{"id":7502,"date":"2025-05-08T15:30:00","date_gmt":"2025-05-08T07:30:00","guid":{"rendered":"https:\/\/dollarsandsense.sg\/business\/?p=7502"},"modified":"2025-05-08T15:31:38","modified_gmt":"2025-05-08T07:31:38","slug":"contract-of-service-vs-contract-for-service-whats-the-difference-between-these-two-employment-relationships","status":"publish","type":"post","link":"https:\/\/dollarsandsense.sg\/business\/contract-of-service-vs-contract-for-service-whats-the-difference-between-these-two-employment-relationships\/","title":{"rendered":"Contract of Service VS Contract for Service: What\u2019s The Difference Between These Two “Employment” Relationships?"},"content":{"rendered":"\n

It\u2019s often said that a business is nothing without its people. However, the people who support businesses to grow may or may not be employees of the company. In this regard, both businesses and their people need to know if they are entering (or should enter) into a Contract of Service<\/strong> or a Contract for Service<\/strong>.<\/p>\n\n\n\n

This is especially for individuals, in their role as freelancers or self-employed, as the distinction is less clear between working with an employer compared to working with a client. Conversely, for larger outfits, including incorporated companies, it will be quite clear that they are entering into a B2B contract with another business.<\/p>\n\n\n\n

What Is A Contract of<\/span> Service?<\/strong><\/h3>\n\n\n\n

A Contract of Service is an agreement between an employer and an employee. The Ministry of Manpower (MOM) states that a Contract of Service defines the terms and conditions of employment and must include the Key Employment Terms (KETs)<\/a> and essential clauses such as hours of work and job scope.<\/p>\n\n\n\n

In Singapore, most working adults are employees, and thus, work under a Contract of Service. Majority of employees in Singapore are also covered under the Employment Act, and are provided statutory benefits. <\/p>\n\n\n\n

Read Also: <\/em><\/strong>Singapore Employment Act: 10 Statutory Requirements To Pay Employees<\/em><\/strong><\/a><\/p>\n\n\n\n

What Is A Contract for<\/span> Service?<\/strong><\/h3>\n\n\n\n

Those who sign a Contract for Service are not defined as employees. They are usually freelancers or vendors who agree to complete an assignment or project for a fee. The Labour Force in Singapore 2024 report states that there are over 201,000 Own Account workers today.<\/p>\n\n\n\n

The Employment Act does not protect such individuals. This is a big consideration as such individuals do not enjoy statutory benefits and protection such as paid annual leaves, public holidays and medical leaves. <\/p>\n\n\n\n

However, MOM encourages businesses and self-employed persons to use the\u00a0KETs template for self-employed persons<\/a>\u00a0as a guide when working together. This way, both businesses and self-employed persons understand their working relationship, as well as adopt the Tripartite Standard on Contracting with Self-Employed Persons.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Main<\/strong> Differences Between Contract of Service VS Contract for Service<\/strong><\/h3>\n\n\n\n

MOM explicitly states on its website that \u201cthere is, however, no single conclusive test to distinguish a contract of employment from a contract for services<\/em>\u201d. <\/p>\n\n\n\n

Especially in the new economy and platform businesses, it can be challenging to define whether an individual is an employee or a self-employed person. For instance, in February 2021, the UK Supreme Court ruled that Uber drivers are workers<\/a> and not self-employed. Meanwhile, another court ruling in the UK on 24 June 2021 confirmed that riders for Deliveroo were self-employed<\/a>.<\/p>\n\n\n\n

In Singapore, Platform Workers are now recognised as a new third category of workers – separate from employees and self-employed persons – from January 2025. The government has mandated employee-type protections for this group of workers, requiring mandatory monthly CPF contributions from both workers and the platforms they work with, as well as requiring compensation under the Work Injury Compensation Act (WICA)<\/a>.<\/p>\n\n\n\n

Read Also: Guide To Platform Workers CPF Contributions (And The Platform Workers CPF Transition Support Scheme)<\/a><\/em><\/strong><\/em><\/strong><\/p>\n\n\n\n

To make it clearer, MOM provides some main differentiating factors between the two types of contracts.<\/p>\n\n\n\n

Contract of Service<\/strong><\/td>Contract for Service<\/strong><\/td><\/tr>
Has employer-employee relationship<\/td>Has client-contractor type of relationship<\/td><\/tr>
Employee does business for the employer<\/td>Contractor does business for their own account<\/td><\/tr>
May be covered by the Employment Act<\/td>Not covered by the Employment Act<\/td><\/tr>
Includes terms of employment such as working hours, leave benefits, etc.<\/td>Statutory benefits  do not apply<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Furthermore, MOM provides a set of questions (factors) to be considered when determining if someone is or should be under a Contract of Service VS Contract for Service<\/strong>.<\/p>\n\n\n\n

#1 Control<\/strong><\/h4>\n\n\n\n