Validity Of Employment Contract: Annie's Essay.

Annie, a Vietnamese migrant studying in Perth, commenced employment with Chinatown Restaurant in December 2012. She waited on tables, took orders, delivered meals and helped with food preparation and cleaning in the kitchen. Joe, the restaurant manager, supervised Annie while she was working and also organised her days and hours of work.  Annie was engaged as a waitress on a full time basis up until December 2016. In that month Annie resigned from her employment in writing. Chinatown’s Human Resources Manager, Johanna, had asked her to contract her services to Restaurant Services Pty Ltd as an independent contractor, telling her that if she didn’t resign she would not be provided with any more work. Annie also signed a letter stating she understood the information supplied to her by Restaurant Services and agreed to accept their offer as detailed in an information pack provided. At a meeting of Chinatown staff Johanna told Annie and the others that nothing would change.  Annie understood she was now a contractor but was not clear on who she was contracted to, since Johanna still approved her weekly hours of work, provided her uniform, and issued her pay.  

Annie’s pay decreased following her resignation and signing of the new agreement, although she was working about the same number of hours.  Instead of receiving a penalty rate for her weekend and public holiday work, she now received a flat rate of pay regardless of the days and times she worked. When she asked Johanna about it, she was told that as a contractor she was only entitled to the flat rate.  Johanna also said that if Annie was not happy with that, she could say so and that she would not be provided with any more work.

• Is Annie able to be party to a valid contract of employment?
• If we assume Annie is able to be a party to a valid contract of employment, was she still one of Chinatown’s employees after resigning? Refer to cases that use the current common law test.
• If we assume Annie is an employee, has Chinatown or Johanna breached any federal legislation in relation to requiring Annie to make a contract with Restaurant Services?

The issue of this scenario is whether Annie will be able to be a party to a valid contract of employment.

As per the Fair Work Act, 2009, a valid contract of employment refers to a written agreement that is usually signed and agreed to by both the employee and the employer. Agreements of employment are generally implied based on verbal statements or the activities of the employee and employer. The purpose of the employment contracts is to produce the rights of the employer to fire an employee who was limited. Employment contracts are formed based on various kinds of agreement. However, the statute of frauds states that any sort of a verbal agreement is not permitted to be carried out in less than one year. Tullett Prebon (Australia) Pty Ltd v Simon Purcell discussed the fact that the certainty was being provided by the fixed-term employment contracts by restricting the ability of an employer for enforcing a full term contract. The employment relationship is referred to as the contract of employment thereafter. The parties must therefore be attentive when the verbal or written contract of employment is being formed between the employer and the employee. The terms and conditions involved with the contract of employment must have clarity when it is formed. The necessary or the essential requirements of the contract must be fulfilled as per the legislation that has been mentioned above. In this regard, it is noteworthy to mention here that an employee must be entitled to all the important benefits of the contract.

From the given scenario, it can be stated that an employment contract was formed between Annie and the Chinatown Restaurant in 2012. However, she had resigned from the restaurant by submitting a written resignation letter and ending the contract of employment that had been formed previously. However, she had to send another official letter to the services of the restaurant as per the orders of the Human Resource Management of Chinatown. After doing so and signing the agreement in the staff meeting, Johanna, human resource manager that she will be treated as an independent contractor and will be entitled to all basic pay, thereafter informed Annie. Thereafter, after signing the new agreement, she had worked more and received fewer amounts of rewards. Despite her complaining to Johanna regarding the pay issue as compared to the work she did, she did not pay heed to her. It can be stated here that the new agreement was formed in a written form and both the parties agreed upon it based on the terms and conditions. Fair wages must be distributed accordingly as per the work done and what the individual deserves. Hence, according to the provisions of the legislation, a valid contract of employment was formed between Annie and the restaurant. This is because the new agreement was created after Annie had resigned already.

Validity of Contract of Employment

Conclusion

In this situation, it can be concluded stating that Annie will be considered to be a party to a valid contract of employment.

(b)Issue

The issue involved whether Annie will be able to be a party to a valid contract of employment and if she will still be considered an employee of Chinatown after her resignation.

Rule

The Fair Work Act, 2009 governs the relationship of the employer and the employee in Australia. This legislation states that an employee or an employer must be entitled to flexible working arrangements and fairness at work for prohibiting any kind of discrimination against the employees. It can be stated that if the employer breaches the contract of the employee, the employee can claim an application to the employment tribunal by stating that he or she had suffered from financial loss and damage. As per the provisions of the Employment Rights Act, 1996, the workers associated with an undertaking are generally provided with protection from being sacked or facing from any kind of unfairly claims of redundancy. Therefore, in this regard, it is essential to mention here that an employee can be treated for an unfair dismissal if the employer breaches any sort of information or condition related to the contract formed between the parties. Such a scenario has been observed in the case of Cannon v Poultry Harvesters Pty Ltd [2015] FWC 3126. As per the legislation, contractual employees are said to have the right for the company since they work to uphold all the essential elements of the contract. For instance, if an employer promises any kind of bonus to an employee on a particular date, he is bound to provide the bonus to the employee. The promise can be made in a written agreement form or orally. According to the existing rights of the employees, in case of violation, employees have the right or authority to sue the company or the employer directly. In certain cases, an employee who has resigned from the company can sue based on the terms of constructive dismissal since he resigned in case of a breach of the employment contract. If the clauses of the employment that have been agreed upon by the both the parties are not carried out accordingly, even then the employee can take actions against the employer or the company.  Coghill v Indochine Resources Pty Ltd (No 2) [2015] FCA 1030 had dealt with such situations.

Rule Governing Employer-Employee Relationship in Australia

From the scenario of the case study, it has been observed or assumed that if Annie is considered a party to a valid contract of employment, she will be entitled to all the essentials perks of the contract, which was formed between the parties. It was observed earlier in this situation that Annie had first resigned from the Chinatown Restaurant. Thereafter, she had formed a new agreement with the company as per the provisions, terms and conditions stated by Johanna, the human resource manager. Annie had agreed to all the objectives of the contract, agreed upon by providing her assent, and hence made it a valid one. Therefore, Annie will still be considered as an employee of Chinatown as she had entered into a new agreement again. By signing the agreement, Annie had become an employee and was carrying out her activities for the benefit of the company.

Conclusion

It can therefore be concluded stating that since Annie is considered to be an employee of Chinatown, she will be able to be a part of a valid contract of employment.

The issue of this scenario states that whether Johanna had breached any Federal Legislation while asking Annie to make a contract with the Restaurant Services.

It can be stated here that the legislation of Fair Work Act, 2009 discussed the provisions that is related to the contract of employment and how they are formed. Johanna had definitely breached the Federal legislation when she had asked Annie to make a contract with the restaurant services. As per the legislation, it is essential for the parties to abide by the terms and regulations of the contract, rather on what they had agreed. Being the human resource manager, Johanna had the right or authority to ask Annie to form a contract with the restaurant services. Annie is considered an adult and of sound mind, which made her eligible to form a contract. The Fair Work Act, 2009 generally provides for the registration of the employer and employee associations and other associations. Employees are protected against the terminations of their employment that can be considered unreasonable of the exercise of a workplace engaging in industrial activities. The alterations to the employment contract or agreement can be made between employee and employer. The law states that the employee can shift from one company to another based on their general skills and knowledge. However, this was observed in the case of Mitchell-Innes v Willis Australia Group Services Pty Ltd (No 2) 2013/148638. Therefore, the above-mentioned legislation states that if both the employer and the employee are associated with the contract that has been formed. Thus, no authority can direct an individual to take certain decisions regarding forming or creating contract.

From the above scenario, it has been observed that Johanna had informed her that Annie would still have to report to her regarding weekly hours of work and pay issues. As per the situation, Annie should have reported to the restaurant services and not Johanna. After resigning from Chinatown restaurant, human resource manager, Johanna directed and suggested she should form an agreement with the restaurant services as an independent contractor. However, as per the legislation, being the human resource manager, she cannot direct Annie to form an agreement with another individual and still ask her to report to her regarding wages, work hours and other workplace related activities. Annie had agreed with the terms and conditions and formed a new agreement with Chinatown restaurant after the process of resignation was completed. Later, Johanna failed to comply with the provisions of the contract and did not keep up with the changes. Thus, it is relevant to mention here that Johanna had breached the provisions of the Federal Legislation for asking Annie to enter into a contract with the Restaurant services. Thereafter, Annie had to report to her and carried out the activities accordingly but did not receive the rewards or awards on time.

Conclusion

In the conclusion, it can be said that Annie being an employee of Chinatown was asked to make a contract with the Restaurant services by the human resource manager, Johanna. Such a situation resulted in a commitment of breach of the Fair Work Act, 2009 by Johanna.

References:

Statutes

Employment Rights Act, 1996

Fair Work Act, 2009

Case Laws

Cannon v Poultry Harvesters Pty Ltd [2015] FWC 3126

Coghill v Indochine Resources Pty Ltd (No 2) [2015] FCA 1030

Mitchell-Innes v Willis Australia Group Services Pty Ltd (No 2) 2013/148638

Tullett Prebon (Australia) Pty Ltd v Simon Purcell