By Joseph Cheah
The employer-employee relationship is governed by legislations and its contract of employment. It is mandatory that both employer and employee contribute to inter alia the Employees Provident Fund (“EPF”) and the Social Security Organisation (“SOCSO”). An employee who is terminated have a right to bring an action under the Industrial Relations Act 1967.
In contrast, an independent contractor can only rely on their contractual rights if there is any breach in the terms of engagement. There is no need to contribute to EPF and SOCSO.
Hence it’s important to immediately identify whether the esports players that you have engaged to play under your organisation, are considered as employees or not.
There is no fixed test to determine if an individual is an employee or an independent contractor.
The courts particularly pay attention the person’s duties and functions in respect of the business – ie: whether or not the work done is an integral part of the business. If so, the person may be considered as an employee. Generally, the courts consider the following (non-exhaustive):
- Nature of work
- Degree of control by the employer
- Length of time of engagement
- Contractual terms
In short, pay attention to the obligations you give to the esports players. Are there just to participate in tournaments under your brand, or do they add more value to your core business? Are they obligated to participate in commercial shoots, content creation, fan meet ups etc?
This is also applicable to anyone else that you engage on behalf of your organisation, such as streamers.
The classification of employee or independent contractor makes a significant difference.