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EXISTENCE OF A "CONTRACT"
A contract of employment is first and foremost, a "contract". So the very first step in determining whether a particular relationship whereby one person performs work for another is "employment" is to determine whether the parties have a contract.
According to our law a "contract" is (generally speaking) a legally binding bargain between parties, where there has been offer and acceptance, and consideration.
There are a number of requirements that have to be satisfied before it can be said that the parties have a contract. The main ones that have to be considered in the case of work arrangements are these.
WHETHER THE CONTRACT IS FOR "EMPLOYMENT"
Assuming that two parties have a "contract" whereby one party agrees to perform work for the other, the question which then sometimes arises is whether the contract is a contract of employment or some other type of work arrangement.
Very often of course, there is or can be no dispute about the matter - the person performing the work is acknowledged to be an employee of the other person. But these days there are quite commonly situations that arise where one or other of the parties to the work contract assert that the person performing the work is a "contractor" not an employee.
Sometimes there can be no doubt that a particular person is a "contractor" (eg a person who mows lawns for a living and who contracts with householders to mow their lawns for a set price each time the lawn is mown would be a contractor in most cases). But there are "grey areas", and with the emphasis these days on "contracting out" work by employers there are increasing difficulties "drawing the line" between employee and contractor.
The Courts have developed over the years a number of criteria for determining whether a particular person performing work for an another is an "employee" or not.
- The person performing the work is not allowed to delegate the work to others - that is there must be personal service
- The work is performed at the premises of the person who requires the work to be done
- The person performing the work is required to work fixed hours per day or per week
- The person performing the work is required to work full time for the other person and/or is not allowed to work for other persons
- The person is paid by reference to hours worked as distinct from payment for a achievement of a particular result
- Tax is deducted from the payments made to the person who performed the work by the person for whom the work is performed
- The person who performed the work receives paid time off (eg holidays or sick leave)
- All or most of the expenses are paid by the person for whom the work is performed
- The person for whom the work is done supplies the equipment needed by the person who performs the work
- Workers' compensation premiums or the Commonwealth Government's Superannuation Guarantee Levy are paid in relation to the person performing the work
The presence or absence of any one or more of these factors will not be decisive of any particular case - every case has to be considered on its own.
TERMS OF A CONTRACT
Assuming that the parties to a relationship which involves one performing work for the other are in a relationship that the law regards as a contract of employment, the next and often most important question is: what is the parties' agreement - that is, what are the terms of their contract?
The terms of a contract of employment can be:
In addition, in most contracts of employment (whether oral or written), there are IMPLIED terms - that is, terms that are not recorded in writing or even spoken about by the parties, but nevertheless the courts say that those terms are BY IMPLICATION (more about this below).
With oral contracts the question of what the parties have agreed depends upon what they agreed in their conversations plus terms they did not speak about but which the courts imply.
With written contracts the terms are set out in the written document. However, unless the parties state in the contract or otherwise make it clear, the written contract will not be regarded as exhaustive of the terms of the contract - there will still be room for the courts to imply terms as well as the written terms.
Often, contracts of employment are a combination of written and oral terms, as well as implied terms. For example, a person may receive on commencement of employment a "letter of appointment" which spells out basic aspects of the contract but many other terms may be oral or implied.
The following are the terms that are most commonly found specifically talked about or written down by the parties to a contract of employment.
There could be many other terms of course depending on the circumstances.
But in most contracts (whether written or oral or partly both) there are also IMPLIED terms.
There are, generally speaking, two types of IMPLIED terms
Generally speaking, terms are only implied where it is necessary to make the contract work.
Here are some simple examples.
AWARDS AND CONTRACTS
Since the early 1900s Australia has had in place through legislation Federal and State systems for the compulsory arbitration and settlement of industrial disputes and matters.
For employees in South Australia the main statutes are the Workplace Relations Act 1996 (Cth) and the Occupational Health Safety & Welfare Act 1986 (SA). These Acts cover various different categories of employees. Indeed it would be fair to say that MOST (certainly more than half) of the persons who work as employees (that is, engaged under a contract of employment) are covered by these Acts.
These Acts empower industrial tribunals to make decisions and orders setting minimum standards for employment contracts, called "awards". Also under these statutes provision exists for the registration or certification of other legal instruments regulating contracts of employment, such as enterprise agreements or Australian Workplace Agreements. Generally speaking these types of agreements are, once registered or certified by the appropriate statutory authority, given the same effect as awards.
For completeness it should also be noted that there are other Acts of Parliament that confer benefits or protections on employees - simple examples are the "paid leave" statutes in South Australia - the Long Service Leave Act 1987(SA).
Sometimes questions arise about an employee's rights when he or she has an employment contract but is also covered in his or her employment by an award. The following are the general rules.
RIGHTS WHEN CONTRACT BREACHED
When a party to a contract of employment believes that the other party has breached the contract in some way, the aggrieved party has rights to seek redress from the courts for that breach - however the bringing of legal action in relation to breaches of employment contracts involve some special considerations (different to the situation with other types of contracts such as contracts for the sale of goods or land etc).
- Action for recovery of unpaid wages or other monetary benefits
- Action for damages for wrongful dismissal
These types of action can be brought in a variety of courts depending on the circumstances, such the Local Court before a Magistrate, or an industrial court or tribunal. Each court or tribunal has its own rules and requirements. Details can be obtained from the Registry of the relevant court or from a professional advisor.
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