Employee’s status unexpectedly changed to contractor

| 26/02/2017

Can an employer unilaterally change your contract from employee to that of an independent contractor? I work in the real estate business and my employer has just changed my contract stating that I am now an independent contractor, in essence making me a subcontractor. I have been informed that I must pay my full 10% pension and the company will no longer contribute its 5%. Further they have told me that I can either pay in full for my health insurance, which is part of the group policy, or the company will cancel my policy. I have also been told that I must pay $750 for my part of the company’s trade and business licence fee. I don’t understand why I have to pay this if I am forced to be a subcontractor. I have never heard of employers proportioning out their trade and business licensing fees to employees or for that matter “independent contractors”.

I have also been told that the company will be deducting the full 10% pension from my commission check to pay for the pension as the company needs to show the pension is paid up in order to renew its trade and business licence. Again, if I am considered an independent contractor (subcontractor) why do I have to remain on the company’s pension plan and pay pension in order for the company to get its T&B licence?

Please let me know if any of this is legal and, if not, do I have any recourse besides walking away from a job I love?

Auntie’s answer: As with most readers’ questions concerning employment issues, I asked the Department of Labour and Pensions (DLP) for help. It seems that your circumstances would be best discussed with a lawyer.

And here’s why. The Labour Law (2011 Revision) deals with the relationship between employer and employee but not an independent contractor. However, the department official pointed to Section 6 (3), explaining, “any material change in the terms of employment as set out in a statement of working conditions, should immediately be furnished to the employee by the employer in the form of an amended statement”.

As much as I hate assuming, I get the impression from your question that no such statement was given to you; that the change was simply included in a new contract. The labour official suggested that you might want to seek legal counsel about the terms of your contract being changed, and I would also ask about all the additional contributions being asked (demanded?) of you.

On the pension question, it was advised that you email a pension officer to discuss your situation in more detail with someone at the DLP.

The law mentioned in this column can be found on the CNS Library

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Category: Ask Auntie, Labour Questions

Comments (7)

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  1. G says:

    The only way to truly get justice is to sue the Ba$#a%ds!

  2. Anonymous says:

    Hmm I guess that’s why they’re all striking out on their own.
    I don’t have much respect for them anyway. They cheat each other!
    Pompous smug know-it-all’s.

  3. Anonymous says:

    You claim you were and employee? What was your salary? What were your mandatory hours? What overtime pay did you get? Did you get double time on Public Holidays?

    …I thought not.

  4. Anonymous says:

    Contractual terms and work practices.

    Legally there is a distinction between the TERMS in your contract of employment and WORK practices.

    CONTRACTUAL terms include pay, hours of work, sick pay and pension scheme. All of your contractual terms may not be in the written statement of your terms and conditions of employment. Some of your contractual terms could be in your staff handbook, a pension scheme booklet or a collective agreement. Changes to these terms must be agreed between you and your employer.

    WORK practices can include breaks and rostering, for example. Details of these may also be in your staff handbook and your employer may change these work practices without your consent. It is considered reasonable for an employer to update work practices or processes to save money or increase efficiency.

    If you do not agree and say you wish to continue working as before your employer may decide to make you redundant. If you are dismissed in this way, you may qualify to bring a claim for UNFAIR DISMISSAL.

    Constructive dismissal arises where you terminate your contract of employment, with or without prior notice, due to the conduct of your EMPLOYER. Your employer’s conduct however must have been such that it would have been reasonable for you to terminate your contract without giving notice.

    If you are dismissed you may, under certain conditions, bring a claim for unfair dismissal against your employer. If you do this and your employer accepts that there was a dismissal, it will be for your employer to show that there were fair grounds for the dismissal. Generally a dismissal is presumed to be unfair unless your employer can show substantial grounds to justify it.

  5. Anonymous says:

    Changes to your contract of employment can occur due to a change in the law, but otherwise, changes must be agreed between your employer and yourself. Neither party can unilaterally decide to change the contract. The nature of your job may change, so that you are doing a different job for the same employer. Such a major change will probably also result in changes to your terms and conditions of employment. Unless your contract already allows certain changes to be introduced, you or your employer cannot introduce change unilaterally. There must be agreement between the parties.

  6. Anonymous says:

    I too am a real estate agent on island and have been with the same company for for the past 14 years. My employer has always refused to pay the 5% pension portion to match the 5% taken from my check and they have always refused to pay any portion of my health insurance. They have never had a problem getting their business licence renewed each year and because of this I know they will never pay their share “required by law”. since there is really no one to enforce this law, They have and always will get away with breaking the laws of the Cayman Islands. If I were to get a Lawyer to go after them I would lose my job and it would take years and thousands of dollars to recoup any part of what is legally owed to me. I can only hope there is such thing a Karma as no one in government will do anything to help any individual employees.

  7. Anonymous says:

    When the employer forced this change on the employee then the employer terminated the employee. Therefore the employer must pay the employee all that is required under the law when a contract is terminated.

    The employee can now agree to the new terms or sue the employer for unfair dismissal.