In almost everywhere in every organisation, the affiliation between an employer and an employee is synchronized by the agreement of employment amid them. On the other hand, there is a distinction between employees and independent contractors in Singapore.
Employees are individuals who work under a contract of service with a company, performing work in return for a salary. On the other hand, independent contractors work under a contract of service with a company for an agreed fee, and the independent contractor’s work isn’t usually subject to the company’s control. This is important because individuals who enter the company as employees are statutorily entitled to certain benefits such as annual leave, medical insurance and employee benefits whereas individuals who connect the company as an autonomous contractor aren’t.
while there is a barely any base of law governing employment, the mainly relevant decree in Singapore is the Employment Act, which relates to every employee and it doesn’t matter from which nation a person belongs to who is under an indenture of service with an employer, apart from for persons employed in a managerial or executive position and earning more than S$4500 per month (and a few other exceptions).
There is a matter of thought that your startup can get away with only appointing “independent contractors” as a substitute of employees by referring to them as such in their contractual agreements. Regrettably, in the event of a disagreement, the title given to the individual in the contract agreement doesn’t matter.
In the country like Singapore, the law seems into a variety of aspects to conclude whether the entity is truly an “employee” of the company. Using the contract as a starting point, the courts will look into the substance of the relationship between the company and the individual, particularly the amount of power the company has over the individual. The more the individual is under the control of the company, the more possible he is to be an employee.
With the proliferation of outsourcing and hiring of consultants in the Singapore start-up scene, it is more important than ever to be able to distinguish between the autonomous contractors and employees of a company. There will be some consequences and accountabilities concerned if a court uncovers that an “independent contractor” working for your start-up was actually an employee.