The Employment Act 1955 defines “contract of service” (COS) as “any agreement, whether oral or in writing and whether express or implied, whereby one person agrees to employ another as an employee and that other agrees to serve his employer as an employee and includes an apprenticeship contract.”
It shall not be confused for “contract for service” (CFS) which is more of a self-employed or freelancer thing. We hear a lot about the Gig Economy these days, well they are the CFS-ers. Or they are often referred as Independent Contractors.
So what are the distinguishable factors between a COS & a CFS? Here is a brief summary:
Contract of Service (COS)
- Obligated to render exclusive service
- Fixed working hours and has regular work
- Earns remuneration by time or piece work
- Comes with a fixed-term contract
- Equipment is provided by employer
- Subjected to disciplinary procedures
- Benefits from statutory contributions like EPF, SOCSO, EIS
- Benefits from other employee benefits like paid leaves & public holidays
Contract for Service (CFS)
- No obligation to render exclusive service ie. freedom to work for others
- Flexible working hours and can determine own working method
- Payment is outcome based ie. completion of tasks
- Mostly tied to a Statement of Work agreement
- Invest in own equipment to deliver service
- Subjected to penalty clauses
- No contributions nor any employee benefits
- Runs own business with business name and logo
COS are for Employees. CFS are for Independent Contractors. And the Act only protects employees. But which employees the Act specifically protects? More of this tomorrow 😉
Bimbo
#EA1955 #HRMatters #KnowledgeSharing #CFS #COS
