HCM535 Employment Law, Policy, And Ethics

Question:

Lewis is a truck driver.

He was injured recently at the depot. Lewis attends the depot Monday through Friday to pick goods up for delivery.

The depot is run by XYZ Pty Ltd.

Lewis started delivering the goods for it in 2001 after responding to an advertisement.

The delivery tasks that Lewis is assigned will vary in terms of his hours, but most days he works from 8am to 4pm.

Lewis, who drives an XYZ pickup truck, invoices it and gets paid an hourly rate. There are no deductions for truck-related expenses (insurance, registration, etc.).

Lewis doesn’t wear uniform, but he follows the depot rules about smoking, drug usage, radio contact, and delivering goods to the depot.

Lewis has never received sick pay, but he takes four weeks of unpaid annual leave each.

Lewis views himself as an independent contractor. He was told by XYZ that he had to sign a form acknowledging that he performed the deliveries. But a friend, who is studying BSL202 Workplace Law, suggests that he might be entitled to workers’ compensation.

Is Lewis an employer or a contractor?

Why or why?

Assuming Lewis is an employee, does XYZ have a violation of the Fair Work Act when he requires him to admit that he was a contractor, as a basis for this question?

Answer:

Issue 1

What does it matter if Lewis is employed by the company or not?

Rule

A person who is considered an independent contractor may have different rights than someone who is considered an employee.

The employer and the employee sign a contract of services or an employment agreement. This allows them to have control over each other.

This means that the employee cannot delegate the work, as it is in the case with contractors (Murray 2016).

A relationship between an employee and an employer is subject to the agency law. The employer can also be held vicariously accountable for the employee’s actions.

You can also sign a contract of service with an independent contractor. In such cases, the work is done at a predetermined price.

The employer does not control the hours worked by a contractor and any subcontracting.

Giliker (2010) further states that the contractor’s acts are beyond the control of the employer.

There are a number of common law tests that allow one to determine whether they are an employee or an independent contractor.

In this context, the control test was used initially in Zuijs [1955] HCA73.

In this case, it was ruled that the right to exercise control of another individual, regardless of their actual control, was a key indicator. This helps determine whether an employee-employer relationship exists.

An integration test, which measures the degree of integration of a worker in a business, is another helpful test.

If an individual wears uniforms provided by another person, it will indicate the employee’s status, as in Humberstone (1949) 79 CLR 389.

The integration and control tests, however, are not considered standalone tests due to their popularity (Marshall 2006).

Stevens v Brodribb Sawmilling Co Pty Ltd [1986] HCA 1 is the case in which the multiple indicia test was formed. This was later confirmed in Hollis (2001)207 CLR 21,

Since then, this test has been most commonly used in every country.

This case brought forth the High Court’s reasoning for this test.

They stated that the control was not sufficient to determine the status. (Find Law 2017, p.

Multiple indicia tests require that the context surrounding employment be assessed to help determine the type and nature of the working relationship.

Turner (2013) states that it is impossible to create a single list which would show the type of relationship.

It is important to recognize common characteristics in order to evaluate the relationship.

The sign of the employer would appear on the vehicle of an employee.

An independent contractor would be someone who arranges taxes personally.

Also, the entitlements and allowances are crucial.

The person who is entitled to superannuation or workers compensation would be considered an employee.

You must also consider the task that has been assigned.

Independent contractors can also be professionals or tradespeople.

If the person was only employed to perform a particular task, they would be considered independent contractors.

The person who has been employed for an indefinite time would be considered an employee (CCH 2010, 2010).

The way the remuneration has been paid is another indicator of the relationship.

If a person is paid on a volume-based basis or a lump sum, they would be considered independent contractors.

Differentiating the two is possible due to the fact that they have control over their work place and hours.

A common factor is the degree of control a person has over the way the task is being done by another person.

All these factors are combined to determine whether the relationship between employee and employer exists (Marshall 2006).

Application

The following case study will help you decide whether Lewis is an employee or a contractor.

First, the hourly payment is what is being made to Lewis for his truck usage.

This includes insurance and vehicle registration.

Lewis is an employee since he is receiving regular pay and the cost of the truck (i.e. material) is covered by the company.

Although his hours aren’t fixed, but the delivery time is, he is still considered an employee.

Lewis doesn’t wear uniforms so he is considered an independent contractor.

But, he follows the depot rules which make him an employee.

Although he is not paid sick leave, he is considered to be a worker since he does receive unpaid annual leave.

Lewis would thus be considered as an employee on the basis multiple indica tests.

If the employer can control Lewis’s work hours, truck, leaves and rules, then he is considered to be an employee.

Based on integration test, he has been integrated in the company’s business, and is therefore an employee.

Conclusion

We conclude that Lewis is an employee on the basis control test, integration tests and integration test.

Issue 2

Lewis is an employee. Was the Fair Work Act infringed when the company asked Lewis if he acknowledged that Lewis was a contractor.

Rule

Fair Work Inspectors can investigate any sham or fraudulent contracting arrangements. They also have the authority to prohibit conduct in relation to reform optin arrangements.

A sham contractual arrangement is one in which an employer attempts to make the employment relationship appear independent.

These acts are done so that employees can avoid responsibility (Fair Work 2017,a).

Fair Work Act 2009 in regards to sham-contracting provisions prohibits employers from misrepresenting any employment relations or proposed arrangement of employment I as independent contracting arrangements.

They are also prohibited from threatening to or dismiss an employee to allow them to be engaged as an independent contractor.

Finally, employees are prohibited from making false statements in an effort to persuade their employee to become an independent contractor.

The Fair Work Act, 2009 contains severe penalties for violating these provisions (Fair Work 2017,b).

Section 6 (Part 3-1 of Fair Work Act 2009) contains details about sham arrangements (Australasian legal information institute 2017).

The employer cannot misrepresent employment as an independent contracting arrangement under section 357.

Section 358 deals with the prohibitions regarding the dismissal and remuneration of employees who refuse work as independent contractors.

Section 359 contains previsions about the employer’s misrepresentation to be an independent contractor.

This section prohibits employers from making false statements (Federal Register of Legislation 2017.

Application

The case study shows that Lewis was an employee.

He was also told by his employee to sign a document to prove that Lewis was an independent contractor.

This request by the company to recognize Lewis as a contractor would violate the Fair Work Act 2009.

This would violate both section 357 of the Fair Work Act 2009, since the employer wants Lewis to be treated as an independent contractor even though he is an employee. Furthermore, he makes false statements and is trying to influence Lewis to sign a false statement on the form that he has been asked to fill out.

The company’s actions could result in severe penalties.

Conclusion

The Fair Work Act was breached because Lewis is an employee.

Refer to

Australasian Law Information Institute.

Australian Master Human Resources Guide 2010.

Sydney: CCH Australia Limited.

2017b.

Federal Register of Legislation

Find Law.

What is an Independent Contractor? And how does this differ from an Employee?

Giliker, P. (2010) Vicarious Liability In Tort: An Comparative Perspective.

Cambridge: Cambridge University Press.

Hollis V Vabu Pty Limited.

207 CLR 21,

Humberstone vs Northern Timber Mills.

79 CLR389

“Working it out – Employee or independent contractor?” National Legal Eagle, 12(2):14-19.

There is a difference between Independent Contractor and employee.

Brodribb Sawmilling Co Pty Ltd. 1986.

HCA 1.

Key Facts: Employment Law.

New York: Routledge.

Zuijs v Wirth Brothers Pty Ltd.

HCA 73.

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