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Unit 14- P3
- Institution
- OCR
P3: Identify the differences between contracts of employment and contract for services.
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Unit 14P3: Identify the differences between contracts of employment and contract for services.
In this piece of coursework, I am going to be identifying the differences between contracts of
employment and contract of services for British Airways.
Contract of employment is an agreement between an employer and employee and is the basis of
the employment relationship. Most employment contracts do not need to be in writing to be legally
valid, but it is better if they are. 1 The employers need to make sure that the employee knows exactly
what is included in the terms of their contracts
Contract for services is a formal, legally binding agreement before a business and a self-employment
individual. It differs between an employment contract – known as a contract of service – which is
between an employer and an individual who then becomes employed by the company. 2
The main difference between contracts of employment and contract for services is that contracts of
employment are between the employer and employee. Whereas contract for services is between
the business and the self-employed individual. Employment contracts are created so that the
employer can state exactly what is required by the employee and the benefits that they will receive
at the business. This doesn’t necessarily have to be written for it to be legal. However, it is better to
have written contracts so that employees are clear on what they are required to do as well as know
that they are entitled to. Majority of businesses give their employees written contracts which they
have signed just in case something happens in the future. British Airways for example would have to
give their employees a contract of employment so that they are aware of what the business requires
of them and any benefits they are given by the business. Contract for services is between a business
and a self-employed worker. Workers under this contract have to find work for themselves and are
treated as any other employee but instead of being paid a salary they are paid wages. British Airways
for example may need an electrician to come and fix something for them. The electrician is called
and works as any other worker for the business as they are providing the service they said they
would to a high standard.
Both employees and employers have obligations they need to follow in Contracts of employment.
This can be split in two, express terms and implied terms. Express terms are things that are
mentioned in the contract such as working hours, salary, holiday pay etc. Whereas implied terms are
things that are not specifically written in the contract but are expected by the employee. For
example, not every task will be written in the contract but is expected to be done if asked by the
employer. British Airways will give employees contracts which they will state certain things that are
relevant. However, they may not include things which are obvious and expected by an employer.
This is because the employee should just carry out the task without questioning it. Contract for
service (self-employed) are responsible for their own insurance and need to make sure that they
make payments such as tax and national insurance. With self-employed workers they do not get
holidays or sick pay as they are the only ones working for the business. If they are unable to attend
to a job they need to find someone who can replace them as they owe it to their client to have a
service that they are waiting for.
Workers under contracts of employments are protected by the Equality Act 2010. This act covers a
number of different legislations. For example, Race Relations Act 2000 is now under the Equality Act
2010 and it protects workers from being discriminated in the work place by other workers a=or
employers. The employees at British Airways will be protected from this. So if they do experience
1
http://www.acas.org.uk/index.aspx?articleid=1577
2
http://www.hrzone.com/hr-glossary/what-is-contract-for-services
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