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The Agency Relationship Nature of Agency § Agency – a relationship that exists when one party represents another in the formation of legal relations § Agent – a person who is authorized to act on behalf of another § Principal – a person who has permitted another to act on her or his behalf 1
Kinds of Employment Relationships Employer-Employee Relationship Principal-Agent Relationship Principal-Independent Contractor Relationship
Employer-Employee Relationship • A relationship that results when an employer hires an employee to perform some form of physical service. • An employee is not an agent unless he or she is specifically empowered to enter into contracts on the principal employer’s behalf .
Principal-Agent Relationship • An employer hires an employee and gives that employee authority to act and enter into contracts on his or her behalf. • The extent of this authority is governed by any express agreement between the parties and implied from the circumstances of the agency. • The crucial factor in determining whether a person is an employee or an independent contractor is the degree of control that the principal has over that person.
Principal-Independent Contractor Relationship • Principals employ persons or businesses who are not employees to perform certain tasks on their behalf. – These persons and businesses are called independent contractors • A principal can authorize an independent contractor to enter into contracts. – Principals are bound by the authorized contracts of their independent contractors.
Summary: Kinds of Employment Relationships Type of Relationship Description Employer. Employee The employer has the right to control the physical conduct of the employee. Principal-Agent The agent has the authority to act on behalf of the principal as authorized by the principal and implied from the agency. An employee is often the agent of his employer. Principal. Independent Contractor The principal has no control over the details of the independent contractor’s conduct. An independent contractor is usually not an agent of the principal. Copyright © 2004 by Prentice-Hall. All rights reserved.
Responsibilities of both Employer and Employee Employer-Employee Relationship • The employer controls or has the right to control, the time, place and the method of doing the work. • Therefore the both employer and the employee have responsibilities
Employee And Employer Rights And Responsibilities Employers are obliged to: • – Pay employees fair wages and other benefits for work performed – To provide safe working conditions Employees are responsible for: • – Fulfilling their contractual obligations to the corporation – For following the goals, procedural rules, and work plans – For performing productively – Timeliness – Avoiding absenteeism – Acting legally and morally – Respecting the intellectual and property rights of the employer – Avoid conflict of interest between the interests of the principal and hid own 8
Employee And Employer Rights And Responsibilities • • Employees are responsible for: Inform the superior or manager of any discriminatory behaviour eg. ensure that they do not participate in discriminatory conduct based on a protected grounds • Keep business and professional secrets confidential • Treats clients, co-workers and the public with respect and dignity 9
Trust and Loyalty at the Workplace What is Trust? • A firm belief in the reliability or truth or strength etc. of a person or thing • The act of placing yourself in the vulnerable position of relying on others to treat you in a fair, open, and honest way • Placing confidence in somebody or in somebody’s good qualities esp. fairness, truth, honour or ability. Where Do We Trust? • Social trust - between people • Trust in organizations - between organizations and those they serve • Intra - organizational trust - within organizations • Inter- organizational trust - between organizations
Trust and Loyalty at the Workplace What is Loyalty? • Demonstrating a strong commitment to people or ideals; staying true to your word • Sticking to someone or something even if it goes against your self-interest • Employee loyalty can be defined as employees being committed to the success of the organization and believing that working for this organization is their best option. Not only do they plan to remain with the organization, but they do not actively search for alternative employment and are not responsive to offers.
Building Trust and Loyalty • Personal communication • Offer acknowledgement and praise • Honesty • Action rather words • Comportment • Respect • etc