Wk3 MGMT2022 - Who is an Employee PDF

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Who is an Employee? Special Types of Employment MODULE 1 Who is an employee? The concept of the employment status of a worker matters because historically it goes back to a question that was crucial in early common law regarding vicarious liability. Who is an employee and the ‘vicarious liability’ issue? According to the concept of vicarious liability: - An employer's responsibility that under the law an employer was vicariously liable for the actions of their employees. - An employer, in this concept, had a non-delegable duty of care in relation to negligence. So if the employee commits some form of negligence and another party is harmed by those actions, an employer has a non-delegable duty of care, that is, the employers can’t delegate that duty to the worker, the employer is responsible themselves for the actions that take place. However, if the employer, and the worker is not an employee but instead an independent contractor, the employer WILL NOT be liable. - The High Court has made clear in various cases including the case of Leichhardt Council v Montgomery (2007) that it will not lightly extend the categories of ‘non delegable duties’ to other workers EG. independent contractors. - However, in terms of vicarious liability, if an employee wrongfully causes some sort of injury or damage then the victim can sue the employer BUT the employer or organisation can only be held vicariously liable for acts or omissions of employees, not the actions of independent contractors. So if the victim is held by a contract then they CAN’T sue the employer. Statutory rights and responsibilities: While the common law has not made much distinction between employer and contractors, it has made a big distinction in terms of vicarious liability. It has become firmly entrenched in many statutory regimes EG: - The Fair Work Act (the FWA) predominantly confers rights and obligations bestowed upon ‘employees’ and ‘employers’. - Awards generally apply only to the ‘employment relationship’. - Enterprise agreements are made between employers and employees. Under the Industrial Relations Act NSW, it deems numerous workers to be employees.

Distinguishing employees from contractors Who is an employee and who is not? Under the common law, a contract of employment is called a contract of service, whereas a contract

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between principal and independent contractor is called a contract for service. However there is no single definition of who is an employee. Legislation - like FW Act - simply uses terms such as ‘employee’, ‘employer’, ‘contract of service’. The legal distinction made is usually between an employee and independent contractor. The definitions rely on common law principles. Distinguishing employees from independent contractors Courts, and tribunals, have framed this on a case-by-base judgement based on certain criteria. A crucial criteria traditionally was the question of control. So to tell if someone was an employee or contractor, we looked at case law that was made by the courts and looked at the extent to which the worker exercised control. The more the employer controlled the relationship, the more likely the relationship was one of employee and employer and not one of an independent contractor. - Zuijs v Wirth Bros (1955) - Hollis v Vabu (2002) - ACE Insurance v Trifunovski (2013) - Putland v Royans Wagga (2017) The multi-factor or multi-indicia test While there is no definitive test for employment, however, the multifactor test has become the standard. This looks at the ‘totality of the relationship’. The ‘multi-factor’ approach was entrenched through Stevens v Brodribb Sawmilling (1986); Hollis v Vabu (2001). The test covers: - Degree and nature of control exercised over worker - behavioural - relationship itself - If person has more control = independent contractor - If business has more control = employee - Mode of remuneration - Responsibility for provision and maintenance of tools - economic - Equipment - economic - Extent of obligation to work for the organisation - intention - Capacity to delegate work to others - economic - The right to reject work that is offered - How tax and superannuation are accounted for - economic The Major Indicia Note there are many factors, or ‘indicia’, that potentially must be present - and no set number or combination of factors that will determine whether a worker = employee or contractor. - In Abdalla v Viewdaze (2003) the AIRC listed 13 questions that need to be asked.

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Examples from Case Law where worker found to be an employee NOTE - each decision depends on its own fact: - Hollis v Vabu (2002) bicycle courier - Diego Franco v Delieveroo Australia [2021] FWC 2818 - Ray Morgan Research v Commissioner of Taxation (2021) - market research interviewers. - Baker v Markellos (2012) - relief fishing boat skipper paid percentage of the proceeds of the catch - Victoria WorkCover v Game (2007) - worker paid a daily rate by a builder. Examples from the Case Law where worker found to be independent contractor - Australia Air Express v Langford (2005) - delivery van driver. - Sweeney v Boylan Nominees (2006) fridge mechanic. - ACT Visiting Medical Officers v AIRC (2006) - Elazac v Shirreff (2001) - electrician who employed his own staff and could work on other jobs. - Voros v Dick (2013) - taxi driver who worked when and where he wished. Avoiding or disguising employment Why try to disguise an employment relationship as an independent contracting arrangement? How to do it: this is about the drafting of the contract - Narish v Commissioner of Pay-roll Tax (1983) - Hollis v Vabu (2001) - Re Porter (1989) ‘can’t create something that has…. Every feature of a roaster calls it a duck’. → More recently, particularly with the rise of the ‘gig economy’, courts have been more likely to look at the substance of the relationship, not just the legal terms included in the contract. - Diego Franco v Deliveroo (2021) the most recent example. - On Call Interpreters & Translators v Commissioner of Taxation (2011) - ACE Insurance v Trifunovsky (2013) Interposing another entity Labour hire: - Contracting with a personal company ‘owned by the worker’ (Y) - Zoltaszek v Downer EDI Engineering (2011) - Court will look at the ‘reality of the situation’. Shams: - Here ‘employer’ and other entities have a common intention to disguise the true nature of their transaction. - EG. Fair Work Ombudsman v Quest South Perth Holdings P/L (2015) Tax implication of the distinction between employee and contractor - The widespread resort to ‘contracting’ has implications for the tax office. - Employers are responsible for:

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1. Withholding tax from remuneration: under Schedule 1 of Taxation Administration Act 1953 (Cth), an employer pays wages to an employee normally and must deduct tax instalments. 2. Paying payroll tax (collected by state governments). - Contractors (EG. with an ABN) are usually required to charge customers GST and pay that to the tax office. - PSI provisions introduced in 2000 to retrieve (2000) some of the missing taxes. Independent contractor legislation - Independent Contractors Act 2006 (Cth) - Coalition Government intention to ‘protect the freedom of contractors to enter into contracts to supply their services’. - Key parts of the Act prevent the States/Territories from treating contractors as employees for any purposes associated with ‘industrial regulations, such as award coverage or leave entitlement’. - The Fair Work Act 2009 (Cth) now prohibits ‘sham’ arrangements through Part 3-1 FWA EG. s 357(1). MODULE 2 Special types of employment There is a host of special types of employment including: - Casual employment - Homeworkers and outworkers - Agency labour - Trainees and apprenticeships - Public sector employment - Voluntary employment and internships Casual employment - A casual is essentially: someone hired on an informal, uncertain & irregular basis: Reed v Blue Line Cruise (1996) - ‘Casual’ typically contrasted with permanent - ‘Permanent’ can include workers hired under a contract that can be terminated on relatively short notice, or indeed employees who have a fixed-term contract - ‘Permanent casuals’ often don’t fit the definition above - Casuals are defined as employees, and are covered by all the same regulations as employees – but they don’t have all the same rights. Award provisions concerning Casuals - In awards, ‘casual’ employment is typically defined as ‘anyone who is specifically engaged and paid as a casual’. - This gives employers almost complete discretion to take a person on as a casual.

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To discourage casualisation, almost 100 years ago, ‘loadings’ were added to the wage rate for a casual job in awards (up to 30% in some awards). The FWC has set this casual loading in modern awards at 25% (made under s.294 FWA).

Reasons for hiring casuals: - More flexible commitment for employer - Casuals not eligible for annual leave, paid sick leave, nor severance pay. - Freedom to hire and fire at will. - Use of casual appointments to ‘trial’ workers. May 2020 decision in Federal Court - Workpac V Rossato Case - This recently changed the view held of casual workers’ rights. - It followed a decision in Workpac v Skene that Workpac appealed to the Federal Court. - Recently, a full bench of the Federal Court handed down its decision, holding that regular, ongoing casuals are entitled to paid annual leave, paid personal/carer’s leave and paid compassionate leave. Employers cannot use extra pay to set off that liability. - “The court has found that the parties had agreed on employment of indefinite duration which was stable, regular and predictable such that the postulated firm advance commitment was evident in each of his six contracts”. Statutory entitlements concerning casuals National Employment Standards (NES) Part 2-2 FWS excludes casuals from some provisions. → EG. where a casual is engaged by a national system employer, they are normally not entitled to annual leave (s86) or paid personal/carer’s leave (s95), nor notice of termination or redundancy pay (s123(c)). However, a casual worker may: - Request more flexible work arrangements once employed for 12 months on a regular and systematic basis (s65(2)(b)). - Is entitled to: - ‘unpaid carer’s leave, unpaid parental leave, compassionate leave or community service leave and reasonably seeks a day off on a public holiday. - to complain of unfair dismissal – once they complete a minimum period of regular employment + if in an ongoing employment contract. Conversion rights - Since 2000, FWC has provided a right for long-term casuals to request conversion to permanent status. - Similar provisions flowed through a small no. of awards. - As part of the FWC review of modern awards one decision: 4 Yearly Review – Casual and Parttime Employment (2017) was to include a conversion provision in almost all modern awards that didn’t already have one.

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The ‘right’ of casuals is limited to: - An entitlement to ask - By Casuals who have worked 12 months or more; and - Have a pattern of employment consistent with full or part time work. - Employer can refuse on basis of ‘reasonable grounds’

Homeworkers and Outworkers Outworkers are those who perform work away from a defined workplace. They include ‘homeworkers’. EG. cleaners, housekeepers, live-in aged/disability care, live in babysitting care. - No reason why outworkers cannot be regarded as employees. - Some state industrial statutes deem outworkers as employees. - 2012 - the FWA was amended to add a ‘deeming’ provision for ‘TCF outworkers’ to discourage growth in ‘sweated labour’ in this sector. → TCF = textile, clothing and footwear. Agency or Labour Hire Employment A labour hire agency is in the business of hiring out labour. - It agrees to supply the services of a worker to another business (the client or host). - The host pays a fee to cover the cost of a worker's service. - The agency remunerates the workers. Why hire through an agency? - Flexibility → filling short-term vacancy, seasonal requirements, particular skills during times of the year. EG. Nurse is hired by an agency to work in a hospital or aged care facility to administer vaccinations in aged care homes. Aged care home pays a fee to the agency for the nurses service. Agency or labour hire - Labour hire is quite distinct from recruitment services. - A recruitment consultant does no more than broker an employment relationship, by introducing a worker to an employer and leaving them to form a contract. Labour hire is generally associated with the supply of temporary workers to meet short term needs.

Triangular relationship of agency or labour hire Question - who is the employer?

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Labour hire: the host/worker relationship - If there is NO contract between them, then the orthodox view is the worker is NOT an employee of the host. - BWIU v Odco (1991) - The host will, on the other hand, still be obliged under work health and safety legislation. - Can a worker be regarded as ‘jointly employed’ by both the agency and the host? - Generally, no (EG. Costello v Allstaf, 2004) - Damevski v Giudice (2003) cleaner employed, offered hire through agency Voluntary work Most voluntary work arrangements are not regarded as contractual in nature and hence are not covered by employment law. However, there is some regulation of voluntary or unpaid work. - Some classes of voluntary workers such as unpaid firefighters etc may be ‘deemed’ to be employees for the purpose of workers compensation (EG. Workplace Injury Management and Workers Compensation Act 1998 (NSW) Sch 1 cll 12, 16. - Employers have a general Duty of Care not to injure volunteer workers. - State anti-discrminiantion laws also apply - EG. Walsh v St Vincent de Paul (2008). It must be stressed that where a person has been engaged under an employment contract, but is asked to do periods of unpaid work their employer may well be breaching an award or other minimum wage law. - Smith v A-Mart All Sports (2008) - Kemblawarra Child and Family Centre (1999) - Internships EG. Fair Work Ombudsman v AIMG BQ (2016)...