Question 2

Issue
Is Wendy an employee or an independent contract has been formed?
Law
The current common law test to conclude whether a person is an employee or individual
contractor is done by the multifactor test (Stevens V Brodribb Sawmilling Co Pty Ltd (1986) 63
ALR 513) and the courts examined and concluded that the basis of establishing the relationship
does not solely exist on control, but other factors are include such as mode of remuneration, the
hours worked, income tax etc.
In determining the relationship based on the level of control it can be of two outcomes, an
employer and employee contact (FCT v J Walter Thompson Pty Ltd (1944) 69 CLR 227) or
individual contract (Commissioner of Pay-Roll Tax (Vic) v Mary Kay Cosmetics Pty Ltd (1982) 82
AR 4444). When there is a high level of control exercised (FCT v J Walter Thompson) between
the principal and worker the court will uphold an employer and employee relationship. Where
there lacks to be a high degree of control an individual contractor relationship exists such as in
Commissioner of Pay-Roll Tax v Mary Kay Cosmetics, where beauty consultants were given a
manual which only suggested advice, they could delegate their functions, thus lacking in control.
Factors other than control will place a great weight and the courts will look at the whole
relationship and make a decision on balance (Hollis v Vabu (2001) 207 CLR 21) to prove if there
is an employment contract or individual contract (Australian Air Express v Langford (2005)
NSWCA 96).
Some other relevant factors that place greater emphasis on whether employer employee
relationships exist include:

Working hours by the worker (Mason J v Stevens)

Payment of own taxes by worker (Sammortino v Mayne Nickless (2000) 98 IR 168)
Labelling of contract terms (Narich Pty LTd v Commission of Tax (1983) 50 ALR 417)
Disciplined for misconduct (Zujis v Wirthbros Pty Ltd (1955) 93 CLR 561)
Applications
Wendy works a fulltime job, her pay is based on 37.5 hour week this is normal employee
working terms (Mason J v Stevens). She uses an ABN when she invoices the company, she
does to the same amount every time and is not inconsistent with that of a wage employee
(Sammortino v Mayne Nickless). Just because the payment arrangement is made to be invoiced
to the company does not indicate an independent contract.
She is given a rule book on how to invoice the company for the same hours she works every
week. This would entail Wendy to follow specific guidelines (Commissioner PRT v Mary Kay) by
the company, leading to an employee contract. The rule book that she was given to her from
day one, indicating a level of control (Zujis v Wirth Bros) right from the beginning she had to
follow their rules of employment, staff restrictions and mission statements. Furthermore in the
rule book it states that staff can be disciplined for discriminatory behavior (Zujis v Wirth Bros)
resulting in an employee relationship.
The contract provided that Wendy is an independent contractor and not employees. This is a
labelling clause, which is inconclusive on its own, and the contract and work done would be
seen as a whole and then decided on the type of contract (Narich v Commissioner of Pay-Roll
Tax)
Conclusion

Wendy is most likely an employee. These is a high degree of control over her by the company
and in this case the indicators of employment outweigh the indicators of contract for service
using the multifactor test. This is why Wendy is seen as an employee.

Issue
Is the company bound to follow the rules book
Law
There are a few factors that need to be considered to see if terms are expressed and the
company bound by them; such as the nature of the policies where the policies will be looked at
and the intentions of these policies will be examined. Secondly the procedures used to bring to
attention the policies to the employees at the time of entering the contract can form terms of the
contract, such as a company manual being referred to (Riverwood International Australia v
McCormick (2000) FCA 889).
Thirdly, the timing. If the policies are brought to attention before or during the contract being
signed then the prospective employee has time to read through it and understand what is
needed of him and what the policies were. If the notice is given after signing the contract
(Akmeemana v Murray (2009) NSWSC 979) then it would be examined by the courts for its
effectiveness and intention of the policy.
When a term in the contract is set in place, the company and employee are bound by those
terms of the contract. The employer/employee are obligated to fulfill their terms of the contract
(Goldman Sachs JB Were Services v Nikolich (2009) FCAFC 120)
Application
Wendy has a set of rules she needs to follow as outlines in the rule book. These rules have the
intent for the company to prosper and also provide a safe workplace without discrimination and
equal human rights. The fact that she was given a rule book which has mission statements and
staff restrictions is bringing to attention the poilicies to Wendy. These will become express terms
of the contract and are legally binding (Riverwood International Australia v McCormick).

Wendy was given a rule book on the first day of work, this is very timely and shows that the
company obligates her to abide by the rules outlined in the book from day one (Goldman Sachs
JB Were Services v Nikolich).
As the supervisor had made a complaint, the rule books illustrates that the company will
aggressively pursue it and promise a report when it is resolved. This policy is an express term
and the intention is in the context, it is meant to be binding as the book states the company
does not tolerate discrimination and there is a serious intention for the company to honor this
policy (Goldman Sachs JB Were Services v Nikolich).
Conclusion
The company are bond by their rules book and will have to follow the rules outlines in the book
as they are express terms to the contract, delivered in a timely manner with the intention to
provide a discrimination-free workplace. Therefore the appropriate disciplinary action will need
to be taken against Wendy.

Issue
Are the terms of post-employment enforceable?
Law
There are restrictive clauses that can cover solicitation of employers customers and direct
competition of the employer. Even if there has been a contract entered between two parties that
provide restriction of trade at time of entering the contract, the courts can determine this clause
as non-enforceable, especially if the specific clause restricts the employee in using their skills or
trade in future employment for a certain amount of time and over an area (Sear v Invocare
Australia (2007) WASC 30) especially is special knowledge of an area is known (Cactus
Imaging v Peters (2006) 71 NSWLR 9).
But it does protect the employer from confidential information like trade secrets and new
innovative ideas to be kept privy to the employer via a valid clause (Wright v Gasweld Pty Ltd
(1991) 22 NSWLR 317) which can be upheld by the courts if deemed to be protecting
confidential information.
Post-employment the length of time and area of restraint are two factors considered when
determining if the clause is reasonable. If the area of restriction is within the industry that the
employer conducts business within, then the clause will be upheld (Nordenfelt v Maxim
Nordenfelt Guns and Ammunition Co Ltd (1891) All ER Rep 1), but if the area is very wide range
then that restriction is too broad and goes beyond the scope of being reasonable (Buckley v
Tutty (1971) 125 CLR 353).
Application

The restraint of trade clause states a restraint period of 12 months which is not unreasonable,
given that she knows the makeup of the mining soils and has the special knowledge (Cactus
Imaging v Peters).
Another fact is that the restraint clause has been restricted to any other person or mining entity.
The courts will uphold the restriction against employment for a mining company, but in the
current field of work, so geology or something similar to, (Nordenfelt v Maxim) including the
entire mining industry is too broad and including any other person is far too wide an area
(Buckley v Tutty)
Finally in the details of the restraint of trade for post-employment, she cannot solicit any staff or
clientele. This will be upheld by the courts as Wendy has special knowledge of the mining
companys geological information and any business with other employees or clients would be
unreasonable and therefore prohibited (Cactus Imaging v Peters).
Conclusion
Wendys restraint of trade will be upheld post-employment for 12 months as that is not a long
time, and be restraint to geological sub industry within the mining industry. She cannot take
employment with clientele or previous employees but can seek work in a different field.

REFERENCES
Marshall, B. 2006. Working it out- Employee or independent contractor? The National Legal
Eagle volume 12 (issue 2): P16- 20.

Waarden, N. 2014. Understanding Employment Law: Concepts and Cases. 3rd Edition.
Australia: Lexisnexis Butterworths.

Fair Work Building and Construction. 2012. Engaging Contractors: Employee or Contractor.
Australia: Commonwealth of Australia. http://www.fwbc.gov.au/employee-or-contractor.

NSW Young Lawyers. 2007. 2007. A Practitioners Guide to Corporate Law: A guide to basic
procedures of corporate law for young lawyers. New South Wales. NSW Young Lawyers
Business Law Committee. ISBN: 0975600230

Word count (not including coverpage, references and current word count page):