March 2012 – Illegitimate Code

Of Employees

I’ve been doing a little reading on Vicarious Liability (VL) recently. Every employer out there should be aware of their exposure under this tort – start-ups even more so. VL is typically employer (ER) being held vicariously liable for any tort committed against a third party (P) by their employee (EE).

But that’s just the simplistic overview. The legal requirements for vicarious liability are that:

there must be a legal tort committed by the EE against P;
There must be one of the other legally recognised torts committed by EE against P. There is no ifs no buts. This was highlighted in the case of Kerajaan Malaysia v Lay Kee Tee & Ors which involved the pig farmers suing the government for negligence during the Nipah virus episode that resulted in 40+ deaths. It was held that they could not sue the government directly for negligence but had to first show that there was a tort committed by the government employee first, before that liability can be transferred to the government.
that there exists a special relationship between ER and EE;
Vicarious liability is by no means limited to ER and EE but that’s just the most common, and easy to understand. There are generally three tests that can be used to see if someone is in a special relationship:
1. Control Test
  It was laid down in Short v J & W Henderson Ltd that four factors are to be considered i.e:
  - the power to selection in the ER.
  - the power to determine the salary or other remuneration.
  - the power to control the method in which the work was done.
  - the power to terminate the EE’s services.
  It was further added in Collins Hertfordshire CC that a contract of service existed if the employer had the power to instruct the employee and to control the method in which work was done.
  
  However, this test has been found wanting as there are lots of cases of people who are employees but whose employers have no power to control their work e.g. doctors in a hospital and other professionals.
2. Organisation Test
  It was held in Stevenson, Jordan and Harrison Ltd that it was not so easy to differentiate between a contract of service with a contract for services. So, another consideration would be whether a person was integrated into the organisation or merely doing work for the organisation.
  
  In Mat Jusoh b Daud it was held that while the plaintiff was not their employee but an employee of their contractor, his work product was integral to their business and was therefore their employee. Hence, the integrity of the task being done is just as essential to determining whether a person is an employee, and not just to follow the classical definitions.
3. Mixed Test
  This is also called the common sense test. It is essentially a combination of both the tests above to determine if any special relationship exists between the ER and EE.
However, in Malaysia, the preference is to use the control test. I think that this is because that is much easier to prove on paper than to get into the convoluted and subjective organisation test. In a majority of cases, there is no problem in proving employment. However, there are some grey areas such as surgeons at a hospital.

In Tan Eng Siew v Dr Jagjit Singh, it was held that as the doctor had a private practice and was merely renting the hospital facilities such as operating room etc, the hospital could not be held liable to the plaintiff.

Also, another grey area is where employees are seconded or lent to another organisation. It is held in Mersey Docs and Harbour Board that because the seconded employee, although working for the new employer, was actually still under the control of the old employer, the old employer was liable.
the tort must be committed during the course of employment.
The general rule is that if the tort was committed while in the ‘line of duty’, the employer should be held ultimately liable. This is much more difficult than it sounds because the problem then becomes, what is considered ‘line of duty’.
- Carelessness while on the job.
- Mistake of worker.
- Worker delegating responsibility.
- Worker acting for own benefit.
- Protecting employer’s property.
- Disobeying direct orders.
- Frolicking.
- Fraud.
- Theft.
- Sexual abuse.
- Statutory duty.
- Time of employment.
- Location of employment.
Each of these things have a whole set of issues to be considered. Time for that in a future blog entry.

Tech and Tech Bill

Disclaimer: I am a registered Chartered Engineer, a lecturer at a local university, and a law student.

There’s another new bill currently in drafting mode titled “Technologists and Technicians Bill”. Some quarters are seeing this as a reincarnation of the Computing Professionals Bill but I don’t.

The reason is because I also know that there is an effort in at the tertiary education level to split the current engineering courses into B.Eng and B.Tech courses, catering to different market segments and that this bill is a natural culmination of the act.

But before we proceed, we’ve got to first look at the future segregation of the engineering world into B.Eng and B.Tech people. The argument is that there are two different market segments to address. Where I teach, the faculty has even been renamed this year to include “Technology” in addition to Engineering.

On the one hand, our local industries need to have a huge work-force to get shit done. This is where the B.Tech is supposed to come in. Ideally, these people are supposed to be more practical oriented with their education more heavily biased towards addressing direct industry requirements.

We already have certain Bachelors degree at certain local universities that were designed with direct input from certain industry partners and where most of the graduates end up heading to those industry partners for jobs later. So, that’s the idea behind a B.Tech – to address an immediate market need.

On the other hand, we still need people to dream up new ideas and to solve more abstract stuff. This is where the B.Eng is supposed to come in. Ideally, these people are supposed to be equipped with abstract problem solving skills and their syllabus is biased at something like a 80/20 level with more theory and less practical.

So, these people are supposed to dream up the next big thing and to design future technology. This group of people are supposed to fill up the market need for say, research, development and design work – stuff where you end up sitting in front of a PC for most of the day instead of getting your hands dirty on the line.

In terms of professional registration, the second group of people need to be registered as is already done under the law. However, the issue is whether the first group of people should also fall under the BEM is something arguable. At the moment, they do fall under BEM if their degrees are accredited by the EAC.

So, what happens to the B.Tech people when we split the engineering courses up. They were previously under the BEM and so, the natural idea is to extend this to include a new board that caters to the registration of these B.Tech people.

Anyway, a lot of people will disagree with what I’ve said because I also thought it weird at first, but that’s generally the idea that I caught onto last year. We cannot deny that there is a disconnect between what our universities supply and industry needs. This is one of the ways to plug the gap.

Now, back to the actual text of the Bill itself.

The definitions:

“technologist” means a person who applies knowledge of mathematics, science and technology specialisation to defined procedures, processes, systems or methodologies;

One can even argue that medicine is covered by this, which I think is the intent of the bill – to include medical technologists. There is a growing demand for medical technologists – i.e. people who can maintain modern medical equipment – as the number of hospitals in this country is also growing.

I think that this is the idea that we can imply from the definitions:

“technical services” means services provided in connection with any operation, product testing, product commissioning and product maintenance and includes any other technical services approved by the Board;

“technology services” means services in connection with product development, manufacturing, operation, product testing, product commissioning and product maintenance and include any other technology services approved by the Board;

I think the issue that most people will take with the bill, particularly the IT people, are S.20 and S.21 of the bill that provides for the registration of these professionals. Any recognised degree in “Technology” is mentioned explicitly. So, if someone graduated with an IT degree, they might fall under this category but I think that the intent is to capture the B.Tech people.

The rest of the bill seems to be quite boiler plate.

So, I think that the bill is rather innocuous as it is. Unlike the CPB, which sought to limit the ability of people to work within the computing field and to limit the ability of someone to sell their services to the CNII industries, this one doesn’t.

As of this moment, this bill just just for the purpose of registration. I think that whomever are behind this bill probably learned a lesson from the CPB2011 mismanagement and will hopefully keep this bill as innocuous as it presently stands.

IP Contract

I had reason to enter into an Intellectual Property (IP) contract recently between my company and another entity. After reviewing the standard form and making the necessary changes, both parties proceeded to sign the agreement in the presence of witnesses.

After that, I went to the tax office to get the contract stamped because that’s the normal thing to do with contracts. However, while I was there, I learned something new, which might interest other local start-ups especially with respect to IP issues.

It turns out that there is no need to stamp an IP deed of assignment.

According to Schedule 1, Item 32, Exemption (d) of the Stamp Act 1949, IP assignments are exempted from stamp duty. It’s the very last in a list of exemptions and is worded as:

Exemptions
(d) Transfer or assignment on sale of any copyright, trade mark, patent or any similar right.

So, the tax office was unwilling to stamp the agreement for me as it is exempted under the law.

What this means to most start-up companies is that you can easily and rather quickly execute IP assignment contracts, between the employees with the company, and between companies as part of normal commercial IP transactions.

I learn something new everyday.