Your rights: Verbal agreement broken

Q. I had a long-term verbal agreement with a designer to do pattern making and worked up to three days a week for almost two years, sometimes four days a week, and one month full time.

After a disagreement I was advised by phone not to bother coming in again.

This occurred just after the Easter break last year. Do I have any right to claim unfair dismissal?

A. Only employees have a right to challenge a dismissal as being unjustified. They can claim for lost earnings, lost benefits and compensation for humiliation, loss of dignity and injuries to feelings.

Contractors are limited to claiming only for any outstanding pay. In some cases contractors can bring breach of contract actions and claim for general damages to recover their financial losses.

Employees often have significantly more rights and remedies when faced with a dismissal compared with a contractor.

Additionally, employees can use the Department of Labour's Mediation Service for free. Proceeding to the Employment Relations Authority involves a $70 filing fee. The legal costs associated with a hearing in the authority are often comparable to the legal costs a contractor will incur in having a case heard in the District Court.

It is not easy determining whether someone is an employee or a contractor.

The Employment Relations Authority, when determining the real nature of the relationship, has to consider all relevant matters, including anything that indicates the intention of parties.

It is not entitled to treat any verbal or written statement of one of the parties as absolutely determining the real nature of the relationship.

The authority often looks first at how the parties have described their relationship if a written contract or agreement exists.

Secondly, it will look at whether the worker has a chance of making a profit and runs a risk of incurring a loss.

Thirdly, it will look at whether the worker is integral or ancillary to the business. And finally, it will consider the degree of control the worker has and their ability to stipulate how, where, when and by whom the work is done.

A determination that the real nature of the relationship is one of employment can have several significant consequences for an employer. The employer may become liable for holiday pay and paid special leave. The employer will also be forced to justify any decision to dismiss the employee they treated as a contractor.

I suspect that if the real nature of your relationship was one of employment your employer will struggle to justify your dismissal. You might be entitled to claim for your lost earnings and the humiliation you suffered as a consequence of your dismissal.

ERS

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