Employee or independent contractor - law needs to be clear

The recent case in which the Central Provident Fund (CPF) Board applied to recover nearly $417,000 in alleged CPF arrears from Jurong Country Club highlights the highly unsatisfactory state of the current legal distinction between employees and independent contractors (Judge rejects CPF Board's bid to recover $417k in alleged arrears; Dec 25, 2018).

District Judge Jasbendar Kaur said that an inquiry into whether a person is an employee or independent contractor has to be fact-based, where a multi-faceted test is applied.

The complexity of this legal test is unsatisfactory as it means that in many cases where workers are in less-structured working arrangements, parties are not able to say if the worker should be legally treated as an employee or independent contractor.

We have encountered this question in our work with low-income women engaged in part-time work.

For example, are cleaners who come in on a part-time but regular basis independent contractors or part-time employees?

What about child minders who come in on an ad hoc basis?

We tried to ask CPF and the Ministry of Manpower for advice, but they found it difficult to give a definitive answer due to the complexity of the legal test.

This uncertainty makes it difficult for employers to do the right thing and, from our experience, some employers do take advantage of such situations to deny workers their rights.

This law needs to be reviewed urgently, given the sharp rise in gig contracts in the new economy.

In doing this, we should keep in view the need to promote practices that are fair to low-income workers.

If the Government prefers not to change the current legal test, it can consider providing that, regardless of type of work contract, people who work a certain number of hours per month must be given CPF contributions and have certain other rights such as annual leave.

Corinna Lim (Ms)

Executive director


Join ST's Telegram channel and get the latest breaking news delivered to you.

A version of this article appeared in the print edition of The Straits Times on January 04, 2019, with the headline Employee or independent contractor - law needs to be clear. Subscribe