What is a media freelancer?
As a practising freelancer or someone considering this career path, it’s important to understand the difference between a freelancer and an employee. You need to know your rights and obligations in the course of your work, including whether you are covered under the Employment Act.
Contract for Service vs Contract of Service
A contract of service defines the employer-employee relationship, including the terms and conditions of employment. The contract must include certain terms and essential clauses, such as hours of work and job scope.
In contrast, a contract for service is between a client and an independent contractor (or self-employed person), wherein the client engages the independent contractor to provide certain services. This distinction is important as an independent contractor is not protected by the provisions of the Employment Act. Some key factors that would indicate an independent contractor relationship as opposed to an employment relationship include instances where the person engaged to provide a service:
- is responsible for the production process, timing and method of production;
- owns the tools and the equipment for the factors of production;
- is not provided with a working place and materials;
- carries on business on his or her own account instead of for an employer;
- is liable for any risk of loss;
- is not bound by working hours and does not have leave benefits; or
- is paid upon completion of a project.
There is, however, no single conclusive test to distinguish a contract of employment from a contract for services.
Some of the factors to be considered in identifying a contract of employment include:
- Who decides on the recruitment and dismissal of employees?
- Who pays for employees’ wages and in what ways?
- Who determines the production process, timing and method of production?
- Who is responsible for the provision of work?
- Ownership of factors of production
- Who provides the tools and equipment?
- Who provides the working place and materials?
- Economic considerations
- Is the business carried out on the person’s own account or is it for the employer?
- Can the person share in profit or be liable to any risk of loss?
- How are earnings calculated and profits derived?
An employer cannot rely on a contract labelled “for service” when in substance the contract is an employment contract. If an employer incorrectly characterises an individual as an independent contractor when that individual is an employee, that employer may be penalised.
POSSIBLE MISIDENTIFICATION OF CONTRACT OF SERVICE:
For example, it is possible that a technical crew person such as a grip, who:
- has no control over the production process, timing and method of production;
- does not own the tools and equipment for the factors of production
- whose place, time, and materials of work are provided and determined by
- conducts business for a company
may be interpreted an employee, and therefore protected under the Employment Act.
Under a contract for service, an individual who is self-employed is not covered under the Employment Act and the Work Injury Compensation Act. Such an individual is not entitled to any statutory benefits such as overtime pay and rest day, and does not have mandatory employer CPF contributions.
Query: Can a production house not pay a writer if that writer does not follow a new schedule set by the production house?
Answer: If the writer is an employee of the production house and is covered under the Employment Act, the production house is bound to pay the writer’s salary in accordance with the employment contract. The terms of payment may include performance targets such as conforming to the production house’s writing schedule. If the writer is an independent contractor, the contractual terms between the production house and the independent contractor would determine whether the production house is required to pay the writer.
But this is confusing!
Yes, we know! Unfortunately there isn’t an easy, clear-cut answer. In the end, everything depends upon negotiation and agreement prior to the project. Based on the circumstances and nature of the job, it is up to the parties what relationship they choose to enter into. Should a issue arise and a matter be brought to court, the court will then examine whether the relationship is in fact an employer-employee relationship and the incident be covered under Employment Laws in Singapore. (What can we advise? Is this accurate?)
What about CPF and Taxation for Freelancers?
Self-employed persons (such as independent contractors) earning an annual net trade income of more than S$6,000 are not required to make any CPF contributions, except to their CPF Medisave account at the prevailing mandatory rate. Any additional voluntary contributions to an individual’s CPF Medisave account may be claimed as tax relief in the following year of assessment.
Query: Why aren’t freelancers entitled to CPF if they are required to work at a client’s office a certain number of hours a week? After all, the same freelancer would receive CPF from an educational institution if he or she was teaching a course for a set number of hours during a semester.
Answer: The nature of the contractual relationship (i.e. whether an individual is considered an independent contractor or an employee) would depend on the facts in each instance. An individual conducting a course in an educational institution may be characterised as an employee instead of a self-employed person, in particular if that individual is not responsible for providing the teaching materials for a particular course, and is bound by fixed working hours. That same individual providing services at a client’s office for a fixed number of hours a week may be characterised as an independent contractor instead of an employee, if that individual provides the necessary materials for the production of work, and is liable for any losses arising from the work produced for the client.
The entitlement to CPF flows from the nature of the contractual relationship, and mandatory contributions from an employer only arise from an employer-employee relationship.
A self-employed person is liable for income tax under the Income Tax Act (Cap. 134, 2014 Rev. Ed. Sing.) for the gains or profits from a trade, business, profession or vocation. Self-employed persons carrying on a trade or business may be allowed tax deductions from their income generated, reducing the total “taxable income” of that individual. These include expenses that are wholly and exclusively incurred in the production of income (unless prohibited under the Income Tax Act), including costs of staff and bad debts. Expenditure for the acquisition of assets for the purposes of one’s trade, profession or business, such as intellectual property rights, may be set off against income derived from the utilisation of such assets.
In Singapore, income tax is assessed on a preceding year basis for each year of assessment. For an individual, this means that income tax payable in 2018 would refer to that individual’s income earned in the calendar year 2017. If notified, taxpayers are required to file a tax return with the Inland Revenue Authority of Singapore (“IRAS”), and IRAS will subsequently issue a notice of assessment setting out the details of income tax payable and the terms of payment. The taxpayer must ensure that the information provided to IRAS is correct, or risk facing a fine or imprisonment.
What are the Key Employment Issues and Obligations?
The Employment Act – who is covered?
The Employment Act is Singapore’s main statute for employment or labour law. It applies to all employees of any nationality, except for seafarers, domestic workers, civil servants, and statutory board employees. The Employment Act also does not apply to any person employed in a managerial or an executive position with a monthly basic salary of at least S$4,500.
Employees in a managerial or executive position (“PMEs”) typically have supervisory or executive functions, where their duties and authority may include decisions on recruitment, discipline, termination of employment, assessment of performance and reward, the formulation of strategies and policies of the enterprise, and the management and running of the business. Professionals with tertiary education and specialised knowledge or skills whose employment terms are similar to those of managers and executives also fall within this category of employees. While PMEs are not covered under the Employment Act, those earning a basic monthly salary of up to S$4,500 are covered under the general provisions of the Employment Act, which include sick leave benefits and protection against unfair dismissal. PMEs are not covered under Part IV of the Employment Act (see below for an explanation of Part IV of the Employment Act).
The employment of part-time employees (i.e. employees required to work less than 35 hours a week) is regulated further by the Employment (Part-Time Employees) Regulations (Cap. 91, Section 66B, 1997 Rev. Ed. Sing.).
What are Some of Your Employer’s Obligations?
Part IV of the Employment Act (rest days, overtime, and annual leave)
Part IV of the Employment Act provides for rest days, hours of work, annual leave, retirement benefits, and other conditions of service. Workmen (i.e. employees whose work involves mainly manual labour) who earn up to S$4,500 a month, and employees other than workmen who earn up to S$2,500 a month, are covered by Part IV of the Employment Act, in addition to the general provisions of the Employment Act. The provisions applicable to the employment of such employees are set out in greater detail below.
One (1) day each week must be a rest day without pay. While this day is generally Sunday, the employer can determine otherwise from time to time. The rest day for an employee engaged in shift work may be a continuous period of 30 hours.
The rate of pay for work done on a rest day is set out in Table 1.
Table 1. Rate of pay for work done on a rest day
|If work is done||For up to half normal daily working hours||For more than half normal daily working hours||Beyond normal daily working hours|
|At the employer’s request||One day’s salary||Two days’ salary||Two days’ salary + overtime pay|
|At the employer’s request||Half day’s salary||One day’s salary||One day’s salary + overtime pay|
This rest day entitlement applies to part-time employees who work at least five (5) days in a week. However, the hourly basic pay only increases to one point five (1.5) times his hourly basic rate of pay to the extent that his working hours are longer than the normal work hours of a full time employee.
Maximum work time & overtime pay
Employees are not required to work for more than eight (8) hours in a day or for more than 44 hours in a week. In calculating working hours (which shall not exceed eight (8) hours), rest hours are excluded.
Employees may work for more than eight (8) hours a day or for more than 44 hours in a week in the following scenarios set out in Table 2.