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.
Nb. The above questions are intended to cover only common law issues; it is important not to detail any legislation in your answer.
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