Contract for Service Vs Contact of Service

Students of Bachelor of Human Resources Management is required to prepare a study on comparison of the contract of service and contract for service and the various types of misconducts by employee in the organization. The purpose of this assignment is to enhance our ability to outline legal tests to determine employer-employee relationship and to evaluate the effectiveness of procedures to prove misconduct in a selected organization. For this assignment, I had choose a company based in Glenmarie, Shah Alam as a reference and were interviewed the Branch Executive for Kuantan Branch, Mr. Matthew Chai on 1st March 2011 at 4pm.

Scott & English (M) Sdn. Bhd., one of Malaysia's leading trading and engineering companies, is a member of the DRB-HICOM Group of companies. Incorporated in 1970, Scott & English (M) Sdn. Bhd. has today grown to be recognised as a premier engineering & trading company, involved in importing, distributing and providing total service support for a wide range of quality industrial and marine. It serves diverse business sectors, namely mining, manufacturing, agriculture and plantation, oil and gas, logging, marine and the transportation industries. From its Head Office in the HICOM-Glenmarie Industrial Park, the company directs a nationwide network of 10 branches and service workshops strategically located in the major towns in Peninsular Malaysia as well as Sabah and Sarawak. To focus operations and communications, products are grouped into two divisions, namely, Power and Industrial. Each division is equipped with the expertise to meet and provide the needs of all our customers. In their relentless pursuit of quality, they have established strategic partnerships with companies known for their culture of excellence. Today, they distribute products of world-renowned names like Cummins, Fleetguard, Holset, TCM and Sullair.

Their vision is to be a leading regional conglomerate through the provision of competitive world-class products and services. Their missions are committed to the creation of brand name recognition by adding value and exceeding customers' expectations, committed to the development of a knowledgeable, dynamic and motivated workforce, committed to the creation and application of innovative technology through strategic alliances, committed to being socially and environmentally responsible corporate citizens, improving the lives of the community we live in and committed to continue to lead the growth of Malaysia's industrialisation.

2.0 CONTRACT OF SERVICE & CONTRACT FOR SERVICE

2.1 CONTRACT OF SERVICE

"Contract of service means 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" (Section 2 (1) of Employment Act 1955)

A contract of service can be in the form of a letter of appointment/employment. The employer cannot change the terms and conditions of employment unless the employee agrees to it. Any terms and conditions of employment, in a contract of service, that is less favourable than the relevant provision under the Employment Act is illegal, null and void. The provision in the Act will take precedence over a particular contractual term that is less favourable. A contract of service is an agreement whereby one person agrees to employ another as an employee and the other agrees to serve his/her employer as an employee. The employer would need to contribute EPF and comply with relevant statutory benefits such as annual leave, sick leave and et cetera for its employees engaged under a contract of service.

In Scott & English, they are practice the Employment Act law. Any person who has entered into a contract of service or of apprenticeship with an employer, whether by way of manual labour or otherwise, whether the contract is express or omplied or is oral or in writing, whether remuneration is calculated by tuime or by work done and whether by the day, week, month or any longer period is (with a few exceptions) a "workman" (section 2(1)) and consequently entitled to the benefits of the Workman's Compensation Act. To every new employee, they given an offer letter after successful in interview session. This offer letter encloses the contract of service which following details are written in the contract:-

a) Name of employee & National Registration Identification Card (NIRC) No

b) Occupation or appointment

c) Wage rates (excluding other allowance)

d) Other allowances payable and rates

e) Other benefits (including approved amenities and service)

f) Agreed normal haours of work per day

g) Rates for overtime work

h) Agreed period of notice of termination of employment or wages in lieu

i) Number of days of entitlement to holidays and annual leave with pay

j) Duration of wage period

However, for employee that given promotion, they also given offer letter and the service contract also is renewed in accordance with the new post.

2.2 CONTRACT FOR SERVICE

"Contract for service is an agreement to provide service to a person or a group of people. The person providing the service is free from any control and monitoring by the person or group of people receiving the service" (http://www.kwsp.gov.my)

In a contract for service, there is no employer and employee relationship. The person is usually self-employed or may provide his/her services on a freelance basis at a fee. He/she is not an employee within the definition in the Employment Act. A contract for service is an agreement whereby a person is engaged as an independent contractor, such as a self-employed person or vendor engaged for a fee to carry out an assignment or a project for the company. Under such a work arrangement, there is no employer-employee relationship, and the employee is not covered by the Employment Act.

In this organization, they would open the tender to cleaning and security service. Contractors that succeed get tender would be supplying their employee here. No working relationship between both parties that are involved. Employee only bound with employers that appoint them not with