Employment Agreements VS Service Agreements | INS Global

Employment Agreements VS Service Agreements: What You Need to Know

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Key Takeaways

Differences between Employment Agreements and Service Agreements


It is difficult for most people to distinguish the difference between employment agreements and service agreements. Thus, sometimes they suffer from severe loss in their employment relationships and in worst cases, may even lose their jobs.

This article intends to summarize some of the major differences between such two agreements.

1.  Differences on laws and regulations 

The applicable laws and regulations for an employment agreement is Labor Law, and Labor Contract Law. The applicable laws and regulations for a service agreement is Civil Law, and Contract Law.

2.  Differences on content

In an employment agreement, one party should be a company, an economic organization or a firm, etc., while the other party should be a regular employee. On the other hand, in a service agreement, the agreement can be between two firms or between two employees.

3.  Differences on rules

In an employment agreement, an employee may be compensated directly from the employer, however, the employee must abide by the rules made by the employer, such as working hours etc. However, in a service agreement, the service provider only needs to provide the agreed service or product within the agreed time span. Furthermore, the service provider does not need to obey other regulations unless otherwise agreed.

4.  Differences on compensation

In an employment agreement, if the employee is injured when he/she is working, then the employer must compensate the employee with the amount provided by PRC laws. In a service agreement, if a service provider is injured during working hours, the clients are not obligated to pay any compensation.

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