Contract of Service / Contract for Service ??? - Factors to consider

The Supreme Court of Nigeria in the case of SHENA SECURITY CO. LTD VS - AFROPAK (NIG) LID & 2 OTHERS (2008) LPELR 368/2002; (2008) 18 NWLR (pt.1118) 77, (2008)4-5 S.C (PT 11) 117 laid down the following factors that should guide counts in determining which kind of contract parties entered into.

a)     If payments are made by way of "wages" or "salaries" it is indicative that the contract is one of service. If it is a contract for service, the independent contractor gets his payment by way of "fee" in the case at hand; remuneration is neither payment of wages or salaries nor payment of fee. The contractual agreement was modeled upon an apprentice style where the labour of the servant is remunerated by way of settlement at the end of the contract to assist such servant or employee continue on his own rather than payment of monthly salary which the employee may not be able to save and startup a business of his own. The claimant was therefore; to be paid by way of settlement as against a "fee".

b)    Where the employer supplies the tools and other capital equipment, there is a strong likelihood that the contract is that of employment or of service. But where the person engaged has to invest and provide capital for the work to progress, it indicates that it is a contract for service. In claimant's case, the Defendants provided every work tool and the duty of the claimant was to receive stock, sale and account for sales etc. it is contract of service as against contract for service.

c)     In  a  contract  of service/employment,   it  is  inconsistent  for an employee to delegate his duties under the contract and thus where a contract allows  a   person  to  delegate  his  duties thereunder;   it becomes a contract for service. My lord, the terms of the agreement and nature of the claimants duties does not allow claimant to delegate his duties thus; an indicator of a contract of service.

d)    Where the hours of work are not fixed it is not a contract of employment or of service but that for service. In the instant case, the employment of the claimant is fixed by time hours of work this, indicative of contract of employment.

e)     It a not fatal to the existence of a contract of employment/of service that the work is not carried out on the employer’s premises. However, a contract which allows the work to be carried on outside the employer's premises is more likely a contract for service. In the case at hand the claimant carried on his contract at the premises of the defendant thus an indicator that the contract is one of service and not for service.

f)      Where office accommodation and secretary are provided by the employer, it is a contract of service/of employment. The defendants herein provided office accommodation and a secretary from the above guide set out by the Supreme Court in the case of SHENASECURITY CO. LTD - VS - AFROPAK (SUPRA) it can be safely concluded that the contract that existed between the claimant and the Defendant subject of this dispute was a contract of employment or of service and not a contract for service.