Employment Relationships

1
Employment Relationships
2
Objectives

• Introduction
• Describe the nature of the contract of
  employment
• What is meant by a contract of employment
• Detail several tests used to categorise work
  relationships

3
LEARNING OUTCOMES

• You should answer the following
• How does common law define work relationships?
• What tests are applied in determining work
  relationships?

4
The Employment Relationship

• Significance goes beyond the law of employment
• Eg taxation
• Relevant at both state and federal level.

5
Contracts of Employment

• Issues to consider include
• Responsibility for superannuation
• The payment of payroll tax And,
• The payment of income tax.
• Case law on work relationships comes from tax
  assessment cases

6
Contracts of Employment

• Whether persons are employee or not is critical
• Rules of common law mainly apply to employees
• System is based on individual contracts of
  employment in existence
• Concerns itself with the collective aspects of
  the employment relationship.

7
Statutory definitions

• In ordinary language the employer is the "boss
• Referred to as the master
• Employer maybe a natural person or a university
• Several definitions follow

8
Statutory definitions

• Employer - a person who is usually an employer -
  workplace relations act 1996
• Employee - any person whose usual occupation is
  that of an employee workplace relations act 1996
• One has to rely on common law to determine
  whether contract of employment exists.

9
Tests of an Employee

• Common law categorises work relationships into
  two broad categories
• Contracts OF service
• Contracts FOR service
• Independent contractors provide a contract for
  services
• Employee works under contract of service.

10
Tests of an Employee

• To enable work relationships to be categorised CL
  has developed a number of principles. These
  tests are identified in over leaf

11
Control Test

• Measures nature and degree of control
• Developed in 19th century - employees were
  largely servants or labourers.
• Yewens v Noakes (p27) stated
• "a servant is a person subject to the command of
  his master as the manner in which he shall do his
  work."

12
Control Test

• Control test
• In 1951 the above case was used in
• Gould v minister of national insurance (p28).
• Amount of control and nature of control
• 2 essential elements of control
• Nature of control
• Degree of control.

13
Control Test

• Control test
• Control test has become increasingly difficult to
  apply
• Employee work becoming specialised/ complicated
  to the point that the employer lacks requisite to
  direct the employee.

14
Control Test - Cases

• Queensland stations Pty ltd v federal
  commissioner of taxation (p29)
• Held drover was not an employee of the company.
• He was required to use the whole of his time,
  energy and ability in droving
• Drover responsible for provisioning men,
  equipment and horses.

15
Control Test - Cases

• Zuijs v Wirth brothers Pty ltd(p29) control of
  employer superseded by the employers right to
  exercise control.
• Not conclusive to rely solely on the control test
  to distinguish between an employee and an
  independent contactor
• The following provides and example of the
  difficulty

16
Control Test - Cases

• Sgobino v state of south Australia (p30)
• Occupations with limited scope for control held
  to be under contracts of service i.e. employees.
• Held that the plaintiff was under a contract of
  service.

17
Integration Test

• Whether work is integral to the business or an
  accessory to it.
• Not a test in its own right.

18
Integration Test - Cases

• Stevenson Jordan and Harrison v MacDonald and
  Evans (p30)
• Handel en Scheepvaart NV v Slatford (p30)
• Work done as an integral part of the business
• Not integrated into the business but an accessory
  to it.

19
Integration Test - Cases

• Criticisms of the integration test
• Emphasises activities and relegates the work
  performed to the background
• How is an integral part of an organisation
  determined?
• Independent contractors perform work integral to
  the firms operations
• Does not determine an employee or not.

20
Multi Factor Test

• Looks at entire circumstances
• Degree of control
• Mode of remuneration
• Provision of maintenance and tools
• Place and hours of work
• Provisions for holiday
• Ability to delegate
• Deduction of income tax
• Type of contract entered into.

21
Multi Factor Test - Cases

• Australian mutual provident society v
  Chaplin Chaplin (p28)
• Identified as an agent not an employee.
• Had right to incorporate his business
• Able to delegate duties
• Right to enter into a partnership
• Operating own business according to tax returns.

22
Multi Factor Test - Cases

• Stevens v Brodribb Sawmilling Co Pty Ltd ( p31
  33) looked at entire circumstances of work
  relationship

23
Multi Factor Test - Cases

• Degree of control
• Mode of remuneration
• Maintenance and equipment
• The obligation to work
• The recording of hours
• The provision of holidays
• The limitation on delegation
• Tax arrangements

24
Multi Factor Test - Cases

• AMIEU v Mahoneys abattoirs (p35) re federal meat
  industry award 1981
• Held that the worker was an employee.
• Workers provided own tools
• Paid piecework
• Employer deducted income tax.

25
Multi Factor Test - Cases

• Building workers industrial union of Australia v
  Odco Pty ltd (p35) (the Troubleshooters case)
• Workers neither employees of an agency or the
  building contractors
• Workers simply worked for the contractors under
  an arrangement.

26
Tests

• Business test
• Variation of above
• Economic reality test
• Variation of above.
• Ready mixed concrete test
• Not generally accepted in Australia.
• Provides a circular argument.

27
Ready Mixed Concrete Test

• New approach not generally accepted in Australia
• Servant agrees to
• Provide his own work and skill.
• Be subject to the others control.
• Provisions consistent with contract of service

28
Ready Mixed Concrete Test

• It may be seen that the third test in the list
  above is circular in as much as the contract of
  service is known when, in fact, that is precisely
  what the test seeks to establish .

29
LEARNING OUTCOME

• Know the types of employment contract that exist
• Differentiate between them.

30
Types of Contract

• Contracts with labels
• Contracts labels indicate the legal status of a
  worker
• Intention is to classify worker as other than an
  employee
• Typically contains clauses that acknowledge
  worker is not employee
• Summary of cases and relevance follow

31
Key Cases

• Narich Pty Ltd. v Commissioner of Payroll Tax
  (Employee) p39
• AMP Society v Chaplin (Agency)
• Transport Workers Union of Australia v Glynburn
  Contractors (Salisbury) Pty Ltd. (Employee) p40

32
Principles

• Contracts of employment can have labels
• Courts will accept and enforce labels
• If parties depart from expressed intention
  courts scrutinise relationships to determine its
  true character (multi factor test)
• Labels will not prevent a court examining the
  true nature of the work.
• Relationship must be consistent with the label.

33
Hired Employees

• Hired employees
• Some organisations maintain a pool of workers
• Contracts of service exist
• Workers are on payroll and paid as agreed
• Difference is the worker has no agreed PLACE of
  work
• Worker is assigned as and when 3rd party requires
  the service.

34
Hired Employees

• When service is required employer charges out
  worker for an agreed period
• Employee remains on the payroll of the general
  employer.
• Does a contractual arrangement exist between the
  worker and the third party?
• To answer the question the following points are
  important

35
Hired Employees

• Contract is in existence prior to 3rd party
  involvement
• Contract of hire comes into being between the
  general employer and the third party.
• No contract comes into being between the third
  party and the hired employee.
• Hired employee is contracted to the general
  employer. This must end prior to new contract
  being formed.

36
Key Case

• Century Insurance Co Ltd. v Northern Ireland Road
  Transport Board (NIRTB) p42

37
Part Time Employees

• General presumption that contracts of service
  silent on duration are indefinite
• Richardson v Koefod p43.
• Awards/industrial agreements govern part-time
  employment
• Part-time employment creates flexibility in the
  workforce - enables employers and employees to
  appropriate form of agreement.

38
Part Time Employees.

• It is noted that one of the 20 award conditions
  is
• Type of employment, such as full time
  employment, casual employment, regular part-time
  employment and shift work.
• Part-time work cases have set minimum conditions
  that apply to part-time employment.

39
Casual employment

• No clear definition of casual employment
• A separate and distinct contract exists each time
  a person accepts offer of employment.
• There is no guarantee of further employment.
• No income tax, no annual leave No leave or sick
  pay, are common features of most casual contracts.

40
Casual employment

• T W U of Australia v Glynburn contractors
  (Salisbury) Pty ltd P44
• The federal court concluded that the driver was
  engaged on a series of contracts of service.
• Sgobino v state of south Australia, p44 the
  contract was whole and entire and came to an
  end when Sgobino completed each assignment.

41
Casual employment

• Can a casual contract of service be converted
  into an ongoing one?
• Certain rights are excluded to casual employees.
• Reference to metals and engineering workers union
  - western Australia v centurion industries ltd. P
  45 provides various tests

42
Casual employment

• The classifying name given to the worker at
  commencement of employment.
• Provisions of award.
• The reasonable expectation by the worker.
• The number of weekly hours.
• Whether employment was regular.
• Whether the employees work was published in
  advance.

43
Casual employment

• Reasonable expectation of continuity.
• Whether the employee was required to give prior
  notice of absence.
• Whether the employee reasonable expected work to
  be made available.
• Whether the employee had a regular starting and
  finishing time.

44
Casual employment

• Dismissal maybe unfair if an ongoing relationship
  in line with the above list of tests.
• See also Ryde-Eastwood leagues club ltd. V
  Taylor.
• Law provides for two categories of casual
  employment
• True casuals -distinct contracts with each offer
• Workers that start casual basis then form a
  relationship of a more ongoing character.

45
Outworkers

• Outworkers - workers that perform work outside
  the workplace eg at home
• Employees or independent contractors?
• Continuing contract or an ongoing one?
• Several tests apply in making a determination

46
Outworkers

• Airfix Footware ltd. V Cope. Equipment supplied
  by company
• Work carried out at home
• Quantity of work varied according to season.
• This relationship had existed for 7 years
• The company had trained the worker
• Tribunal held that the worker was an employee
  (integration test).

47
Dual Status

• Dual status - refers to a worker who is an
  employee and something else
• Common for a company director to have dual
  status
• Director is not a contract of employment
• If a dispute occurs the courts will consider the
  contract of service.

48
Dual Status

• Toole v Flexihire Pty ltd. A director at the time
  of dismissal
• Tooles employment was resolved at a meeting of
  the board
• Minutes from the meeting later revoked
• Held there was a contract of employment and Toole
  was entitled to have the dismissal determined by
  terms of the written contract of employment.

49
Changed Status

• The legal status of a worker may change over the
  course of time . the contract in existence at
  the time will have bearing on the case.

50
Changed Status

• Molfetas v Dwiar. A carpenter engaged as an
  independent contractor.
• It was agreed later he would work exclusively for
  Dwiar.
• After a accident the court had to decide if Dwiar
  was employee or contractor.
• Held whilst Dwiar was an independent contractor
  when the project had started he was an employee
  at the time of the accident.

51
Independent Contracts

• Sub-contracting
• Outsourcing
• Franchising
• Concessions
• Several reasons for using independent contractors

52
Independent Contracts

• Reduction in the number of employees.
• Contracting out a number of services
• Develop and maintain new aspects of the companys
  operations
• Avoid payment of certain award term and
  conditions (leave loading)
• Avoid dealing with trade unions.

53
Protection for Contractor

• Little protection at common law
• Western Australia does not have state legislative
  protection of other states
• Queensland and new south Wales
• S127c of the workplace relations act 1996 (Cth)
  does provide some protection at a federal level.
• 4 requirements of the federal scheme

54
Protection for Contractor

• It only applies to individuals persons
• The principal must be a constitutional
  corporation or authority
• The contract must relate to performance of work
• The contract must be unfair or harsh.

55
Protection for Contractor

• The federal court will take into account
• Relative bargaining strength of the parties.
• If undue influence or pressure exerted.
• If total pay is less than that of another worker
  performing similar work
• Any other relevant matter as the court sees fit.

56
Hired independent contractors

• Hired independent contractors follow the concept
  of hired employees.
• Several cases are relevant, these are set out

57
Hired independent contractors

• Construction industry training board (CITB) v
  labour force ltd p57.
• Builders workers industrial union of Australia v
  Odco Pty ltd. (Trouble shooters available) p58.

58
Ministers of Religion

• Minister of religion
• Recent cases show that the work arrangements
  between a minister and the church are not
  contractual
• Several cases have found that ministers are
  neither employees nor independent contractors
• Ministers can, however, enter into a specific
  contract.

59
Directors

• Company directors
• 2 kinds
• Executive directors
• Non-executive directors
• Directors remunerated by directors fee
• They become employees through the offer of
  employment contracts.

60
Bailment

• Bailment involves the performance of work. A
  good example is a taxi driver
• The owner bails the car to the driver to collect
  fares for a specific time cost
• The driver returns the vehicle and pays an amount
  previously agreed.
• The point to note is the bailee is not an employee

61
Volunteers

• The voluntary worker
• Voluntary worker are not employees
• Doesnt matter in law if as a voluntary worker
  they are under someones control
• Receiving a payment doesnt change the situation.

62
Partnerships Office Holders

• Partnerships
• A partner is not an employee if they share in the
  profit or losses of a business.
• Office holders
• Judges of the supreme courts are examples of
  office holders .
• Office holders are appointed to a specific
  position and are not employees.

63
TUTORIAL

• List and describe several types of employment.
• Give reasons that part-time employment is being
  encouraged?
• How does part time employment affect the
  construction industry?
• Name with the key points an important case that
  affects hired independent contractors in the
  construction industry.