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Application of Employee or Contractor Classification

Discuss about the Technicalities Ltd or Innovative Storage.

Is Maisy an employee or another type of worker? Understanding the form of worker Maisy is to Technicalities Ltd or Innovative Storage will make clear her position in applying for a job with IS, it would show if she has breached any contract she had with Technicalities.

All employees in Australia will need to have a Common law contract of employment. In this contract, the terms of employment are specified. This could exist as a written contract or an unwritten one. The workplace agreement could exist between the employer and also a group of employees as well. The employee agreement is differentiated from the independent contractor agreement. The Independent Contractors Act 2006 is present to ensure that contractors are not treated as employees and vice versa. Independent contractors in general will have an Australian Business number ABN. They run their business in their own times and also control how they take up work. On the other hand, an employee is one who is controlled by the workplace and told what they have to do on a regular basis. The usual employee rights are not available to the contractor. Usually courts judge whether a person is a contractor or based on multiple criteria. The right to control manner in which work is performed would be considered as well as the entire relationship between the worker and the place of business.

The case of ACE Insurance Limited v Trifunovski [2013] FCAFC 3 set the precedent for whether a person should be considered as an employee or as a contractor. In this case, five insurance sales representatives had signed contract agreements, but the nature of their work made them appear as employees more than independent contractors. They worked in a specific geographic location, and reported to a regional manager.The sales representatives were to carry out their work only as specified and could not do anything on their own. According to this case, even when there are written contracts, the nature of the relationship will decide whether the person in question is an employee or other.  Second, the work in question must have been such that the contractor should have had the freedom to either carry out the work on their own or make use of someone to carry out the work. The contractor must have been entitled to control time limit for work and costs and should also be allowed to use their own equipment as well. According to this case, the result would determine the payment and not the number of hours that were put towards the work.

Assessing Employer Responsibility

Now applying the Common law contract of employment, Independent Contractors Act 2006 and ACE Insurance Limited v Trifunovski [2013] FCAFC 3 Maisy appeared to have signed up like a contractor as she had her own ABN number, but then the nature of her employment, makes her more of an employee. She is seen to have taken proper orders from IS and has even worked for a longer term with IS taking up all other work orders with Technicalities only in a part time stand point.

Maisy can be considered as both an employee and contractor depending on if the discussion is with respect to Technicalities or IS.

Assuming Maisy is an employee, who is Maisy’s employer, Technicalities or IS? Assessing for this issue will help in understanding with whom Maisy was in a contract with.

Employee or contractor decision tool from the Australian taxation office, attempts to present how there could be some myths about who is a contractor. Some of the most common understandings of contractor are that, the contractor decides most of their own jobs, might work short term jobs or might have an ABN number, invoicing for a work etc. However, none of these things by themselves could be used to determine the contractor status of a person. or employee. There are rules, and working arrangements could be difference and hence it is better to understand the difference. Australian Government taxation office website lists these differences as follows,

Ability to subcontract/ delegate: The employee is one who does not have the ability to sub contract their work or delegate their work. They cannot pay someone else to do the work. On the other hand, the contractor has the right to freely delegate the work to someone and also pay them.

Basis of Payment: In terms of the basis of payment, the worker is usually pad by time, such as the hours works or the price form item or a commission. Now in the case of a contractor, they are usually paid by the result that they have achieved.

Equipment, tools and assets: In the case of the employee, the employee need not bring any tools or assets to the workplace. Everything they need to complete the work is usually given to them. In the case of the contractor worker, all the equipment is usually provides by the contractor themselves. They will not receive any form of reimbursement for the equipment that they use.

Conclusion

Commercial Risks: In the case of commercial risks, the business is the one that has to legally bear the costs of the burden and is liable for rectifying work defects or issues with worker safety. In the case of the contractor any form of commercial risks that is taken by the worker, then the worker becomes wholly responsible.

Control over the work: In the context of work control, the employee usually follows direction given to them, and the contractor might end up doing the work in his own way, only guided by the contractor agreement.

Independence: In terms of the independence or the autonomy of the work, the employee usually is considered as being part of the business, they are not an independent entity,they are considered to be connected. In the case of the contractor, the services are rendered to the business, but the person who renders the service will not consider themselves as being a part of the business. They can accept work according to the contractor agreement they have signed and also adjust for work as their cycle runs.

In addition to these rules as presented in the Taxation department website of the Australian Government, the rules as presented for the insurance agent in the case of ACE Insurance Limited v Trifunovski [2013] FCAFC 3 will also be applicable.

Now in the case of being hired by Technicalities, Maisy was not receiving direct work instructions from Technicalities and hence could be said to not be an employee of Technicalities. However, Maisy was receiving proper work orders from IS. She was obeying the work orders of IS. She did not have any equipment to complete her own work and used the equipment of IS. IS had control over her work, and Maisy in the context of an unforeseen accident also claimed for medical expenses from IS.

Based on the application of the standard rules, it can hence be said that Maisy is indeed an employee of IS, or at least the nature of her work makes her an employee of IS. She is not an employee of Technicalities and could be considered as a contractor only with respect to technicalities.

Assuming Maisy is an employee, has Maisy’s employer breached any contractual duty owed to her?

By contractual duties, it can be said that under common law, an employee will owe duty or obligation to provide service in good faith according to Blyth Chemicals Ltd v. Bushnell. Contractual duties can either be expressly stated or it could be understood to be implied. The implication is understood as long as it is seen to add some business efficacy to the contract BP Refinery Pty Ltd v. President, Councillors and Ratepayers of Shire of Hastings.

References

When starting work for Technicalities Maisy registered for an ABN number but she received neither direct work orders from Technicalities nor was she required to report to them or be under their control. In fact, Maisy was seen to accept proper work with IS and IS was even reported to have asked for her services more directly. Now according to the common law of contracts Maisy might not hold a contractual relationship with Technicalities. On the other hand, since she was taking orders from IS, and was reporting to IS, she owed a duty of obligation to IS under the common law of contracts. So when Maisy applied for a work with IS, she should have been given a chance to explain before her work with them was terminated by IS. While it is true that IS did not have any direct agreement, according to the fair trade agreement, IS should give her a chance to explain.

Conclusion

Maisy must be given a reasonable chance to explain her standpoint and her work cannot be dismissed as such with such a pay in lieu of notice.

References

Australian Government. "Difference between employees and contractors" Australian Taxation Office. 2016. accessed Sep 30 2016. https://www.ato.gov.au/Business/Employee-or-contractor/How-to-determine-if-workers-are-employees-or-contractors/Difference-between-employees-and-contractors/

Australian Government. "How to determine is a worker is an employee or an independent contractor". Fair Work Building and Construction accessed 30 Sep 2016. https://www.fwbc.gov.au/resources/fact-sheets/independent-contractors/how-determine-if-worker-employee-or-independent

Bennett, Laura. "Making Labour Law in Australia." Law Book Company, Sydney(1994).

Brosnan, Peter, and Pat Walsh. "Employment Security in Australia and New Zealand." Labour & Industry: a journal of the social and economic relations of work8, no. 3 (1998): 23-41.

Campbell, Iain, and John Burgess. "Casual employment in Australia and temporary employment in Europe: Developing a cross-national comparison."Work, Employment & Society15, no. 1 (2001): 171-184.

Carter, John W., David J. Harland, and Kevin E. Lindgren. Contract law in Australia. Michie. 1996.

Hopkins, Iain. "Court finding sheds light on employee vs contractor equation" HC Online. Mar 2013. accessed Sep 30, 2016. https://www.hcamag.com/hr-news/court-finding-sheds-light-on-employee-vs-contractor-equation-173955.aspx

Johnstone, Richard, and Michael Quinlan. "The OHS regulatory challenges posed by agency workers: evidence from Australia." Employee Relations28, no. 3 (2006): 273-289.

Kalleberg, Arne L. "Nonstandard employment relations: Part-time, temporary and contract work." Annual review of sociology(2000): 341-365.

Mahoney, Paul G. "The common law and economic growth: Hayek might be right." The Journal of Legal Studies30, no. 2 (2001): 503-525.

Milsom, Stroud Francis Charles. Historical foundations of the common law. Butterworth-Heinemann, 2014.

Mulgan, Richard. "Contracting out and accountability." Australian Journal of Public Administration56, no. 4 (1997): 106-116.

Treitel, Guenter Heinz. The law of contract. Sweet & Maxwell, 2003.

VandenHeuvel, Audrey, and Mark Wooden. "Self-employed contractors in Australia: how many and who are they?." Journal of Industrial Relations37, no. 2 (1995): 263-280.

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