Question

(i)                                                                                             Skyros’s Ventures Ltd

                                                                                                 P. O. Box 021

                                                                                                Osu- Accra

                                                                                                24^th September, 2007.

Dear George,

Thank you for coming to see me yesterday in response to our advertisement in the “Daily Graphic”. Since our legal Adviser resigned in July, a great deal of work has piled up and we are anxious to get this cleared as soon as possible.

You have indicated during our discussions that you have been dealing with such commercial cases for some time and we happy to engage you as our legal advisor.

Our secretary will make available a room and all necessary documents to enable you acquaint yourself with all outstanding cases.

Our offices are open from 8: 00 am to 5:00 p.m. and you can use our facilities if you so wish during these hours. Please be reminded that delegation of duties by your outfit is not acceptable.

Your level of fees is acceptable. We reserve the power of dismissal, but work can be cancelled with compensation rights. We hope you can start work on Monday 1^st October 2007.

I look forward to seeing you then.

                                                                                                            Yours faithfully,

                                                                                                            Joe Ansah

                                                            (Managing Director)

Required:

Discuss whether the conditions in the letter indicate a contract of service or a contract for service.

Answer 1

Contract of Service vs Contract for Service :

Under a contract of service, there is no independence of work and a person is hired by an employer as an employee with duties and compensation based on terms and conditions of employment. The compensation is called salary in this case and the employee is bound to follow the instructions of the employer and does not have independence as based on carrying out the work allocated to you.

On the other hand, a contract for service includes an independent person such as a third party contractor who is engagement in a particular task or job on a fee basis and hence, the compensation in the case of Contract for service is called Fee. There is no employer employee relationship but a contractor – contractee relationship and hence, the contractor has independence to carry out the task based on his discretion and his role. Here, the contractor is not covered by the respective employment act and statutory benefits which are provided to employees are not allowed.

In the given case, George has been hired as a legal adviser and hence is not an employee of the organisation. The consideration payable is fees in the given case and further, the email states that he can use their facilities but does not state how he will perform his duties which means the same shall be based on his discretion. Hence, the conditions stated in the letter is Contract for Service.