QLD Can Contracts as Contractors be Dissolved Under Contract Law?

[Felipe]

Hi everyone,

My wife has found herself in a very stressful situation and we are seeking some help.

She is a nurse and a new mum. We have a 5-month-old daughter. While she was in maternity leave, she decided to apply for a job in a clinic in a shopping centre where they do botox and other beauty injections. Well, she was offered a 'job', but we should have paid more attention to the contract.

Brief summary:

- She was hired as a contractor, so she had to setup a business structure.

- Was told the targets she would be trying to achieve were 15,000 per month in sales, and she would be paid in commission from those 15k.

- They would train her up. She has done so far 3 days of training with more down the track.

- She knew starting a new business was going to be difficult but...

- She made $300 dollars for the whole fortnight

- If she breaks the contract Termination Fee = $40,000.00 ÷ number of months of the duration of this Agreement (24 months) x number of months remaining in the Term. She has only done 3 months.

- "Additional days/times or alterations by negotiation." She approached the manager to ask if she could drop 1 of the 3 days she is contracted to pick up extra work at the hospital to compensate for the lack of income, answer was you signed the contract, "NO".

So basically, we found ourselves in a situation where she is not making enough money and yet is expected to go to 'work'... I understand they might have payed some money for the 3 days of training she has done, but surely it is not worth 40k.

Can these types of contracts be dissolved under contract law? Or even if she is making $150 per week be expected to honour it while we cannot pay our rent?

I would very much appreciate guidance...We are super stressed out! Can someone recommend a lawyer?

Thank you.

 

[@thelawbundle]

Hi Felipe,

From what you've said, there are a number of ways to sort this out.

Firstly, that contract termination fee appears to be a clear "penalty clause". They're not lawful. Unless the business can argue that the "termination fee" is a genuine pre-estimate of the loss that they're likely to suffer by your wife terminating the contract, it won't be enforceable by them.

In practice what this means is - if you breach the contract (and just "quit"), this business will need to sue you for breach of contract. If they are suing you because you didn't pay the $40k termination fee - they're going to have to spend a fair bit of time and effort getting you to Court. Even if they go to all of that bother (which is unlikely) you can file a defence claiming that the clause they are suing you for breaching is a "penalty clause" and should be declared void and of no effect. You can get help from a lawyer to file a defence etc.

You sound like you're a bit strapped for cash at the moment (which I understand as a new parent) so why not try your local Community Legal Centre (who can usually help you pro-bono (free)). If you want to pay for a lawyer, you can try Lawtap for a referral. A more real risk (than being sued for the termination fee) is that they'll just pressure or harass you with demands - if that happens, you might want to contact Fair Work (discussed below) or get one of the above services to send some correspondence for you, to show them that you won't stand for it. Of course, you can also just ignore it if that suits you.

Secondly, this could be a "sham contractor arrangement". It seems like the business is demanding that your wife works set hours, even though she is a contractor? If that's the case, then this could well be a sham contractor arrangement.

These arrangements are practices that unscrupulous businesses will engage in to recruit a labour force that they don't need to pay minimum wage, superannuation etc. You can report these arrangements to Fair Work and they might inspect the matter and also help you out with some good advice and guidance.

Thirdly, I note your question about whether the contract can be "dissolved" or terminated. This will depend upon your wife's termination rights under the contract. Perhaps there's a notice period that she can give before terminating the contract? I gather from your question though that this will be unlikely.

If you get one of the above services to read the contract, it's possible that they might find other "ways out" for you. For example, it's not clear if your wife has entered into this contract in her personal name or in the name of the "business structure" that you've set up e.g. a private company limited by shares.

If it's the latter, and the company has no assets - you'll likely be better protected from an asset protection perspective if your wife gets sued. Also, if your wife was told any "misrepresentations" about this business, her earning potential etc. then this could also help you out if this goes any further.

Note that all of the above comments are subject to my reading of the contract (which I haven't done). But unless you've left out some key details, the above comments will hopefully help you guys. The key is to not panic (easier said than done I know) but you seem to have some good options at this stage, from my perspective.

Best wishes.

 

[Felipe]

@thelawbundle,

Thank you very much for your response. It means a great deal to us in this very stressful times. It seems that there can be some light at the end of the tunnel!

I have a feeling that this could potentially be a sham contract... But then again would a 'big company' do this?

Thank you

 

[Felipe]

Hi everyone,

Just wondering if anyone could recommend a lawyer that would be good dealing with this sort of stuff.

Thank you!

 

[@thelawbundle]

Felipe,

Where are you based? Would you prefer to see someone in person or speak to them online?

Did you not want to try one of the community legal centres first? They will have volunteer lawyers who can give you advice and referrals on this.

If not, Lawtap will have lawyers who might offer you a free initial consultation. I would recommend either a good employment lawyer, or a law firm that has employment, commercial and litigation lawyers.

Kind regards.

 

[Felipe]

@thelawbundle,

I am in Brisbane, happy to meet in person or speak over the phone. Going to need one really fast.

 

[@thelawbundle]

Felipe,

If you can get to Redcliffe tonight, you can walk-in and see a lawyer for free at this Community Legal Centre: Legal Information, advice and referrals provided free Morton Bay Regionsl Community Legal Service Inc.

I used to volunteer there, they are very good. Waiting times vary but they should be able to give you some form of guidance or book you in for a longer follow-up appointment.

If there was a way that you could get the contract to us via this forum then I'd be happy to look at it (as I'm sure others would be) but I don't think that's possible. You could always check with forum admin of course. I haven't read the rules for a while.

Hope that helps.

 

[Felipe]

Thank you! Thank you! Thank so much. I will be going to Redcliffe tonight.

Thank you Rhys, you have been a light to us during this very stressful times.