is only allowed to work with Y boutique exclusively and she is not allowed to engage other employment with other person or company whereas Mr. F is not solely bound on the service provided by him in the swimming classes, he can be engage in doing any other similar services that he likes.
- Profit
As an employee of Y boutique, Ms. D is entitled to a yearly bonus by the company however, any profit-sharing or bonus depending on the discretion of the company whereas Mr. F is not entitled to any bonus or profit-sharing by teaching the children, if he wishes to earn more he can be more committed by teaching more children.
