Are temporary workers at risk during the coronavirus ‘lockdown’?

Will temporary workers and daily-paid workers lose their wages during the coronavirus ‘lockdown’? We think the answer is a ‘No’. Why is that?

[This article is the joint effort of Mr VK Raj and GK Ganesan]

Q-1: Must daily paid wage earners be paid their wages during the Movement Control Order?

The answer is ‘Yes’.

Why?

Since daily-paid employees or casual employees enjoy equal protection of the law, they have to be paid during the MCO period. See here for a fuller discussion.

Q-2:  What is the ‘legal status’ of a daily paid (or ‘daily-rated’) worker?

Is she any different from a ‘permanent’ employee?

The law says that such a person is to be considered as an employee.

One famous industrial case, Coco Industry, ruled that,

‘… under the Act, there is no distinction between casual, temporary or permanent workers. They are all workmen, including apprentices and probationers.’1Coco Industry Sdn. Bhd. v. Kesatuan Pekerja Pekerja Perusahaan Membuat Tekstil Dan Pakaian P. Pinang & S. Prai [1985] 1 ILR 81

So there is your ‘legal’ answer.

Do you want to stop here, or do you want to be clever, read further, and really be good at this?

What does the word ‘Employee’ mean?

It has been long accepted that the term ‘employee’ is,

… ‘not confined only to permanent employees but includes temporary and casual employees as well.’ 2Halsbury’s Laws of Malaysia Volume 8 – Employment, Industrial Relations (2007 Reissue), at p.9

Who is a ‘Casual Employee’?

The law is quite clear on this. He is one who,

‘… offers himself work at the job site each day, and if given work, is paid at the end of the day, but where workers are assigned different tasks each day but paid only at the end of the month, this could be more reflective of regular employment and the workers might not be casual workers as the term is generally understood.

A temporary employee is one who is employed for a fixed term, for example, during the absence of an employee who is on maternity leave or to complete a particular task, such as a market survey.’3Ibid

The Acid test: What is the difference between a ‘Contract Of Service’ and a ‘Contract For Services’?

The first is an employee: note the word ‘Of’.

There is a ‘master-servant’ relationship between the worker and the person who tells him what work he must carry out.

In the second – in a ‘contract for services’ – the worker is an ‘independent contractor’: note the word ‘For’.

Such a person is ‘paid for’ his services. He is not an employee.

The difference between the two can sometimes be confusing.

The famous judge, Lord Denning, recognised this difficulty:

‘It is often easy to recognise a contract of service when you see it, but difficult to say wherein the distinction lies. A ship’s master, a chauffeur and a reporter or a staff of a newspaper are all employed under a contract of service; but a ship’s pilot, a taxi man and a newspaper contributor are employed under a contract for services.4 Stevenson, Jordan and Harrison Ltd. v. Macdonald, [1952] 1 TLR 101, at p. 111

So how was a difference to be found?

The courts use different tools to determine if a person is an employee or an independent contractor

In Chye Hin Co. Ltd. v. Public Prosecutor, 5[1960] MLJ 137, per Smith J the court faced the question whether a company has to pay EPF contributions to some individuals: if they were employees, it was; if they were independent contractors, it was not.

The court used a legal tool.

It was called the ‘control and direction test’.

It used that legal tool to differentiate between the two types of workers.

Ruling that one needs to determine if the person who paid for the services of a worker (the Boss) ‘controlled’ and ‘directed’ the worker, the court held that if he did, then there was a relationship of ‘master and servant’.

This was a rather unsatisfactory situation: it did not help judges solve the problem.

The courts’ several attempts at finding a satisfactory test

Then Denning L.J. himself formulated a test.

He thought the right question to be asked was whether a man’s work was ‘part of the business’.

If he was, he was an employee.6Ibid, Stevenson, Jordan and Harrison Ltd. v. Macdonald  [1952] 1 TLR 101, at p. 111.  There, Lord Denning said: ‘… One feature … is that under a contract of services [in an employment contract], a man is employed as part of the business, and his work is done as an integral part of the business, whereas under a contract for services [an independent contractor], his works, although done for the business, is not integrated into it but is only accessory to it’.

And so, if a worker was, ‘part and parcel of the organisation,’ then he was to be considered an employee: that was the test.7 in Bank Voor Handell en Scheepvaart N.V. v. Slatford [1953] 1 QB 248, at p. 295, Lord Denning said that: ‘The test of being a servant does not rest nowadays on submission to orders. It depends on whether the person is part and parcel of the organisation.

Let us see an example of this principle at work: and we have to go way out on a limb!

So, is a Trapeze Artist an employee?

The answer is Yes.

Miss Ann Whittaker was a trapeze artiste.

She was ‘engaged’ by a circus company to perform trapeze acts.

The company also asked her to be an usherette.

The court used the ‘organisation test’ to decide whether she was an employee or an independent contractor.8Whittaker v. Minister of Pensions and National Insurance [1967] 1 QB 156 per Mocatta J.

Concluding that Whittaker was an employee, the court ruled that her performance was ‘an integral part of the business of the circus.’

Is a log splitter an employee or an independent contractor?

The same question arose in 1982, but in Malaysia.

A sawmill engaged Mat Jusoh as a ‘sawyer’: he split logs and cut timber to size.

He was injured during work and lost three fingers of his right hand. Because he was injured, the sawmill refused to employ him further.

He sued the sawmill and claimed for damages.9Mat Jusoh Bin Daud v. Syarikat Jaya Seberang Takir Sdn. Bhd. [1982] 2 MLJ 74

The sawmill protested that Mat Jusoh was not their employee: it said he was the employee of the defendant’s contractor Lim.

The High Court utilised the Denning test to rule that Mat Jusoh was indeed an employee.

The work Mat Jusoh carried out, said the court, was done as an integral part of the sawmill’s business.

He cut or split the logs for the sawmill’s business’.

Mat Jusoh had supplied his service and skill to the sawmill, and not to the contractor Lim.

It was the sawmill, through its supervisors, that decided what quantity of logs were to be sawn.

And so over the years, the ‘control test’ lost much of its strength

In the modern world, just because there is no control over a person does not mean he is not an employee.10Ibid

Take the case of professionals – engineers, architects, lawyers, managers, doctors – most of their time, they do not have an employer breathing down their neck, giving them instructions by the minute.

And yet they are considered employees.11 Morren v. Swinton & Pendlebury B.C. [1965] 1 WLR 576 at 582

What is the important point here?

And so, whether a person is a temporary worker, or paid by the hour, is not the important point.

What is important is whether the employee was ‘part and parcel’ of the organisation.

If she was, she is an employee; if she is not, she is merely an independent contractor.

And so …

And so, employers have to pay their  ‘temporary worker’, ‘hourly-paid workers’ and ‘daily-rated workers’.

 

[The author expresses his gratitude to MR VK Raj, Ms.KN Geetha, Mr. JD Prabhkirat Singh, Mr. GS Saran, Miss KP Kasturi, Ms. Tina Syamsuriatina Ishak, Mr. Andrew Lim, Ms Santhi Latha and Mr. Matthew Thomas Philip for their assistance.]

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