Under Malaysian law, the distinction between a ‘contract of service’ and a ‘contract for service’ is significant.
Individuals under a contract of service are treated as employees for the purposes of, amongst others, the Employment Act 1955 and the Industrial Relations Act 1967.
Meanwhile, individuals under a contract for service are treated as independent contractors and are not treated as employees for the purposes of, amongst others, the Employment Act 1955 and the Industrial Relations Act 1967.
The Malaysian courts have provided various insights into the difference between a ‘contract of service’ and a ‘contract for service’.
The following are some of those insights:
Contract of service
– “A contract of service will give rise to an employer and employee relationship”[1]
– “… in the case of a contract of service the master not only directs what work is to be done but also controls the manner of doing it.”[2]
– “… under a contract of service, a man is employed as part of the business, and his work is done as an integral part of the business …”[3]
– “As long as there exists a relationship of a master and servant or that of an employer and employee, the law will infer a contract of service existing between them”[4]
Contract for service
– “… an independent contractor works under a contract for service.”[5]
– “… in the case of a contract for work and labour or a contract for services the employer is entitled to direct what work is to be done, but not to control the manner of doing it.”[6]
– “… under a contract for services, his work, although done for the business, is not integrated into it but is only accessory to it.”[7]
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[1] Letchumanan a/l Gopal (representative for the estate of Rajammah a/p Muthusamy, deceased) v Pacific Orient & Co Sdn Bhd [2011] 6 MLJ 788 (CA), at paragraph 33
[2] Halsbury’s Laws of England, (3rd Ed), Vol 25 at p 452, cited in Letchumanan a/l Gopal (representative for the estate of Rajammah a/p Muthusamy, deceased) v Pacific Orient & Co Sdn Bhd [2011] 6 MLJ 788 (CA), at paragraph 48
[3] Stevenson, Jordan & Harrison, Ltd v Macdonald & Evans [1952] 1 TLR 101 (CA), which was referred to by the Federal Court in Hoh Kian Ngan v Mahkamah Perusahaan Malaysian & Anor [1995] 3 MLJ 369 (FC), at page 392
[4] Lian Ann Lorry Transport & Forwarding Sdn Bhd v Govindasamy [1982] 2 MLJ 232 (FC), at page 234
[5] Mary Colete John v South East Asia Insurance Bhd [2010] 6 MLJ 733 (FC), at paragraph
[6] Halsbury’s Laws of England, (3rd Ed), Vol 25 at p 452, cited in Letchumanan a/l Gopal (representative for the estate of Rajammah a/p Muthusamy, deceased) v Pacific Orient & Co Sdn Bhd [2011] 6 MLJ 788 (CA), at paragraph 48
[7] Stevenson, Jordan & Harrison, Ltd v Macdonald & Evans [1952] 1 TLR 101 (CA), which was referred to by the Federal Court in Hoh Kian Ngan v Mahkamah Perusahaan Malaysian & Anor [1995] 3 MLJ 369 (FC), at page 392