Validity of Athena’s Contract of Employment

Whether Athena would be able to be a party to a valid contract of employment, or not?

An employment contract or contract of employment shows the presence of relationship of employee and employer. It is basically a written agreement (or an oral one in certain cases), which specifies the terms and conditions on which the individual agrees to perform the duties as are controlled and directed by the employer, in payment of the agreed upon salary or wage (Murray, 2016).

In the given case study, an employment contract had been formed between Athena and Chinatown where she was given certain responsibilities and had to work for the restaurant. This work was taken up on a full time basis. She was asked to resign from the employment in writing. This was an oral employment contract. Upon the resignation from employment, this contract of employment came to an end. There is nothing to show that there was illegality or lack of any element to hold that Athena was not a party to the contract of employment. 

Conclusion

Thus, Athena had a valid contract of employment drawn with Chinatown.

Whether Athena was still the employee of Chinatown, upon her resignation, or not?

An employee and independent contractor are two roles which an individual can play in course of their work. Both these categories give rise to different rights and different liabilities. There are certain differences in between the two as the independent contractor’s work can be delegated but the same cannot be done for an employee (CCH, 2010). The employer is held responsible for the work of the employee, as the principle of vicarious liability operates. The independent contractors working hours cannot be regulated by the parties employing their services; however, for employees, the working hours can be regulated by the employers. Such factors make it crucial to make differentiation amongst the employees and the independent contractor (Giliker, 2010).

For making the differentiation between the two roles, the common law provides certain tests, which are very helpful. The control test given under Zuijs v Wirth Brothers Pty Ltd [1955] HCA 73 is helpful. Based on this test, the control employed by one person over the other defines the presence of relationship (Australasian Legal Information Institute, 2018). The next test is integration test, which provides that the degree of the integration of a person in the business of the employer has to be seen to decide on this matter. In Humberstone v Northern Timber Mills (1949) 79 CLR 389 it was provided that wearing uniform was the proof of employer employee relationship being present.

Employee or Independent Contractor? Common Law Tests

However, in comparison to these two tests, the multiple indicia test is more appropriate. This test was given in Stevens v Brodribb Sawmilling Co Pty Ltd [1986] HCA 1. Later on, with the case of Hollis v Vabu Pty Limited (2001) 207 CLR 21 reaffirmed this test. Based on this test, the different factors surrounding the work done by the individual, the decision had to be taken on the presence of employer employee relationship (Find Law, 2018). There is a need to analyse all the possible circumstances revolving around the particular work being done by the individual in this regard (Turner, 2013). There are no uniform criteria which could determine the presence of independent contractor or employee and the different aspects have to be thus evaluated. Hollis v Vabu Pty Limited saw the wearing of uniforms, the equipment being provided to the worker, the setting of days and hours as a factor for presence of employee status (Marshall, 2006).

Sammartino v Mayne Nickless (2000) 98 IR 168 provided that principal repairing and maintaining the equipment, and clear and regular obligation to work showed the presence of employee status (APH, 2005). For the same purpose, the requirement set out under On Call Interpreters and Translators Agency v Commissioner of Taxation (No 3) [2011] FCA 366 was for the principal to require the individual to work in a certain manner and based on a specific standard (Jade, 2018). Requiring undergoing specific training was deemed as employee relationship being present based on ACE Insurance v Trifunovski [2013] FCAFC 3 (Ryan and Sowden, 2013). Vabu v FCT (1996) 8 IR 150 however presented that payment of superannuation and taxes was presence of independent contractor (Student VIP, 2018).

The Fair Work Ombudsman provides that the employees have to get paid based on the base rate for all the hours which they work on the public holiday (Fair Work Ombudsman, 2018). These provisions are particularly provided under section 114 of the Fair Work Act, 2009 (Federal Register of Legislation, 2017). 

In the given case study, in order to decide upon the status of Athena, there is a need to apply the different tests discussed above. Based on the control test discussed in the previous segment, Chinatown had complete control over Athena. This can be proved through Athena resigning from Chinatown and signing her services to Restaurant Services Pty Ltd, even when she did not want to do so. She even signed a letter just to continue getting work from Chinatown. The next test is integration test. Athena had completely been integrated in the work of Chinatown as even after resigning from Chinatown, she was doing their work.

Multi-Indicia Test

The best test which could bring clarity to the status of Athena is the multi indicia test. Each of the aspects given in the case study need to be analysed for this purpose based on the case laws presented earlier.

The employer, i.e. Chinatown had complete control over Athena where she worked for them even after resigning. She also signed a contract for services with another restaurant upon being told to do so by the Human Resource Manager of Chinatown. She even signed a letter at their instance to accept the offer of the other restaurant. She was still getting paid by Joanna who was the human resource manager of Chinatown. Her weekly hours were provided by him. Further, she was wearing a uniform, which based on Hollis v Vabu Pty Limited would make her an employee.

Due to the changed job profile, she was not being paid a penalty rate as would be done for the employees based on hourly rates based on the relevant provisions of the statute stated above. Getting a flat rate irrespective of the times and days she worked, or the hours contributed by them would make them an independent contractor as the contractors are entitled to flat rate only.

Conclusion

Thus, on the basis of this discussion, it becomes clear that Athena would be an employee of Chinatown even after giving her resignation on the basis of control test, integration test and multi factor test.

Where Athena is assumed to be the employee of Chinatown, whether there has been a contravention of any of the federal legislation regarding Athena being required by Joanna or Chinatown to contract her services to Restaurant Services, or not? 

Under the Fair Work Act, 2009 (Cth), the employers have been prohibited from representing the relation in a manner which can be best deemed as wrong, particularly when the employers indulge in sham contracting (Fair Work, 2018a). Sham contracting arrangements are deemed as the attempts which is made by the employer for misrepresenting the relation which they have with their employee, and instead to show it as a contracting agreement. The power of investigating on the sham contracting arrangements is given to the Fair Work Inspectors in order to make certain that the employers are stopped from evading the responsibilities which they have regarding the employee entitlements (Fair Work, 2018b).

Under the Fair Work Act, its Division 6, Part 3-1, the restrictions pertaining to the contracting arrangements have been covered. Under section 375 of this act, the employers have a strict prohibition from wrongly depicting the employment which a person has as being an independent contracting arrangement. Under section 358 of this act, the employers have been prohibited from dismissing an employee where they do not engage as the independent contractor. Based on section 359 of this act, the employers have been prohibited from making false statements through which the employment relationship is misrepresented or portrayed in a misleading manner (Federal Register of Legislation, 2017).  

Employee Status of Athena

In the given case study, Athena had been asked specifically to sign the control through which she would get in a contract for service with Restaurant Services Pty Ltd. This would be deemed as a sham contract arrangement as it has already been established that Athena was an employee of Chinatown and he had been asked to sign the contract for contracting his services to other restaurant for deeming him as independent contractor. This is a complete breach of the various provisions covered in the governing act. Under 357, such behaviour has been strictly and clearly prohibited and yet Chinatown asked Athena to sign the contract through which her status would be represented wrongly. This resulted in section 357 of the Fair Work Act being breached by Chinatown. Apart from this, Chinatown indulged in making of false statements to the employee regarding the things to continue being the same when Athena signed the contract. This resulted in section 359 being contravened by Chinatown. As a result of this, Fair Work Inspectors can investigate in this sham contracting arrangements of Chinatown and prohibit from evading their responsibilities. 

Conclusion

Thus, Chinatown has been in breach of the various provisions of Fair Work Act. 

References

APH. (2005). New South Wales Government Submission. Retrieved from: https://webcache.googleusercontent.com/search?q=cache:3UoldPgXz6MJ:https://www.aph.gov.au/Parliamentary_Business/Committees/House_of_Representatives_Committees%3Furl%3Dewrwp/independentcontracting/subs/sub35.pdf+&cd=5&hl=en&ct=clnk&gl=in

Australasian Legal Information Institute. (2018). Zuijs v Wirth Brothers Pty Ltd [1955] HCA 73; (1955) 93 CLR 561 (15 December 1955). Retrieved from: https://www.austlii.edu.au/au/cases/cth/high_ct/93clr561.html

CCH. (2010). Australian Master Human Resources Guide 2010 (8^th ed.). Sydney: CCH Australia Limited.

Fair Work Ombudsman. (2018). Working on public holidays. Retrieved from: https://www.fairwork.gov.au/leave/public-holidays/working-on-public-holidays

Fair Work. (2018a). Independent contractors. Retrieved from: https://www.fairwork.gov.au/find-help-for/independent-contractors

Fair Work. (2018b). Contractors and employees – what’s the difference? Retrieved from: https://www.fairwork.gov.au/how-we-will-help/templates-and-guides/fact-sheets/rights-and-obligations/contractors-and-employees-whats-the-difference

Federal Register of Legislation. (2017). Fair Work Act 2009. Retrieved from: https://www.legislation.gov.au/Details/C2017C00323

Find Law. (2018). What is an independent contractor and how does an independent contractor differ from an employee?. Retrieved from: https://www.findlaw.com.au/articles/4515/what-is-an-independent-contractor-and-how-does-an-.aspx

Giliker, P. (2010). Vicarious Liability in Tort: A Comparative Perspective. Cambridge: Cambridge University Press.

Jade. (2018). On Call Interpreters and Translators Agency v Commissioner of Taxation (No 3) [2011] FCA 366. Retrieved from: https://jade.io/j/?a=outline&id=215859

Marshall, B. (2006). Working it out- Employee or independent contractor?. The National Legal Eagle, 12(2).

Murray, J. (2016). Difference between Independent Contractor and Employee. Retrieved from: https://www.thebalance.com/independent-contractor-or-employee-what-s-the-difference-397912

Ryan, W., and Sowden, L. (2013). Australia: Employee or Contractor? – Ace Insurance Limited v Trifunovski. Retrieved from: https://www.mondaq.com/australia/x/227812/Contract+of+Employment/Employee+or+Contractor+Ace+Insurance+Limited+v+Trifunovski

Student VIP. (2018). The Common Law Of Employment. Retrieved from: https://studentvip-notes.s3.amazonaws.com/12728-sample.pdf

Turner, C. (2013). Key Facts: Employment Law (3^rd ed.). New York: Routledge.