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Hospitality Business Law

Hospitality Business Law. Employment law Study guide Topic 5 Chapter 18 Restraint of Trade Chapter 35 (electronic copy). Objectives. Describe the requirements (elements) of an employment contract Restraint of trade (anti-competition clause)

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Hospitality Business Law

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  1. Hospitality Business Law Employment law Study guide Topic 5 Chapter 18 Restraint of Trade Chapter 35 (electronic copy)

  2. Objectives • Describe the requirements (elements) of an employment contract • Restraint of trade (anti-competition clause) • Distinguish between an employee and an independent contractor • Describe rights and duties of employee • Identify the importance of the Fair Work Act 2009 (Cth) and awards and enterprise agreements • Explain Unfair Dismissal and Unlawful termination of employment

  3. Class Questions • Employment starts with a contract… • What do you already know about contracts generally? Do they have to be in writing? Who can enter a contract? What are the consequences of a contract? What contracts might the law say are illegal? What do we need for a valid contract?

  4. What is required for a valid contract…

  5. Offer and Acceptance = agreement • Agreement • Advertised- invitation to treat Employer offers position or employee offers services Offeror Offeree accepts Binding contract Provided the agreement is supported by consideration

  6. Consideration Promise to provide service in return for promise to pay All contracts need an exchange- a mutual process What is the “price” for the work – might include benefits other than money

  7. Consideration Normally a wage is required but.. • Cudgegong Soaring V Harris (1996) 13 NSW CCR 92 Rent free accommodation enough here for an employment contract (and consider minimum standards that could then be applied eg a wage)

  8. What is required for a valid contract…

  9. Intention • Intend to create a legally binding relations… • Not all relationships are legally binding • Consider volunteer arrangements

  10. Intention of the parties Social, domestic relations What others? What do the parties intend? Consider Intention to be legally bound- Eg Teen Ranch vs Brown(1995) 87 IR 308- long term volunteer worker not paid, consider the motivation of the parties-? Need more than moral obligation

  11. Intention? • Family eg Williamson vs Suncorp Metway Insurance (2008) QSC 244 father paid son but ad hoc • Consider also friends- social and domestic

  12. Edwards V Skyways (1964) I WLR 349 • “honorary undertaking” – was their intention to create legal relations • If you are declared redundant we will give you an ex gratia payment • There was intention

  13. What is required for a valid contract…

  14. Is there Genuine Consent? • Mistake • Misrepresentation • Duress- threat of violence • Unconscionable • Undue influence Vitiate the genuineness of consent (i.e. destroy its legal effect)

  15. Contracts contain… • Terms- • Implied – You will not steal from us, you will be careful and try to do a good job • Express – You will be paid $50,000 p/a,

  16. Certainty • Biotechnology Australia V Pace (1988) 15 NSWLR 130 • Uncertain term in contract • “you have an option of our shares” • But at the time they did not exist

  17. Who can enter a contract? • In law we call this contractual “capacity” • Who may not have legal capacity at common law - ?

  18. Capacity • Children (minors under 18) only in certain circumstances (and with certain protections) • Illegal immigrants WorkCover v Da Ping (1994) 175 LSJS 469

  19. What is required for a valid contract…

  20. Illegal Restraint of trade • Restrictive covenant- anti-competition clause- • Term- “you cannot work for anyone else” Restricting work after that contract is terminated These are illegal for public policy reasons over the years the courts determine if they are unreasonable…….

  21. Restraint of trade • Lindner v Murdock Garage (1950) 83 CLR 658 • Reasonable in time? • Reasonable in geography? • Bargaining strengths • Reasonable as to type of business? • To what extent are they required to protect the employers business?

  22. Restraint of trade • Unequal relationship so to be reasonable in an employment context generally must show.. Protecting trade secrets-secret formula for example KFC spices?,

  23. Restraint of trade customer details or connections, Del Casale & Ors v Artedomus (Aust) Pty Ltd (2007) NSWCA 172 Is it really a secret or general knowledge? Extent to which known inside and outside the business The value of information to competitors Difficulty in acquiring or duplicating the information Does the employer have a proprietary interest?

  24. Restraint of trade • Forster & Sons Ltd V Suggett (1918) 35 TLR 87 Confidential glassmaking techniques- 5 year restraint no other glassmaking in UK reasonable

  25. Restraint of trade • Rentokil Pty Ltd v Lee (1995) 66 SASR 301 Contract “two years in Austral not carry out not engage in business “in any capacity” that was competitive with Rentokil” Resigned went to work with competitor immediately tried to “steal” Rentokil customers Is “any capacity” too broad and therefore unreasonable- the court decided this part could be severed and cut from contract and the rest of the contract remained

  26. Hospitality Business Law Is it an employment relationship or independent contractor? Presenter: Lydia Richards

  27. An Important Distinction – Employee Independent contractor Contract of service- an employment relationship- carries on work personally Contract for services- not an employment relationship- work for agreed price

  28. Why is it important? Many legal obligations flow from the employment relationship (much legislation seeks to “protect” employees” or give them certain rights such as: • Superannuation Guarantee • Tort law (eg employee negligence) • Taxation • Various Protective statutes eg: unfair dismissal, pay rates- awards, leave entitlements, Workers Rehabilitation and Compensation Whereas Contractors: • have more flexibility, can substitute others to do “the work” • have to undertake their own record keeping, own insurance, tax, finding work, no sick leave, no holiday pay, no award rates, workers no compensation etc, may get super if over 50% of contract

  29. Areas where the laws apply to all those on a worksite Discrimination Work Health and Safety

  30. The courts have struggled to come up with a clear definition of when someone will be considered an employee OR an independent contractor Legislation has left it to the judges to make the decision various tests…

  31. CONTROL? Zuijs v Wirth Bros (1955) 93 CLR 561 control in fact/right to control • Z was an acrobat (injured) – W owned the circus • Only Z knew how to be an acrobat, so how could W control his work? • W had general control over Z’s employment • “control” in principal rather than actual control! • (photo by Photo by Loomis Dean via LIFE Images Hosted by Google)

  32. Beyond the control test • Stevens V Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 Saw miller dies, wife seeks workers compensation…. Is he a worker or a contractor? The court said look beyond control and consider various factors (or indicia- indicators)

  33. Multi factor indicia test • Payment -How paid wage or invoice? • Liability -Risk of loss- insurance? • Set hours? Degree of control of the “employer” • How are they taxed- PAYG or invoice? • Do they get paid leave, sick leave • Does employer pay superannuation? • Integration- how important? • Risk of capital loss? • Uniform? • Do they Supply/own tools • Free to work for others • Use of business name • Delegation- can “worker give away work”

  34. Hollis v Vabu Pty Ltd (2002) 207 CLR 21 Bicycle courier, hits pedestrian rides away… can courier company be liable for actions of the rider – only if an employee… Consider indicia…to determine if an employee

  35. The Holistic Approach- how do you decide(Hollis v Vabu) • Little independence • Little investment in equipment • Little skill • No freelance career • Bikes not just for work(Couriers) • Imposed work practices told how much to charge • Vabu logo had to be worn • Controlled annual leave • Work allocated by fleet controller(Vabu)

  36. Hospitality Business Law Terms in an employment contract (duties)

  37. Terms in a contract Many express terms Few express terms • Detailed comprehensive code • Oral/written • Implied terms • Oral/written More scope for implied terms Less scope for implied terms

  38. Terms • Where will you find terms of a contract… • And what will terms cover…

  39. Express terms… Written contract but also • Emails, letters, text messages • Conversations, phone call, company policies, and awards or enterprise agreements Terms cover such issues as salary, other entitlements, hours of work, expectations, company policies, what happens upon termination, restraint of trade etc

  40. Awards and Enterprise agreements • Awards- set by the government tribunal for different industries Covers minimum wages, pay rates, hours of work, rest breaks, classifications, allowances, leave etc • Enterprise agreements Large organizations (enterprises) may negotiation with workers for a collective agreement – must still be authorized by Fair Work

  41. Minimum standards All contracts must comply with the National employment standards these are minimum standards (these are set out in the Fair Work Act (2009) Cth – Part 2-2 • (a) maximum weekly hours • (b) requests for flexible working arrangements (c) parental leave and related entitlements • (d) annual leave • (e) personal/carer’s leave and compassionate leave • (f) community service leave • (g) long service leave (h) public holidays • (i) notice of termination and redundancy pay • (j) Fair Work Information Statement

  42. Terms not included in written contract What about verbal promises at negotiation stage then not in written contract? – promise at interview – you will be on the executive team- but not in written contact- held to be a term a collateral contract and could be misleading and deceptive Morton v Interpro Australia Pty Ltd & Anor [2009] FMCA 423,- promise of bonus

  43. Variation/change of terms • Terms in a contract are “settled” when the contract commences but things do change over time… Sometimes employer makes changes through policies • Employer cannot without agreement: • Reduce pay eg Rigby v Ferodo (1988)ICR 29

  44. Other changes An employer can make these changes to the contract overtime • Cresswell v Inland Revenue (1984) ICR 508 Change from pen to computer lawful and reasonable instruction Easling V Mahoney (2001) 78 SASR 489 no material variation smaller office secretary removed

  45. Express terms in an employment contract are reasonably easy to apply Eg: policy about stealing, internet use, staff standards etc Also at common law there have been many implied standards imposed upon employers and employees These standards have implications for dismissal, discipline and other issues

  46. Implied terms Employer duties • Duty to provide work, provide remuneration (for permanent – continuing staff) Casual staff- minimum hours if called in • Health and Safety (now legislated- see next week) • Indemnify for expenses • Vicarious Liability – take legal responsibility

  47. Implied Duties Employee Owes Employer To exercise skill and competence Lister backed a truck over a fellow employee (his father!). Employer was vicariously liable. Lister was under an implied duty to act as a trained truck driver (Lister v Romford Ice & Storage)(1956 AC 555)

  48. Implied terms- Employee duties • To be obedient- must obey lawful commands but only if reasonable “managerial prerogative” Australian Telecommunications Commission v Hart (1982) 43 ALR 165- caftan and thongs Fairburn v Star City Pty Ltd (2003) NSWIRC 424- casino tongue ring- not unlawful or unreasonable- “five star image” clear speech

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