a. Laws and Guiding Principles
While the inclusion of express provisions setting out the relationship of the parties (e.g. being an employer-employee relationship, or an independent contractor) in the relevant contract or such other document, may be a relevant factor, it is not in itself conclusive as to the relationship, which exists between the parties.
Regardless of the characterization, which the parties themselves have imposed on their relationship, the Courts will look at substance over form. This basically means that the Courts will go beyond such express characterization accorded by the parties, and study the reality of the relationship as a question of fact, while bearing in mind the various factors discussed in Section I above.
Accordingly, the Courts may re-characterize a ‘contract for service’ into a ‘contract of service’, should sufficient factors indicate that the relationship is factually that of an em-ployer and employee.
The burden of proof would typically be on the independent contractor (as plaintiff), who would need to demonstrate that he is an employee.
b. The Legal Consequences of a Re-Characterisation
Where an independent contractor has been re-characterized as an employee, a number of consequences may arise.
Firstly, the employer may be liable for additional statutory contributions under Singapore law. For instance, where the employee is a Singapore citizen or a Singapore permanent resident, the employer may be required to make the applicable contributions to the CPF of the employee, for the period of the employee’s employment.
Secondly, the re-characterization of the independent contractor as an employee opens the employer up to vicarious liability issues. While the employer-entity is generally not vicariously liable for the actions of independent contractors, he would typically be vicari-ously liable for the actions of an employee carried out during the course of employment.
Additionally, should the re-characterized employee fall under the category of an EA Employee, he would be entitled to enjoy the relevant benefits provided pursuant to the Employment Act. As mentioned above, this may include annual leave, paid medical leave, public holiday pay and overtime pay. The employer may also be liable t o the re-characterized employee, for additional compensation or benefits (over and above the express terms of his contract), which the employer grants to its regular employees. As an example, where the employer provides all its employees with pension fund contributions, or a non-discretionary bonus, the re-characterized employee may make an argument that he would be entitled to the same benefits.
c. Judicial Remedies Available to Persons Seeking ‘Employee’ Status
The person seeking ‘employee’ status may wish to bring an action against the employ-er-entity in court. Typically, this course of action would be undertaken only after negoti-ations with the employer-entity are unsuccessful.
d. Legal or Administrative Penalties or Damages for the Employers in the Event of Re-Characterisation
The employer may be liable for the CPF contributions and the additional benefits raised in Section II.b above. Additionally, the employer may also be liable for certain fines which may arise for its failure to meet statutory obligations in respect of the employee (assum-ing the employee is an EA Employee), e.g. for a failure to issue key employment terms and itemized pay slips for the employee.