Employee and Independent Contractor †Free Samples to Students

Question: Discuss about the Employee and Independent Contractor. Answer: Introduction: Generally, employers take shield of contracts by stating that person is appointed as independent contractor and has no rights as employees under employment law. This report states, issues related to contracts which states that that person is considered as employment law. It also states, issues related to current restraint clause. Subsequently, this paper is concluded with brief conclusion. The fundamental differences between the employee and independent contractor are stated below: Employee enters into contract of service and independent contract for services. Control is accessed by employer over the employee, but in case of independent contractor employer does not access any control over independent contractor. In case of employee, employer is vicariously liable for the acts of employees. In other words, independent contractor performs an agreed task for an agreed price and employer does not control the working hours of the employee and how such work is carried on by independent contractor. Generally, employer considered person as independent contractor for the purpose of avoiding federal and state legal requirements. However, if characteristics of employment of person are resemble from employee then such person is considered as employee and not independent contractor. Numbers of tests are determined by common law for the purpose of determining the status of person as employee or independent contractor and these tests are stated below: In case Zuijs v Wirth Bros, Court determine the control test and state that if employer access control over the person then such person is considered as employee, and control is determined through significant relationship shared by them. Other test is integration test which determine the degree of integration worker accessed in the employment such whether worker wears uniform provided by employer or not. The most important and last test is multiple indicia test, and this test was introduced in case Stevens v Broadribb Sawmilling Co Pty Ltd, and this test was later confirmed in Hollis v Vabu Pty Limited in Australia. This test consider all the essential circumstances of the employment for the purpose of determining the status: FACTOR INDEPENDENT CONTRACTOR EMPLOYEE Equipment and tools If not supplied by employer If supplied by employer. integration Not integrated in the business such as does not wears uniform, and use vehicle. Integrated in the business such as wears uniform, use vehicle. Tax arrangements Person themselves mange the tax compliance Employer manages the tax compliance. Entitlements and allowances Does not provide any entitlement and allowances. Provide any entitlement and allowances. Working hours Specified task Indefinite period Remuneration Lump sum wages Delegation of work Employer does not delegate Employer provides directions and instructions (CPA, n.d.). In the present case, Fred work as tutor in training organization and his working hours are decided by organization. Fred gets remuneration fortnightly which means for work he undertook for the previous fortnight. He also uses the equipments provided by employer, and the most important employer directs the Fred how to work. After considering all these factors it can be considered that Fred is employee of the organization and not independent contractor. Restraint clause: Generally, restraint clauses are used by employers under employment contract for the purpose of protecting the interest of their business after employee resigns from their company. These clauses are usually included in the employment contracts of professionals and senior/manager employees. The most common restraint clause is prevention of departing employee from working in the business of competitor for any specified period. Some other restrictions are also included such as not dealing with the clients of former employers and not use any confidential information of previous employer. Court will upheld these clauses only if these clauses are reasonable in nature. This can be understood through example; Court will never enforce any such clause which interferes in the rights of worker to contribute their own labor. In case law Buckley v Tutty (1971) 125 CLR 353 at 380, High Court stated that unreasonable restraints are not enforceable if such clauses are contrary to the welfare of the public and prevent any person from earning a living from lawful resources. While assessing the reasonableness of restraint clause, Court considers various factors such as area in which these clauses are applied, activities of the employee, control assessed by employer, etc. Court has power to cancel the restraint clause if they find the clause unreasonable (Jewell, n.d.). In the present case, clause preventing the Fred to work in for a competitor training organization for the period of 12 months of completing his work at the existing training organization. This clause is invalid because clauses are not enforceable if such clauses are contrary to the welfare of the public and prevent any person from earning a living from lawful resources. Therefore, this clause in employment contract is not valid. Conclusion: After considering all above facts it is clear that Fred is considered as employee of the training institution because all the factors of employment states that Fred is the employee of the organization. Other issue is related to restraint clause which prevents the Fred to earn his living resources through legal way. However, this restraint clause is not reasonable in nature considered as invalid clause. References: CPA. Employee or Contractor. Viewed at: https://www.cpaaustralia.com.au/~/media/corporate/allfiles/document/professional-resources/practice-management/employee-versus-contractor-factsheet.pdf?la=en. Accessed on 1st October 2017. Zuijs v Wirth Brothers Pty Ltd - [1955] HCA 73. Buckley v Tutty (1971) 125 CLR 353 at 380. Stevens v Brodribb Sawmilling Company Pty Ltd - [1986] HCA 1. Hollis v Vabu Pty Ltd [2001] HCA 44. Jewell, I. Restraints of trade: non-compete clauses, are they reasonable. Viewed at: https://insightsresources.seek.com.au/restraints-trade-non-compete-clauses-reasonable. Accessed on 1st October 2017.