Analysis of Employment Law Cases - Assignment Example

Name University Course Tutor Date Employment Law Question a: Facts: Mrs. Rosita made an agreement with Mentor Software Suppliers Ltd and signed a letterhead under Conditions of Assignment as an independent contractor. She has to deal with Mentor’s customers, such as Rapster Pty Ltd as a software program specialist. Mrs. Rosita works full-time but she can delegate other duties given that the client is okay. Nevertheless, Clients pay Mrs. Rosita’s remuneration to Mentor whereby the company deducts tax prior to its payment. Based on the legal principles from decided cases, the relationship between Mrs. Rosita and Mentor is that of an employer and employee. Issue: Is Mrs. Rosita an individual contractor or an employee? Rule: Existence of employer/employee relationship forms a contract OF service while a relationship of independent contractor and principal forms a contract FOR service. Analysis Mrs. Rosita signed two documents while working for Mentor Software Suppliers Ltd, namely Conditions of Assignment as Independent Contractor Agreement and Conditions of Assignment of Employee. Based on the legal definition of individual contractor and an employee, Mrs. Rosita falls under employee category. An independent contractor refers to any individual doing business for themselves (Catanzariti 2005, p.25). They can also be called entrepreneurs, self-employed, freelancers, business proprietors, or consultants. Independent contractors own sovereign businesses rather than relying on an employer. They are also not entitled to benefits, such as insurance, time-off payments, or health benefits. Alternatively, an employee is a person who conducts services for an employer. He/she is also controlled by the employer regarding his/her duties and the time for performing those duties. Special statutes for particular situations and common law define employees. Common law defines an employee as an individual who carry out duties controlled and dictated by other people, mainly the principal or the employer. Employees mainly undergo work training and mostly work for an employer. Employer-employee relationship gives an employer the right to lapse an employee’s contract if any. Courts have decided whether a person is an employee or an individual contractor based on three facets namely relationship type, financial, and behavioral control. Financial control deals with facts showing whether a business is entitled to control or direct the business or financial aspects of the employee’s job. These considerations entail the scope of employee’s investment, the amount of money a business can recompense an employee, including whether an employee realize a loss or profit. Behavioral control shows the ability of a business to control or manage how responsibilities are performed through training and instructions. Training allows employees to receive education on how to conduct services in a certain way. In instructions, employees are mostly told how, where, or when to work, what duties to perform, or where to buy services and supplies. According to Catanzariti (2005, p.34) most individuals prefer independent contract rather than a contract of employment for various reasons. First, the suppliers of services possess better tax benefits and have the ability to exercise common rights of law to claim damages unlike employees who are limited to the compensation of workmen. This can be seen in the Australian Air Express Pty Ltd v Langford (2005) 147 IR 240 case. The case involved Australian Air Express Pty Limited, a company operating delivery services in Australia and a driver (Stewart 2011, p.78). The company signed an agreement with the driver stating that he would a) Provide his delivery truck b) Maintain the truck himself c) Bore the operating costs of the truck d) The company could deduct tax from his income e) Port for work regularly everyday f) Drive his vehicle but it has the name of Australian Air g) Carry an identification card given by Australian Air h) Wear a uniform given by Australian Air, and Attend safety trainings and events that Australian Air organizes. The driver sued Australian Air for negligence when he was involved in an accident involving another driver. He argued in court that he was an Australian Air employee citing that Comcare Act would regulate his claim. The Court of Appeal maintained in the main ruling that the Australian Air driver as an independent contractor. Additionally, the NSW Court of Appeal decreed that some facets like Australian Air giving insurance premiums and a weekly amount to Comcare, as well as being represented by a trade union portrayed the driver as an individual contractor. Based on the evidence given above, it is evident that Mrs. Rosita is an employee. First, it is hard to identify whether Rosita is an employee or an individual contractor. However, some duties that she performs for the company shed some light that she is an employee. For instance, Mentor Software Suppliers Ltd hired her as a software program specialist to give her services to the company’s other clients like Rapster Pty Ltd. This means that she is tied under Mentor Software Suppliers Ltd’s and Rapster Pty Ltd’s guidelines despite being allowed to perform her other responsibilities. Another reason why Mrs. Rosita is an employee is that Rapster Pty Ltd first gives her remuneration to Mentor Software Suppliers Ltd to deduct taxes. If she was an individual contractor, Rapster Pty Ltd could pay Mrs. Rosita directly. Additionally, she is taxed like other employees after two weeks. The fact that Rapster Pty Ltd gives Mrs. Rosita equipment and a work manual shows that she works under the company guidelines too. The manual contains conditions and terms about her duties and what she is required to do and behave as indicated by Sappideen, O’Grady, and Riley (2011, 54) irrespective of the fact that the company gives her full access to and utilize its software research and development facilities. Conclusion: Mrs. Rosita is an employee of Mentor Software Suppliers Ltd. Question b Issue: What are the legal rights, any breach of implied duties and remedies at common law and under the Fair Work Act 2009 (Cth)? Rule: Contract should be for a legal purpose and should not be subject to uncertainties of legal effect such as the ability to contract, authenticity of consent. Analysis: Under the Fair Work Act 2009, both parties have legal rights and there is breach of implied duties and remedies at common law. The Act gives Mrs. Rosita the right to have flexible hours. This will help her to take care of herself even when she is about to reach her retirement age. The act states that; “Some want part-time work; some want casual work; and some want to work for blocks of time, take leave and return to work ... Others wish to scale-down and work fewer hours, allowing more time for recreation. Many find it difficult to work full-time, standard hours because of their health, caring responsibilities or other specific circumstance (CCH 2010, p.67)” CCH (2010, 78) also argues that Mrs. Rosita is entitled to a “flexible term” whereby she and the company should make an explicit “Individual Flexibility Arrangement (IFA),” which varies the influence of the agreement to account for the particular situations in her life. Therefore, Mrs. Rosita can negotiate an IFA with Mentor Software Suppliers Ltd, for instance, to change working arrangements. Mrs. Rosita is also entitled to modern awards with a “flexible phrase” that allows her and Mentor Software Suppliers Ltd to create an explicit IFA to diverge the influence of the business contract to account for particular situations in her life. Sappideen et al (2011, p.123) refer modern awards to industrial mechanisms that control the minimum conditions and terms for an explicit occupation or industry, as well as the constitutional minimum outlined by the National Employment Standards (NES). A modern award includes NES provisions and offers added detail concerning NES prerogative operation. The Fair Work Act include as terms that should, should not, or may be incorporated in a modern award. The Act also states that a modern award can cover a state system worker who is not included in a business agreement and does not earn high proceeds. Generally, only personnel at a certain profession or industry can benefit from a modern award. Furthermore, a modern award is utilized as the standard to assess business agreements prior to their approval by the Fair Work Act. Another legal right that Mrs. Rosita can benefit from in her business operation with Mentor Software Suppliers Ltd is the notice of employment termination. The NES create the least period of payment or notice and stipulates that employers must notify their employees about the termination of their employment with no rational cause. The time of constant service with an employer determines the amount of payment or notice. The Fair Work Act demands Mentor Software Suppliers Ltd to increase Mrs. Rosita’s service in the company by a single week if she is above 45 years. Mrs. Rosita may suffer because of breaching a contract she signed with Mentor Software Suppliers Ltd under “Conditions of Assignment of Employee.” The agreement states that “For a period of Thirty Six (36) months after the termination of engagement between Rapster Ltd and Mentor Ltd, Mentor Ltd undertakes that its employee or employees shall not deal with any person or business entity who or which at any time during the preceding Forty Eight (48) months shall have been a customer of or in the habit of dealing with Rapster Pty Ltd, or has been a competitor of Rapster Star Pty Ltd so as to harm Rapster Pty Ltd’s business or goodwill or to compete with Rapster Pty Ltd” ( Carrick and Abourizk 2014, p.1). Both Rapster Ltd and Mentor Ltd could sue Mrs. Rosita for maligning their businesses while still offering her services. These companies also prohibit her from dealing with either of their employees at any time. Mrs. Rosita started a company names the Five Star Ltd where she provides the same services provided by Rapster Ltd and Mentor Ltd. She provides better business terms to her clients. She also maligns Rapster Ltd and Mentor Ltd operations in order to discourage clients from requiring services from these services. Her action has created more problems for Rapster Ltd that is thinking about terminating her services. This also means that Mrs. Rosita has breached her fiduciary duties. Nevertheless, the common law does not restrict a person’s from using his/her general knowledge to generate livelihood after his/her contract is terminated (Sappideen et al, p.128). Therefore, Mrs. Rosita can use the knowledge and skills gained throughout her period of employment in Rapster Ltd and Mentor Ltd to benefit herself. Alternatively, the common law prohibits her from taking information falling under trade secret category as it may destroy a company. In this case, Mrs. Rosita is breaching that law as her tendency to malign Rapster Ltd and Mentor Ltd could tempt her to sell out the companies’ trade secrets. This could be found in the Faccenda Chicken Limited v Fowler and Others at 65 that stipulated that trade secrets involve confidential information that people can even learn through their hearts. Although the common law allows Mrs. Rosita to create her own list of clients, it prohibits her to remove them from her employer’s list. This could be explained using Triangle Corporation v Carnesew case where client lists were unprotected. This case involved former workers who obtained lists throughout their period of employment. Those catalogues contained the names of about 1100 workers and 10,000 clients. The company had included a term in one of the employee’s contract stating that he was not allowed to utilize any confidential information of the company. Nevertheless, the term in his employment agreement could not safeguard the employer as the judge concluded that the identity and additional information about clients in the case failed to fall under the trade secrets category. Conclusion If these companies decide to sue Mrs. Rosita, the judge could demand her to return all the clients she stole from both companies and include a hefty fine on top of that. The remedy in such a situation could involve Rapster Ltd and Mentor Ltd coming up with a specific agreement ordering Mrs. Rosita to return all clients. Nevertheless, this would not hold in court as indicated in Triangle Corporation v Carnesew case citing that Mrs. Rosita did not disclose trade secrets. Bibliographies Carrick, M. & Abourizk, L. (2014), Employees who Leave and Steal Confidential Information. Available at http://www.tved.net.au/index.cfm?SimpleDisplay=PaperDisplay.cfm&PaperDisplay=http://www.tved.net.au/PublicPapers/June_1998,_Sound_Education_in_Law,_Employees_who_Leave_and_Steal_Confidential_Information.htm (Accessed on August 9). Catanzariti, J. (2005), Workplace Relations Insights. Available at http://www.claytonutz.com/publications/newsletters/workplace_relations_insights/20050622/employee_or_contractor_an_ongoing_question_in_industrial_and_other_contexts.page (Accessed on August 9). CCH. (2010), Understanding the Fair Work Act 2nd ed. CCH Australia Limited Sappideen, C, O’Grady, P, & Riley, J. (2011), Macken’s Law of Employment. 7th edn. New York: Law Book Co. Stewart, A. (2011), Stewart’s Guide to Employment Law. 3rd edn. New York: Federation Press. Read More