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Case Study: Tea Wholesaling Company Owner, Lou Add in library

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Question:

Assignment Question

Lou, the owner of a tea wholesaling company, decided about a year ago that product quality of some imported sources was too variable. To improve consistency of the product Lou decided he would employ someone to test samples of imported product and grade them. His retired Uncle Jim came to mind.  He was a food scientist and using his skills would also assist him by keeping him busy. 

Lou approached Jim with an agreement titled Contract for Services, devised by the company’s lawyer. It involved Jim agreeing not to be an employee and to have his own incorporated consulting business. The agreement included a clause suggesting he was not permitted to delegate any of his responsibilities at the tea company to another unless he got Lou’s approval. The agreement also stated he would be paid a set fee for each day he came to the warehouse and worked and a monthly pay date. Although not mentioned in the agreement, Jim was to pay his own taxes and make his own superannuation contributions. He was supplied with a warehouse uniform and all the equipment he required to perform his scientific analysis.

Jim worked from 9am to 5pm Monday to Friday for eight months without a day off and then suffered a serious heart attack. His daily routine at work had involved him checking in with Lou for instructions on the day’s work, Lou’s oversight of his progress during the day and an assignment of administrative support to support him at particular times. Toward the end of the financial year Jim was asked to supervise a couple of juniors in stocktaking processes, for about four weeks, but he had otherwise stuck to his scientific analysis.

One of the policies Lou added to the Employee Handbook last year was an anti-bullying policy.  The policy required a particular procedure to be followed if bullying was detected by any member of staff, and indicated management would treat the behaviour, if confirmed on investigation, as serious misconduct and it was likely to result in disciplinary procedures being taken. The policy was not included in staff contracts but they were all alerted to it on commencement of their engagement. Jim had reported the two juniors he had supervised as bullies just before his heart attack.  He made a written complaint stating their language was repeatedly demeaning to him and their regular slapping of him on the back was so aggressive it upset him to the point he was ready to resign. Lou was aware of his issues with the young workers and wonders what he is required to do now that Jim is convalescing and may not return to work.

Advise Lou whether

  • Jim could be regarded as an employee, despite their written agreement.
  • He is contractually bound to follow the Employee Handbook procedure in relation to the bullying complaint.
  • He has breached any common law duty to Jim even if he is not contractually bound to follow the Employee Handbook procedure.
 

Answer:

This case study is about a tea wholesaling company owner, Lou who decided to hire a person to test the product quality of some imported products. Hence, he approached his uncle, Jim who was a food scientist and using his skills would also assist Lou by keeping him busy. He approached Jim with an agreement titled Contract for Services, devised by the company’s lawyer. ‘Contract for Services’ is generally an agreement whereby a person agrees to serve the employer as an independent contractor. Under this, there is no employee-employer relationship between the two parties. Hence, the employee is not covered under ‘Employment Act’ (Brank, 2012). Hence, Jim couldn’t be regarded as his employee since the contract already had a clause about it (Brank, 2012). Although Jim was hired by the company at fixed salary but he couldn’t be considered employee since he signed ‘Contracts for Services’ with the company.  Hence, by no means, Jim can be considered an employee. If he would have been an employee, he would have signed ‘Contract of Services.’ Hence, Jim couldn’t be regarded as his employee.

Second case taken in this case study is about the ‘bullying.’ In order to safeguard the interest of the employees, Workplace Safety & Health Act has been enacted in Western Australia (Farrington, 2009). Workplace Safety & Health Act, WA ensures that no employer can exploit his employee in any way. In WA, the Workplace Safety and Health Act is a critical part of the new framework that is accountable to cultivate good habits in all the individuals so as to integrate a strong working culture in the workplace. In the case study, the legal issue which has come up is ‘Anti-Bullying Issue.’ At workplaces, bullying remains a critical issue. By definition, bullying refers to a systematic campaign of interpersonal destruction that put a great impact on physical, mental and psychological health of a person. It is a common phenomenon observed at workplaces, educational institutes etc (U.S Department, 2010). As per reports, the primary reason that bullying is so common at workplaces is that it is not yet illegal and even illegal, bullying is practiced fearlessly by employees. In this case study, I think, Lou is not contractually bound to follow the Employee Handbook procedure in relation to the bullying complaint.  This is because ‘anti-bullying policy’ was added to Employee Handbook procedure but not to Staff contracts. Hence, he is not contractually bound to follow it but it was his common law duty to listen to the complaints of the employees or other stakeholders about any kind of bullying. By definition, Employee Handbook procedure mentions about how all employees, regardless of their job or role in the company should behave in the organisation (Voten, 2011). The handbook is given to every employee irrespective of his job or title in the organisation. If ‘anti-bullying policy’ was made part of Employee Handbook procedure then it is crucial to follow when authorities sense or receive complaints about bullying acts in the company (U.S Department, 2010). Although Lou, himself added ‘anti-bullying policy’ to Employee Handbook procedure last year yet he didn’t take any action against the complaint registered by Jim. As per the ‘anti-bullying policy’ added by Lou in the Employee Handbook procedure, particular procedure to be followed if bullying was detected by any member of staff, and indicated management would treat the behaviour, if confirmed on investigation, as serious misconduct and it was likely to result in disciplinary procedures being taken. However, no such action was taken when Jim reported about the two juniors whom he had supervised as bullies just before his heart attack.  As per Australian law, Jim should have been given compensation since no action was taken in spite of his regular complaints. There are numerous bullying cases registered in which respondent had to face alleged behaviour and even forced to leave his employment on account of regular complaints of bullying. But they were given justice and paid lump-sum amount of compensation to repay their damages. For example, a case of bullying was registered in 2006 in Western Australia against four men who worked with close proximity to a female worker in a Bank. As compensation, female worker was awarded damages of nearly two million Australian Dollars. It was alleged by the female worker that four male workers who worked with close proximity to her bullied her. The alleged behaviour shown to the lady worker included passing lewd comments on her, ignoring her presence and laughing when she walked in the room. Unlike Jim, lady also raised the complaint of bullying with her manager and HR manager but no effective were taken by them. As a result, when complaint reached high command of the bank, four men were fired and were asked to pay a compensation of two million Australian dollars. In another case, Ms Kumar consistently reported about her late pay. After regular complaints from her, Ms Kumar was forced out of her employment and was also victimised in number of ways such as humiliating, hurtful behaviour towards her and isolated. When this was known to Deputy President of the company, he found it totally unfair. Hence, judge ordered that respondent must be paid 38 week salary at the rate of $627 a week. In third case, a woman who was performing office and driving duties for a caravan company was abused and employer forced her to fulfil unreasonable demands. In her lunch time, she was made to perform bank duties also. She was asked by the employer to mail a copy of cheque drawn in favour of supplier back to office. This was indeed embarrassing but woman was made to do so. The employer reacted in an abusive manner when he came to know that woman had missed her lunch to visit bank and had also not procured the manufacturing parts to clients. The employer gave her an ultimatum that if she would not perform her duties well, she would be fired. The NSW commission accepted the evidence given by the woman and stated that the behaviour the employer had shown to the lady worker was unfair. Hence, employer was made to pay $8400 as the compensation to lady. In another case, a senior management employee of the company was sacked on grounds of bullying and humiliating nature towards junior employees. Mr Purse, a senior legal officer by the Commonwealth Attorney General department was dismissed for breaching the code of conduct. It was stated that officer abused the junior physically and verbally. He used to yell at juniors, use abusive words and also push them at some instances. Although Mr Purse claimed that his dismissal was unfair but upon inspection it was known that all the evidences against him were valid (Brank, 2012). Hence, in Jim’s case also, it was crucial for Lou to provide compensation to Jim.

 

Thirdly, Lou has breached a common law duty to Jim even if he is not contractually bound to follow the Employee Handbook procedure. Though he was not contractually bound to follow the handbook of Employee procedure yet as an employer, it was his duty to take actions against the culprits. It could hamper the productivity of work and loss of an honest employee due to carelessness of Lou. The principles governing Workplace Safety and Health Law at workplaces in Western Australia are reducing risk by making all the stakeholders to reduce the risk they cater, providing greater ownership of Safety and strictly preventing acts of bullying or other accidents by leveraging high penalties on convicts (Taylor, 2012). These are the key underlying principles of Workplace Safety and Health Law. The features of the Workplace Safety and Health Law in Western Australia include:

  • It held every stakeholder responsible to ensure safety at workplaces and ensuring no employee bullies others.
  • To focuses on the safety of the workplace.
  • It facilitates effective enforcement by issuing remedial orders.
  • It imposes strict and high penalties on those whose behaviour is found abusive and in adherence to the conduct (Taylor, 2012).

In Australia, there is no clear definition of what constitutes bullying. Hence, it is one of the critical problems for employees. Apart from employees, around 20,000 students are affected by bullying in various Australian schools (Taylor, 2012). Being an intentional cruelty, every individual might have to go through it regardless of age, gender, caste and religion. Although various studies state that it normal but it can lead to tragic consequences in some cases. Bullying often results in numerous negative impacts on employees and working environment of the organisation. Since Lou didn’t take any action against the culprits so it gave an unnecessary advantage to them to continue showing hostile behaviour towards others (Davenport, 1999). As a result, Jim suffered a heart attack. Some more effects of bullying and harassment at workplaces are:

1. Increased in absenteeism due to the fear and panic among employees leading to hampering of work: One of the impacts of bullying at workplace is increased absenteeism i.e. more employees prefer taking leaves due to fear and panic than coming to office. Hence, it hampers the productivity of work.

2. Increased stress among fellow employees which leads to increased errors in work: Second impact of bullying is increase in stress. This is one of the signs which is stated in case study also that Jim might have suffered heart attack due to constant bullying by two juniors.

3. Decrease in performance of employees and productivity at work: Third impact is decrease in performance of employees which is observed in the case of Jim. He had to take leave from work due to heart attack and there are changes that he might not return.

4. Lack of motivation in staff: Above impacts often leaves staff unmotivated and unhappy. Hence, they can’t focus on work completely.

5. Increased time spent on juggling up with complaints: Due to large bullying case, management is required to spend maximum time handling those complaints in spite of thinking about growth of the company. In the case of Lou also, there may be chances that many such cases of bullying might go unreported (Ericson, 2001).

Hence, it is common law duty of Lou to take action against the culprits though he wasn’t bound contractually. If he would have intervened in the case, Jim might have not suffered heart attack.

 

References

1. Ericson, N. (2001). "Addressing the Problem of Juvenile Bullying". OJJDP Fact Sheet #FS-200127 (U.S. Department of Justice: Office of Juvenile Justice and Delinquency Prevention) 27.

2. Davenport, N. (1999). “Mobbing: Emotional Abuse in the American Workplace.”, Civil Society Publishing.

3. Taylor, A. (2012). "The University of Manchester Dignity at Work and Study Policy". The University of Manchester.

4. U.S Department, (2010). "State Laws Related to Bullying Among Children and Youth". U.S. Department of Health and Human Services - Health Resources and Services Administration - Maternal and Child Health Bureau.

5. Brank, E. (2012).  "Bullying". Annual Review of Law and Social Science (Annual Reviews) 8: 213–230. doi:10.1146/annurev-lawsocsci-102811-173820. Accessed 13 Feb, 2015.

6. Bennett, E. (2006). “Peer Abuse Know More!: Bullying from a Psychological Perspective.”, Infinity. Accessed on 13 Feb, 2015.

7. Farrington, D. (2009). “School-Based Programs to Reduce Bullying.”, campbellcollaboration.org. Accessed on 13 Feb, 2015.

8. Voten, M. (2011). “A large‐scale evaluation of the KiVa antibullying program.”, Wiley Online Library. Accessed on 13 Feb, 2015.
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