Chapter 4: Contract Formation & Terms

By invitation or recommendation, advertisement, employment agency services Contractual Stage:

Where 6.5 out of the 7 (less consideration) below elements must be present for a contract to be valid: 1. Offer and Acceptance o Irrevocable agreement o Offer must be definite and clear o Acceptance is the total agreement to all terms offered without change 2. Intention to create legal relations o Written signed contract 3. Consideration o 0.5 + 0.5 = 1 or Exchange of promises o Contract of law is normally born out from exchange of promises however not all exchange of promises will be contract at law o Benefit and detriment theory or something for something 4. Capacity to enter into contract o Minors, Sanity, Drunkard 5. Form of contract o Written or oral will still be valid o Express terms are terms with straightforward meaning If unclear, through contra proferentem rule, the term will be less favourable to the person who drafted the term of the contract o Implied terms are not written or spoken but read into contract by Law 6. Subject matter of contract must be legal

o Any illegal contract are treated as void 7. Parties genuine and true consent to enter into contract o in the absence of vitiating factors like duress, undue influence, misrepresentation, mistake and unconscionability

Chapter 5: Employer Duties

Between employer and employee: No work, no pay principle

Duty of Mutual Trust and Confidence:

Degree of cooperation is required of both employer and employee to ensure the relationship works smoothly Employee must act in a good faith and fidelity to the employer and so employer must provide reasonable and fair treatment of such employee Woods case: Clerk for 28 years till company sold to another. She did her part of acting in good faith and fidelity to employer however was then reduced hours of work, changed of duties and employment title due to improving business operations. Held: The employer improperly or unreasonably conduct themselves to destroy the trust and confidence between themselves and Woods Implied promise by employer not to destroy trust and confidence without reasonable cause Perkins case: Dismissal of employee unjustified due to unproven allegations (rumours) or without evidence. Held: Employee could seek reinstatement but is not possible to claim damages for loss of future income due to reputation or distress Courts provide injunction or specific performance to uphold the duty of mutual trust and confidence in an employment contract Hill case: The employer did not want to dismiss Hill but due to pressure by trade union who wanted Hill to be dismissed. Held: Shown that the duty of trust and confidence not destroyed even the courts impose remedies to stop Hill from being dismissed or reinstated

Duty to Provide Work:

Employer may not be liable to provide work but have a duty to page wages of employees hired and who is ready and willing to work

Employers have exceptionally duty to provide work to his employees when failure to provide work: 1) Can lead to loss of reputation or publicity o Entertainment industry Curro case: Did not have enough appearances provided as the reporter for the company although frequency was not stated in the contract. Before contract ends, when into contract with another company. Held: Curro expected more than wages, reputation and public awareness from the company as it is more important to his reputation. Law will blame the first party who breach the contract first 2) Leads to reduction in employees actual or potential earnings o Full-commission based o Employer must give opportunity so as the employee can close the deal in order to earn money in order to maintain basic livelihood for survival Bauman case: Bauman was paid a set amount per week plus commission but must undertake commission work himself. Held: If Bauman did not have employer did not provide work, Bauman would not be able to make a reasonable amount to sustain his basic livelihood 3) Appointment in relation to performance of a specific office or special skill o If employer provides a different job scope from what was agreed upon initially, then a breach of duty on the part of the employer o If you hired a finance director, you must give him work specifically relevant to the position he is hired for otherwise if the skills are not used, it would degrade or cause it to be stagnant and bad for their future o Certain job of employees needed to be given work by employers to keep their skills up to date Collier case: Appointed to be chief sub editor for a newspaper, later employer continued to pay but did not provide Collier with the same work. Held: Collier was employed for a specific

position, once that newspaper is sold, the employer destroyed the office which Collier was hired for

Duty to Pay Remuneration: (Wages)

Employee enters into an employment contract with employer because of wages Only money can be paid as wages, in terms of cash, cheque or be deposited into bank account No Work, No Pay No Work as directed, No Pay

Gape case: Gape did not perform his ordinary duties for 3 days and employer refused to pay him to full salary. Held: Gape performed certain duties consented by employer during the 3 days when he was away

Duty of Care and Safety

Any one of the breaches the sub-duty will cause the main duty of care and safety to be breached: Provide competent staffs or fellow employees o If the actions of an employee is something that the employer cannot foresee or anticipate then the employer is not held liable Hudson case: A practical joker staff hired by the company caused injury to another colleague but was not removed. Held: Company liable for breaching duty to hire such staff that pose danger to other staffs and still did not remove such a staff Provide safe plant and equipment

Taylor case: Employers knew that a batch of chisels is defective as one incident of chisel shatters while in used happened before but neglected on it and later an employee got injured over it. Held: The employer is liable for breach for supplying the chisels to employee causing employee to be injured

Provide safe system of work o Employer must provide reasonable care for workers for their safety

Bennett case: A worker from company X was injured when he was tasked to work at company Y. Held: Only company Y was liable as B is able to work alone without direction and foreseeable that the worker would repair the machine in such urgent moment at company Y

Duty to Indemnify (Reimburse)

Employer to reimburse an employee for debts or reasonable expenses accrued in the reasonable performance of their duties Kelly case: Employee was asked to drive the uninsured vehicle and was caught for it. Held: Employer would reimburse the employee for using the vehicle as employee was unaware that such conduct is unlawful

References
If employment reference is given, it is the duty for the employer to ensure that it is truthful

Accommodation
No obligation for the employer to provide accommodation to employee

Medical care
No duty for employer to provide medical care

Chapter 6: Employees Duties

Duty to obey orders
Employee must follow employers instructions in return for their p romise to pay wages for service. Such orders must be lawful and reasonable, employees did not have to obey if the orders are otherwise WA Government Railways case: Employer tells employees to wear goggles at all working days, employees refused and employer refuse to pay them. Held: The order was lawful but unreasonable as at that time there was already a safety program to secure safety problem at workplace so no need for employees to wear goggles

Duty of Care and Competence

Standard of care will depend on the nature of the work for each employee If employer hires employee lacking of required skills with acknowledgement, the employer cannot thereafter sue him under breach of duty of Competence Lister case: Employer have no obligation to insure or take care of employees property. Held: Employee may have implied duty to take reasonable care of employers property especially if under employees control

Duty to Indemnify (Claim)

Insurance Contracts Act 1984 Section 66: Insurance company can only claim losses from employee where damage occurred outside his course of employment or where employee engaged in serious or wilful misconduct No hope for the insurer to attain double claim Company can still be vicariously liable when employee injures third party in his scope of work If employee acted outside scope of employment, the company would not be vicariously liable

Insurance will try to pay first then claim from employee by suing them to offset the losses

Duty to Provide Faithful Service

Duty of fidelity or good faith to the employer as part of the employee in the employment contract Ansell case: The managing director of company took a commission which the employers did not know of and had shares in other companies of the same trade as his employers. Held: Ansell breached the duty for the secret profits Laughton case: Indicated intention to trade with company suppliers in the near future thus was dismissed. Held: Dismissal was inappropriate as there was no breach restraint of trade clause or disclosure of secret and confidential information in employment contract Smith case: Last week of his work, he poach employer companys customers to be customers for his soon to be set up business. Held: Breached implied term of employment and was made to pay damages Moonlighting: Check contract if main employer bought over your time even after office hours If stated in contract and signed then not excusable otherwise breach of good faith If not such a clause, then one is able to do anything during spare time so long it does not affect reputation, interest of employers business or duties which one need to give employer during the day

Duty to Hand Over Inventions

Invention made by employee in course of employment belongs to employer However, any invention not using company materials and equipment and such invention done during spare time of employee then invention need not be handed over to employer

Hudson case: Hudson and wife invented and patented an adaptor and assign the right to sell to another company. Held: Company sued Hudson but failed as Hudson did such invention in his home and after working hours without using companys materials

Duty of Disclosure
No obligations to disclose unless asked by interviewer Senior has the obligations to disclose junior Whistle Blowing No obligations to disclose even if you do something wrong

Duty of Confidentiality
Even if not included in a contract, it is present. No disclosure even after leaving the company or even contract ends or even till death. And also an employee is not allowed to use employers confidential information for personal benefit Extends to Trade Secrets which is something very original and valuable, and not made known to the public Bitumenoids Ltd case: 2 workers measured and manufactured unique machines owned and invented by employer set up another company to compete with employer. The workers even absorbed customer information relating to the machines during their course of employment. Held: The measurement, design and manufacturing of the machine is confidential information hence there is a breach of implied duty. The usage of customer information was learnt and acquired during performance of work during the scope of employment hence could be made use of and not be liable for breach unless contract states so

Restraint of Trade Clauses

Apply to restrict employee during course of employment or post-employment. Postemployment clause could be void because of public policy of freedom of trade. If former employer want to revive restraint of trade clause to bind on employee if not the following 3 sub-clauses are satisfied, unless: Employer who imposes such restriction has a proper interest to protect

Reasonable between parties to protect such interest Reasonable from community standpoint of view o Rectum surgeon example given by Adrian

Usually, employers enforce normal restraint of trade clause factors to employees like: Time period Geographical limits of the restriction Position of employee Accessibility of trade and confidential data of company Age of worker Type of qualification and skills of the employee Type of trade industry Any other trade-off

The blue pencil rule: Courts will void unreasonable restraint of trade clauses Courts are not able to save a void restraint of trade clause unless there is legislation to say that the court is authorized to do so