It is very much important to Understand the concept of ‘Contract of Employment’ and ‘Contract for Employment’. You can relate these concepts in different context and cases.

What is “Contract of Employment” and “Contract for Employment”

Contract of employment: In a contract of employment there is an employer and an employee relationship between the parties. The employee works on the guidance and supervision of the employer and receives salary for his work. In contract of employment, employer has control over the activities of the employee and he directs him how to perform his work in a manner he wants. For Example – Mr. A works for XYZ Ltd as a Full-time employee.

There are some characteristics of “Contract of employment.”

1. There is an employer and employee relationship between the parties.

2. One party act on the guidance and supervision of another party.

3. One party receive remuneration as consideration for his work as salary or wages from another party.

4. Being in a “contract of employment” is a full-time job, so generally a person can be in a contact of employment with one person at a time.

5. But the fact given in above point 4 does not prevent him to be in a “Contract for Employment” with any other person during his “Contract of Employment”

Contract for Employment– In a “contract for employment” a person delegates his work to another person in a manner that he has no supervision (certain restrictions can be there) over the activities of other person. The person to whom work has been delegated perform his duty in a professional Capacity and charges his fee accordingly. A person to whom work has been delegated does not perform on the supervision of that person who delegated his work. For Example- XYZ Ltd appoints a lawyer to represent them in court of law.

There are some characteristics of “Contract for employment”. 

1. There is not any employer and employee relationship between the parties.

2. One party does not act on the supervision of another party.

3. One party receive fee as consideration for his work from another party.

4. Being in a “contract for employment” is not a full-time job, so generally a person can be in many “contact for employment” with different person at a time.

As now we have understood the difference between these two concepts, now we will be able to relate these terms in different contexts.

In the context of Consumer protection Act. 

As you know that a person can go to consumer court if he suffers any loss or damage due to deficiency in service. Service means an act perform by one person for another person for a consideration. So, as you can observe that “Contract of Employment” and “Contract for Employment” both comes under the definition of service as in both cases one person is acting for another for a consideration. But in the context of Consumer Protection Act “contract of employment” does not count as service because in “contract of employment” a person performing his duties in the supervision and guidance of its employer, so how can an employer himself go to consumer court as an aggrieved person if suffer damage due to deficiency in service in which he himself had supervision over the activities of the service provider i.e., its employee.

But that does not prevent employer to take action against wrong doing of its employee in the provisions of any other law(s). 

In the Context of Directors under Compnies Act 

The Executive directors of the company are full time employees of the company. Like any other employee they are into “Contract of Employment” with the company. Being an executive director is a full-time job that’s why an executive director can not be a full-time employee elsewhere (in certain exception cases companies Act permits this also). A Non-Executive Director is a part time employee of the company, being a Non-Executive director is a part time job for the director and he can accept a full-time employment elsewhere during his tenure as a part time director in an organization.

In short, an executive Director is in “Contract of Employment” with the Company and a Non-Executive Director is in “Contract for Employment” with the company. A person can be an executive director in one company only and can accept Non- Executive directorship in any other company(ies) but within the limits prescribed under the Companies Act or Article of associations of the Company. Similarly, a Non -Executive director can accept a Non- Executive directorship in any other company(ies) within the limits prescribed under the Companies Act or Article of associations of the Company but he can be an Executive director only in one company.

In the context of Members of parliament, Members of State Legislative assembly and Members of State Legislative Council. 

Is being a Member of Parliament/ Members of State Legislative assembly/ Members of State Legislative assembly is a full-time job? Can a MP/MLA be count as an employee? can he do private practice outside while being a MP/MLA? All these questions are very interesting, Lets read what supreme court says about this. In a decided case regarding this Supreme court Said that

  • The legislators cannot be characterised as full-time salaried employees as there is no relationship of employer and employee.
  • Advocates, who become law-makers, cannot be debarred from practising in courts.
  • The status of legislators (MPs, MLAs, MLCs) is of a member of the House (Parliament/State Assembly). The mere fact that they draw salary under the 1954 Act or different allowances under the relevant Rules framed under the said Act does not result in creation of a relationship of employer and employee between the Government and the legislators, despite the description of payment received by them in the name of salary.
  • Although the legislators are deemed to be public servants, their status is unique and certainly not one of a full-time salaried employee of any person, government, firm, corporation or concern as such.
  • The legislators being elected people’s representatives occupy a seat in Parliament/ Legislative Assembly or Council as its members but are not in the employment of or for that matter full-time salaried employees as such. They occupy a special position so long as the House is not dissolved.
  • The fact that disciplinary or privilege action can be initiated against them by the Speaker of the House does not mean that they can be treated as full-time salaried employees. Similarly, the participation of the legislators in the House for the conduct of its business, by no standards can be considered as service rendered to an employer.
  • The legislators receive payment in the form of salary and allowances or pension from the Consolidated Fund, is not enough to debar them from practising as advocates, sans being a full-time salaried employee of the specified entities.
  • legislators cannot be characterised as full-time salaried employees as there is no relationship of employer and employee
  • No express provision either under the Rules and the law regulating the profession of the lawyers to restrict them from practising on becoming members of Parliament, state assemblies or state councils.

As you can observe from the above points of the judgement that MP/MLA/MLC are not employees and they are not barred from doing private practice unless until they hold any position in Central government/ State government. For Example- Cabinet minister, Minister of State, Prime Minister, Chief Minister etc. (these positions are full time job of Central Government/State Government, as the case may be).

In the context of Attorney General for India 

The Attorney General is the first law officer of the government of India and acts as top advocate for Union Government.  He is responsible for giving advice to President / Government of India upon such legal matters and to perform such other duties of legal character which are assigned to him by the President, but being attorney general for India is not a full-time job of Central Government, Attorney General is not a full time Government servant. He is an advocate of the government and is allowed to take up private practice, provided the other party is not the state. Further, he cannot defend the accused persons in criminal matters without permission of the government.

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Qualification: Student - CA/CS/CMA
Company: M/s. Anupama Tripathi & Associates.
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Member Since: 06 Jun 2020 | Total Posts: 4
I am a B.Com (H) Graduate from Delhi University and a CS Professional Student of ICSI. I am working at Alliance professionals (a corporate law firm in Delhi) as CS trainee from more than a year. My key areas of interest are Corporate laws including Capital Market Laws. View Full Profile

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