Navigating employment contracts and your contractual obligations

November 27, 2018

Contractual disputes are costly and time consuming. One persistent source of such disputes is the confusion around permanent employee, temporary employee and independent contractor agreements.

Our laws have changed quite significantly around the use of temporary contracts. An employer may only engage an employee on a temporary / fixed term basis for a very specific work event such as a maternity leave cover or a project-specific contract. An employee who works for longer than six months on a temporary basis may not be treated any less favorably than a permanent employee.

Often companies offer prospective employees a fixed term contract for a period of three to six months before they go permanent which is, in essence, a probation period. This “try before you hire” tactic is not compliant with legislation and companies should avoid it.

So what is the difference between an employee and an independent contractor?

The employment contract which outlines an employee / employer relationship is called a contract of service. The employee undertakes to render his or her services for an undetermined period. In return the employer undertakes to pay the employee for these services.

The independent contractor agreement is a contract for service. The contractor undertakes to perform a specific service and upon completion, the contractor will produce an invoice for payment.

In the employment contract, the employee is subject to the control and discretion of the employer. The employer stipulates the hours and how the tasks will be performed. The employer also provides all the tools and resources to perform the work and the employee is obliged to obey the employer’s instructions.

In the independent contractor agreement, the employer may dictate a date when the work must be completed but will not dictate what materials and tools must be used or how to complete the task.

The contract of employment also had a direct link to the policies and procedures manual including clearly defined roles and procedures for each role within the business. The policies and procedures manual comprises, in essence, the day to day operations of the business.

It is imperative that all procedures are well documented so that there can be no grey areas that will let the employee claim later in a dispute that they were not aware of a rule or requirement.

In determining the fairness of a dismissal for poor performance or misconduct, laws require the chairperson to ask the following questions:

  1. Is there a rule in the workplace?
  2. Is the rule reasonable?
  3. Is the employee aware of the rule or could reasonably have been expected to be aware of the rule?
  4. Is the employee aware of the consequences of failing to adhere to the rule?
  5. Is the rule consistently applied?

Consistency is key. You cannot have separate rules for different employees or turn a blind eye to certain employees’ transgressions because of the value they bring. You need to apply the rules consistently across the whole team or company.

By Kim Edwards

By Kim Edwards

“Kim is a Human Resource expert with more than 15 years’ experience in human resources, labour relations, training and development, and alternative dispute resolution. Kim assists Vizibiliti clients in ensuring compliance with all employment legislation and provides support and guidance with staff disputes whilst creating a culture of performance excellence.”

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