Question

Fatima has an annual contract with Simpson Insurance Brokers to provide property maintenance services; this includes lawn care, snow removal and parking lot maintenance. Fatima spends, on average, 20 hours per week working at the company’s premises and is paid a flat amount monthly. She hires part-time workers, when necessary, to assist her. Fatima does not have any other clients. Fatima uses her own small tools; however the company supplies and maintains a riding lawn mower and a snow plow for her use. Her contact at the company is Alan Sinclair, the Facilities Manager, who meets with her every Monday to discuss the work to be done that week. Alan approves Fatima’s monthly invoices and submits them to Accounts Payable. Does Fatima have a contract of service or a contract for service with Simpson Insurance Brokers? As the company’s Payroll Supervisor, explain to Alan the process and factors you used to make your decision.

Answer 1

In this given scenario, Fatima is on annual contract with Simpson insurance brokers to provide property maintenance service in which the work is defined and for which there is a flat monthly payment made to fatima. The facilities manager Alan Sinclair only meets weekly once to update work .so, now we need to decide whether fatima has a contract of service or contract for service.

First we need to understand the terms contract of service and contract for service to make the decision. Contract of service is usually between employer and employee and there exist a relation of employer and employee and the work is carried out based on process defined by employer where as contract for service is contract between two independent parties, which is usually principal to principal basis in which scope of work is defined and it is carried out by the service provider in independent manner.

Under contract of service one party controls the actions , nature and execution of particular job or service . Example in case of employment contract the employer controls all the aspects of performing the job . In case of contract for service , The scope of work is defined and it is usually for a definite period of time for a fixed amount of money.

Fatima is providing service for a definite of time for a fixed amount of money. Fatima's scope if work is defined and it is independently carried out as per her procedure by using her own manpower and tools. The expliantions provided above makes it clear that fatima is under contract for service.