| |
Contract of Service
(Employer/Employee) |
Contract for Service
(Principal/Contractor) |
| Control over work |
Skilled employees may have a high level of independence in the way they work, although the framework within which they work would be set with or by the employer. |
Typically, a contractor has a higher level of independence in the way the work is performed, within the limits of the contract for the work. |
| Independence |
Employees have a duty to perform work for the employer as directed or in accordance with an employment contract. |
The contractor must perform duties in accordance with the contract, but not necessarily in other roles except by agreement. |
| Payment |
Based on the period of time at work regardless of whether work is carried out. |
Typically payment is according to results without regard to the time taken. |
| Liability |
The employer, not the employee is legally liable for the work. |
The contractor is legally liable for the work performed under the contract. |
| Commercial risks |
The employee generally bears no risks in respect of the work and is not liable to remedy any defective work at their own expenses. |
The contractor bears the risks and has the potential to make a profit or loss and is responsible to remedy any defective work at their own expense. |
| Integration in business |
The employee works as part and parcel of the employer's business. |
The contractor works as part of their own business and may be associated with the operations of another business. |
| Ability to delegate |
Employer determines employee's freedom to delegate. |
Typically, a contractor has the ability to delegate the work by agreement or otherwise. |
| Tools and equipment |
Ordinarily provided by the employer, except when specifically agreed otherwise. |
The contractor provides their own tools and equipment. |
| Basis of hiring |
Hired on a continuous basis. |
Hired for a specific task. |
