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Martin has been employed as the manager in the Swimming Pool Co Pty Ltd and is bestowed with the responsibility of installing and bringing in new customers for the company. Martin has been a successful salesperson and pools in money from various customers in a very short span of time. However, soon it is reported that Martin has not been working at the expectations of the company. The constructions which he has been doing are not up to the mark, and the customers have been complaining regarding the quality of the same. Moreover, certain issues have also come up regarding the deposits received by Martin and it has also been discovered that he intends to set up his own business that will be under competition with Swimming Pool Co Pty Ltd. The legal observations are being discussed as under:
Whether Swimming Pool Co Pty Ltd is liable for the actions of Martin?
As per the provisions of the Fair Contract Act, 2009, an employee is someone who is usually under an employment scheme of a company and the exception in this matter is a person under vocational placement. There are certain key essentials of an employee and employer relationship. Firstly, a degree of control over the employee is exerted by the employer, secondly, there are specified working hours and thirdly, there is a certain amount of expectation from the work. The employer keeps a check over the employee and the employee in turn remains bound by the service contract (Aldridge, 1976). The techniques of the work are set by the employer, and the remuneration is received by them as per the terms of the service agreement.
In the case of Blake v JT Perry Nominees Pty Ltd (Blake v J R Perry Nominees Pty Ltd, ), it was established that subject to certain exceptions, the employers are under a vicarious liability for the acts done by the employees. It was ruled by the court in this matter that the employer generally remains liable for the acts of his employee while he remains in the course of employment and if the act done by the employee was an authorized act done by him over which the authority was bestowed by the employer himself (Revill and Ford, 1994). The requirement here is that the act done by the employee should have been done for the benefit of the employment. Otherwise, the act should have the character of being closely connected with the responsibilities which he has under the terms of the employment.
In this given instance, applying the above legal rules, we can conclusively say that Swimming pool Co Pty Ltd is liable for the acts of Martin. He was very much under the course of his employment and was acting for the benefit of the company. The buyers underwent losses for which the liability is totally on Martin, who in turn was under the course of his employment with Swimming Pool Pty Ltd. Hence, it can be said that the company is liable for the acts of Martin under the relevant legal rules. The liability shall be vicarious in nature.
Swimming pool Pty Ltd is liable for the acts of Martin.
Whether the company can exclude its liability for Martin not having followed the instructions?
We shall take the reference of few cases in deciding on this issue. Firstly, in the matter of New South Wales v Lepore (New South Wales v Lepore, ), it was ruled by the Court that an employer remains liable for the acts of the employee even if the employee is not acting in accordance to the terms of the employment or is exceeding the directions.
Further, referring to the case of French v Sestili (French v Sestili, ), we can say that intentional wrongful behavior of the employee will not allow the employer to be free from all liabilities. In this matter, a worker had with full knowledge entered into a criminal behavior and the employer wanted to get freedom from the vicarious liability. The plea was rejected by the Court, and it was held that this is not a sufficient ground to deny the vicarious liability imposed on the employer.
Taking relevance from the case precedents, we can say that the employer, Swimming Pool Co Pty Ltd cannot escape from their liability for the wrongs done by Martin in the course of his employment.
Swimming pool Co Pty Ltd is responsible for the acts of Martin as there is no ground on which the liability of the company can be avoided.
Whether Martin is liable for his actions and what is the relevant law regarding it?
We shall take the reference of Section 180 of the Corporation Act, 2001 in this regard. It states that with respect to the employment, all the officers of a company are supposed to take a minimum reasonable care required. Further, Section 182 provides that none of the officers of the company or the authorities thereby have the ability to misuse the power that is bestowed on them while they are associated with a company (Bruce, 2010).
In the matter of Herbert v Clarendon Holmes (NSW) Pty Ltd (Herbert v Clarendon Holmes (NSW) Pty Ltd, ), it was decided by the court that every employee of a company is supposed to perform his duties with proper care and diligence. If such care and diligence are not shown, the same shall be held to be negligence under the terms of the employment (Keay and Kosmin, 2009).
Applying the legal rules and the case precedents stated above, we can say that Marin does violate the law. Neither did he take proper caution nor did he use the money of the company faithfully. Rather, the funds of the company were misappropriated by him, and his power and position was also misused. Thus, he will remain liable under the Corporation Act, 2001.
The duty of care imposed on Martin has been breached by him.
Whether any requirements under the law have been breached by Martin when he intends to plan and set up his own business?
In the employment laws of Australia, the doctrine of restrictive practice is generally applicable. The reasonableness of the restrictive trade practice applies on those employment contracts that clearly indicate that the employee is not entitled to enter into any similar business as that of the employer. The Competition and Consumer Act 2010 states clearly that if this kind of clause is indicated in the service agreement, kit shall be valid. In certain instances, even if the clause is not expressly written, it is a general requirement under law that the employee should not enter into any competitive business like that of the employer (Lipton and Herzberg, 2001). Further, it is also a requirement under the Corporation Act that none of the confidential information of the company should be used by the employee for driving any personal benefits. The employees do not possess any rights to misuse their authority or get engaged in any kind of competitive practice with the company.
The case of Digital Pulse Pty Limited v Christopher Harris and Ors (Digital Pulse Pty Limited v Christopher Harris and Ors, ), is a leading precedent in this matter. It was stated in this case that setting up a similar business as that of the employer is a violation of the fiduciary duties of the employee and in case an employee indulges in any such act, he shall be held liable under the law of the land (Quilter, 2009).
A similar view was also held by the Courts in the matter of Eagle Burgmann Australia Pty Ltd v Ross Grant Leabeater & Anor (Eagle Burgmann Australia Pty Ltd v Ross Grant Leabeater & Anor, ). It was held in this matter that an employee can be held to be criminally liable for making a breach of his fiduciary duties in any way. This is inclusive of setting up a business like that of the employer.
Applying the above principles, it can be said that Martin has acted in violation of the principles of the Corporation Act 2001 and the Competition and Consumer Act 2010. It is a requirement under the law that the employees are not supposed to cause any financial harm to the company, and a competitive business is likely to harm the company in this respect.
Also, the Competition and the Consumer Act 2010 provides that restrictive trade practices can be imposed on an individual in order to save the interest of their personal business. Applying the legal principles established in the cases of Digital Pulse and Eagle Burgmann, we can conclusively state that Martin is in violation of his financial duties. The provisions of both the Corporation Act as well as the Competition and Consumer Act have been breached by him while he intends to establish a competitive business like that of Swimming Pool Co Pty Ltd.
Martin has breached the fiduciary duty that is bestowed on him by planning to open up a competitive business like that of Swimming Pool Co Pty Ltd.
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