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Initiated action against the company for four weeks' unpaid wages but not his unpaid subsidy

Home, - Action against the company for unpaid wages

Question 1 - Boris signed a contract to work for Foodies Pty Ltd as an auditor. According to the terms of the contract, his compensation was $750 per week with a subsidy of $200 per week for legitimate business expenses. Boris and the company both knew that the amount specified for Boris' expenses would only be less than $75 per week, but a higher amount was stated to lower the amount of income tax that he will need to pay. Four months after, Boris' employment was terminated. He initiated action against the company for four weeks' unpaid wages but not his unpaid subsidy (also four weeks' worth). Explain, with proper legal reasoning, whether the company is liable to pay the claim?

Answer -

The contract between Boris and Foodies Pty Ltd regarding payment of wages is a legally enforceable one. But the part of the contract that pertains to payment of subsidy of $200 for business expenses is partially void. This is because business expenses of Boris are only $75 per week. A higher amount of $200 has been shown as business expense in the contract so that Boris has to pay lower taxes. Compensation or wages are taxable but work or business- related expenses are tax deductible.

This part of the contract was therefore entered into for the purpose of tax evasion on the part of Boris. Tax evasion is an illegal activity. Any contract that is entered into for the purpose of doing any illegal activity is a void contract. A void contract is a contract that is not legally enforceable.

The company is liable to pay Boris four weeks of unpaid wages. It is also liable to pay Boris the actual business expenses that he incurred in this four-week period. But it is not liable to pay Boris the amount above $75 per week that is meant to help Boris pay lower taxes by showing a higher amount of his income as deductible business expenses.

Question 2 - Consider the following factual scenario and explain if causation, as an element of a negligence claim, is present:

Cleo Archer works as a sous chef in a restaurant. She has a medical condition called 'Osteogenesis Imperfecta', which is a disease that results in fragile bones that break easily. While cooking at work one morning, she accidentally burned her hand with hot oil and had to go to hospital. While in hospital, she also broke her elbow. This increased the number of days she had to be confined and, consequently, her hospital bill was higher than she expected. Is her employer responsible for the broken elbow she suffered while in hospital?

Answer -

No, the employer is not responsible for the broken elbow she suffered in the hospital. The three essential conditions for a claim of negligence are:

a. The defendant had a duty of care towards the plaintiff.

b. The defendant failed in exercising this duty of care towards the plaintiff.

c. And the plaintiff received injuries or damage that were caused because of the breach of duty of care of the defendant towards the plaintiff.

In this case both the second condition and the third condition of causation are not present. Cleo accidentally burnt her hand with hot oil while cooking at the restaurant. This accidental burn was not caused because of any negligence on the part of the restaurant, its employer. She had to go to the hospital because of this burn injury. There in the hospital she broke her elbow because of her pre-existing medical condition. In this medical condition bones break easily. So there is no way that the employer can be responsible for the broken elbow that she suffered in the hospital. The employer is not liable to pay the higher medical bill because of her extended stay due to the broken elbow.

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