In the first of our series on the new Civil Code, we take a look at two types of contracts – a “contract for work” and a “contract for employment”.
If this post’s title is confusing, you’re not alone. While in everyday usage, “work” and “employment” are generally synonymous, they’re very different when it comes to the law. The Civil Code defines them as follows:
652. (Definition of contract for work)
A contract for work is a contract whereby one party (the “contractor”) assumes the obligation to complete agreed work and the other party (the “principal”) assumes the obligation to pay remuneration for the results of such work.
664. (Contract of employment)
(1) A contract of employment is formed by the promises of one party to perform services under employment, and another party to pay wages for it.
(2) The party who promises to perform services under employment is referred to as the “employee” and the other party as the “employer”.
Put another way, the first type creates an independent contractor, and the second an employment relationship. For instance, if you hire someone to renovate your kitchen or build you a website, you probably intend them to be an independent contractor (under a “contract for work”) rather than your employee. This is a crucial distinction, as employees are granted a number of protections and entitlements in the Labor Law, while contractors have far less protection.
Companies sometimes will try to hire individuals as independent contractors, rather than as employees. Even though the contract might claim it is a “contract for work” and that the person is an “independent contractor”, courts can look to other factors in deciding whether it is indeed so – including how the person is paid, who controls and directs the work, and whether any tools or work space is provided. Taking a close look at these factors, and deciding which type of contract to use, can save you from unpleasant surprises down the line.