A contract of service defines the employer-employee relationship, including the terms and conditions of employment. The contract must include certain terms and essential clauses, such as hours of work and job scope.
What is a contract of service
A contract of service is an agreement in which:
- One person agrees to employ another as an employee
- The other person agrees to serve the employer as an employee
The agreement can be in writing, verbal, expressed or implied. It can be in the form of a letter of appointment or employment, or an apprenticeship agreement. However, to minimise disputes on the agreed terms and conditions, the contract should be in writing.
From 1 April 2016, all employers must issue key employment terms (KETs) in writing to employees covered by the Employment Act.
Employers must issue KETs in writing to all employees who:
- Enter into a contract of service on or after 1 April 2016.
- Are covered by the Employment Act.
- Are employed for 14 days or more. This refers to the length of contract, not the number of days of work.
Starting a contract of service
The contract is in effect when the new recruit turns up for work on the appointed starting date.
If the recruit fails to turn up:
- The Employment Act does not apply, as the employer-employee relationship did not start
- The employer cannot claim notice pay or any compensation in accordance to the Act
- Any claims for compensation by the employer will have to be a civil claim through a lawyer
Confirmation of an employee
Confirmation depends on the terms in the contract, as it is not covered by the Employment Act.
Note: The length of an employee’s service is calculated from the date on which the employee starts work, and not the date of confirmation.
Terminating a contract of service
Either the employer or the employee can terminate a contract of service.
A contract of service is an agreement between an employer and an employee.
In a contract for service, an independent contractor, such as a self-employed person or vendor, is engaged for a fee to carry out an assignment or project.
This table summarises the main differences between the two:
|Contract of service||Contract for service|
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There is, however, no single conclusive test to distinguish a contract of employment from a contract for services.
Some of the factors to be considered in identifying a contract of employment include:
- Who decides on the recruitment and dismissal of employees?
- Who pays for employees’ wages and in what ways?
- Who determines the production process, timing and method of production?
- Who is responsible for the provision of work?
- Ownership of factors of production
- Who provides the tools and equipment?
- Who provides the working place and materials?
- Economic considerations
- Is the business carried out on the person’s own account or is it for the employer?
- Can the person share in profit or be liable to any risk of loss?
- How are earnings calculated and profits derived?
Self-employed persons (SEPs) can use the KETs template for SEPs to request your service-buyers to provide key terms of engagement.
Service-buyers can use the template as a guide.
As a service-buyer, if you include all suggested terms in Sections A – E, you are ready to adopt the Tripartite Standard on Contracting with SEPs. You are encouraged to do so.
We also encourage SEPs to get your service-buyers to adopt the Tripartite Standard on Contracting with SEPs.
Source of Information:
For all types of Work Passes with their related matters is from the Ministry Of Manpower (MOM), TAFEP &/or Immigration And Checkpoints Authority (ICA), Singapore accordingly.
For all other matters are from the relevant Authorities or Agencies of Government of Singapore.