ABCC v Rapid Formwork Constructions Pty Ltd
[2011] FMCA 649
•1 September 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
ABCC v RAPID FORMWORK CONSTRUCTIONS PTY LTD & ANOR [2011] FMCA 649
INDUSTRIAL LAW – ‘Sham’ contracts of employment – agreed statement of facts – admission of breach – considerations regarding penalty.
Building and Construction Industry Improvement Act 2005, ss.4(1), 15
Crimes Act 1914 (Cth), s.4AA
Fair Work Act 2009 (Cth), ss.357(1), 539(2), 545(1), 546(1), 547(2)
Workplace Relations Act 1996 (Cth), ss.719, 719(6), 722(1), 900, 901, 904
Australian Building & Construction Commissioner v Construction, Forestry, Mining & Energy Union [2011] FCA 810
A & L Silvestri Pty Ltd v Construction, Forestry, Mining and Energy Union [2008] FCA 466
Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560
Construction, Forestry, Mining & Energy Union v Safety Glass Pty Ltd [2010] FCA 989
Construction, Forestry, Mining & Energy Union v Williams (2009) 262 ALR 417
CPSU v Telstra Corporation Limited (2001) 108 IR 228
Darlaston v Risetop Construction Pty Ltd [2011] FMCA 220
Fair Work Ombudsman v Centennial Financial Services Pty Ltd [2011] FMCA 459
Hills v Sutton [2007] FCA 2033
Hollis v Vabu Pty Ltd (2001) 207 CLR 21
McDonald v Australian Building & Construction Commissioner [2011] FCAFC 29
Markarian v The Queen (2005) 228 CLR 357
Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383
NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285
On Call Interpreters and Translators Agency Pty Ltd v Commissioner of Taxation (No.3) [2011] FCA 366
Plancor Pty Ltd v Liquor, Hospitality & Miscellaneous Union (2008) 171 FCR 357
Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543
R v De Simoni (1981) 147 CLR 383
Stuart-Mahoney v Construction, Forestry, Mining and Energy Union (2008) 177 IR 61A. Forsyth, “The 2006 Independent Contractors Legislation: An Opportunity Missed,” (2007) 35 Federal Law Review 327
Applicant: AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSIONER
First Respondent: RAPID FORMWORK CONSTRUCTIONS PTY LTD
Second Respondent: KEVIN PAUL ANDERSON
File Number: CAG 13 of 2011
Judgment of: Neville FM
Hearing date: 19 July 2011
Date of Last Submission: 19 July 2011
Delivered at: Canberra
Delivered on: 1 September 2011 REPRESENTATION
Counsel for the Applicant: Ms P.M. Wass
Solicitors for the Applicant: Australian Government Solicitor, Sydney
Counsel for the Respondent: Mr Y. Shariff
Solicitors for the Respondent: Snedden, Hall & Gallop, Canberra ORDERS
THE COURT DECLARES THAT:
Pursuant to section 16(1) of the Federal Magistrates Act 1999:
(1)The First Respondent contravened section 357(1) of the Fair Work Act 2009 in August 2009 by representing to Brischetto that his contract of employment with the First Respondent was in fact a contract for services under which Brischetto worked as an independent contractor for the First Respondent.
(2)The Second Respondent contravened section 901(1) of the Workplace Relations Act 1996 in May 2009 by representing to Donnelly that if she agreed to work for the Second Respondent she would do so as an independent contractor engaged under a contract for services, when she would in fact have been engaged as an employee.
(3)The First Respondent contravened section 357(1) of the Workplace Relations Act 1996 in December 2009 by representing to Donnelly that if she agreed to work for the First Respondent under the terms and conditions contained in the Agreement provided to her by Barry Anderson at the time of the representation she would do so as an independent contractor engaged under a contract for services, when she would in fact have been engaged as an employee.
(4)The First Respondent contravened the Building and Construction Industry (ACT) Award 2002 (ACT Award) by failing between 29 July 2009 and 31 December 2009 to pay Donnelly in accordance with the ACT Award.
(5)The First Respondent contravened the Building and Construction Industry General On-Site Award 2010 (Modern Award) by failing between 1 January 2010 and 19 March 2010 to pay Donnelly in accordance with the Modern Award.
THE COURT ORDERS THAT:
(6)The First Respondent pay a penalty of $10,500 under s.546(1) of the Fair Work Act 2009 (Cth) with respect to each contravention of s.357(1) of the Fair Work Act 2009.
(7)The Second Respondent pay a penalty of $1500 under s.904(1) of the Workplace Relations Act 1996 (Cth) with respect to his contravention of s.900(1) of the Workplace Relations Act 1996.
(8)The First Respondent pay a penalty of $1500 under s.546 of the Fair Work Act 2009 with respect to its contravention of the Modern Award.
(9)The First Respondent pay a penalty of $1500 under s.719 of the Workplace Relations Act 1996 with respect to its contravention of the ACT Award.
(10)In the absence of written agreement between the parties, the penalties referred to in Orders (6) – (9) be paid to the Commonwealth of Australia within 28 days of the date of these Orders.
(11)There be no Orders as to costs.
FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT CANBERRACAG 13 of 2011
AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSIONER Applicant
And
RAPID FORMWORK CONSTRUCTIONS PTY LTD First Respondent
KEVIN PAUL ANDERSON Second Respondent
REASONS FOR JUDGMENT
Introduction
1.These are penalty proceedings that arise out of circumstances that are now agreed as set out in an Agreed Statement of Facts that was filed on 20th May 2011.
2.The Statement of Claim, filed on 29th March 2011,[1] notes that the Applicant was appointed pursuant to s.15 of the Building and Construction Industry Improvement Act 2005 (Cth) (“BCII Act”), and is authorised to bring contravention proceedings under the provisions of the Workplace Relations Act 1996 (Cth) (“WR Act”) and the Fair Work Act 2009 (Cth) (“FW Act”).
[1] Curiously, perhaps, no Defence or Response, was ever filed by either of the Respondents.
3.The First Respondent (“Rapid”) is a constitutional corporation, a ‘building industry participant’ under s.4(1) of the BCII Act, a ‘building employer’ under the same section of the BCII Act, and a ‘person’ for the purposes of the WR Act and the FW Act.
4.The Second Respondent is, alternatively, a building industry participant, a building employer (under the BCII Act), a sole trader operating under the trading name of “Kev’s Steelfixing”, and a director and or agent of Rapid.
5.The Respondents have admitted liability. That liability relates to the alleged misrepresentation of contracts of employment as independent contracting arrangements in breach of s.357 of the Fair Work Act 2009 (Cth) and ss.900 and 901 of the Workplace Relations Act 1996 (Cth).
6.The orders sought by the Applicant are set out in the Short Minutes of Order that was provided to the Court at the penalty hearing on 19th July 2011. The only matter not agreed was the amount of the penalty that should be imposed.
Factual & Procedural Background
7.The Agreed Statement of Facts (“the Agreed Statement”) is divided into the following sections: “Lucas Brischetto”, “Angela Donnelly”, “The Award”, “Anderson’s and Rapid’s Conduct during the Investigation and Proceedings”, and “Sham Arrangements.” The Agreed Statement has attached to it copies of (a) Rapid’s standard form independent contractors “contract for services”, (b) the Building and Construction Industry (ACT) Award, 2002, and (c) the Building and Construction General On-site Award 2010. For ease of reference and for the sake of completeness, the Agreed Statement of Facts (but without its three annexures) is Appendix A to these reasons.
8.From the Agreed Statement, and other materials before the Court, the following factual overview will suffice for the purposes of the issues to be determined by the Court.
9.The relevant facts concern two workers, Mr Lucas Brischetto and Ms Angela Donnelly. Mr Brischetto worked for Rapid between August 2009 and April 2010; Ms Donnelly worked for Rapid between May 2009 and March 2010.[2]
[2] Ms Donnelly provided an affidavit which was filed in the proceedings on 30th May 2011 in support of the Application brought by the Australian Building and Construction Commission. Two affidavits were filed on behalf of the Respondent, one by Kevin Paul Anderson, filed 4th July, the second, by Barry Paul Anderson, also filed on 4th July 2011.
10.The agreed statement confirms that (a) both workers were required by or on behalf of Rapid to obtain an ABN; (b) to sign a contract that provided for an hourly rate of pay (and which contract had no time limit or specified duration); and (c) both workers were provided with some protective work clothing by Rapid.
11.In the case of Mr Brischetto, Rapid also provided him with some of his work tools. He did not have (a) any public liability insurance or (b) accident or sickness insurance; nor did he contribute to any superannuation fund. He was not paid any sickness benefits. He was not registered for the Goods and Services Tax. Rapid did not contribute to any superannuation on Mr Brischetto’s behalf.
12.In the case of both workers, the Second Respondent transported them to work, or Mr Barry Anderson did so.
13.Like Mr Brischetto, Ms Donnelly did not have any relevant insurance of the kind referred to in [11] of these reasons; nor did she contribute, or receive the benefit of any contributions from Rapid, to superannuation. She was not paid for any annual or sick leave or for public holidays.
14.The various breaches of the two relevant awards (referred to in [7] of these reasons) are set out in par.31 of the Agreed Statement.
15.In relation to the Respondents’ conduct during the investigation and the proceedings, it is agreed that (a) the investigation commenced in approximately May 2010; (b) prior to the commencement of proceedings in late March 2011 they made a ‘without prejudice’ offer to resolve the matter; (c) the Respondents have not contested liability; (d) they have taken steps to reimburse the workers the monies owed to them. In submissions, the Applicant stated (at par.33) that the amount outstanding to Mr Brischetto “is not large”, and that the amount owing to Ms Donnelly amounted to $6,015.95.
16.The final part of the Agreed Statement deals with the widespread use of sham contracts in the building and construction industry in the ACT and the negative consequences for workers of such practices.
Statutory Framework & General Principles
17.The relevant legislative provisions in these proceedings are: ss.719, 900, 901 WR Act; 357 FW Act. Section 719 of the WR Act provides:
Imposition and recovery of penalties
(1) An eligible court may impose a penalty in accordance with this Division on a person if:
(a) the person is bound by an applicable provision; and
(b) the person breaches the provision.
(2) Subject to subsection (3), where:
(a) 2 or more breaches of an applicable provision are committed by the same person; and
(b) the breaches arose out of a course of conduct by the person;
the breaches shall, for the purposes of this section, be taken to constitute a single breach of the term.
(3) Subsection (2) does not apply to a breach of an applicable provision that is committed by a person after an eligible court has imposed a penalty on the person for an earlier breach of the provision.
18.Sections 900 and 901 of the WR Act provide as follows:
Misrepresenting an employment relationship as an independent contracting arrangement
(1) A person contravenes this subsection if:
(a) the person is a party to a contract with an individual; and
(b) the person makes a representation to the individual that the contract is a contract for services under which the individual performs work, or is to perform work, for the person as an independent contractor; and
(c) the contract, as in force at the time of the representation, is a contract of employment under which the person is the employer of the individual, rather than a contract for services under which the individual performs work as an independent contractor.
(2) A person does not contravene subsection (1) if the person proves that, at the time the person made the representation concerned, the person did not know that, and was not reckless as to whether, the contract was a contract of employment rather than a contract for services.
Misrepresenting a proposed employment relationship as a proposed independent contract arrangement
(1) A person contravenes this subsection if:
(a) the person offers to enter into a contract with an individual; and
(b) the person makes a representation to the individual that the contract, if entered into, would be a contract for services under which the individual would perform work for the person as an independent contractor; and
(c) the contract, if entered into, would be a contract of employment under which the person would be the employer of the individual, rather than a contract for services under which the individual would perform work as an independent contractor.
(2) A person does not contravene subsection (1) if the person proves that, at the time the person made the representation concerned, the person did not know that, and was not reckless as to whether, if the contract were entered into, the contract would be a contract of employment rather than a contract for services.
19.Section 357 of the FW Act provides:
Misrepresenting employment as independent contracting arrangement
(1) A person (the employer ) that employs, or proposes to employ, an individual must not represent to the individual that the contract of employment under which the individual is, or would be, employed by the employer is a contract for services under which the individual performs, or would perform, work as an independent contractor.
(2) Subsection (1) does not apply if the employer proves that, when the representation was made, the employer:
(a) did not know; and
(b) was not reckless as to whether;
the contract was a contract of employment rather than a contract for services.
20.Relying upon the regularly cited Full Court judgment in Ponzio v B & P Caelli Construction Pty Ltd, in a recent decision in relation to penalty, Gilmour J outlined the threefold objects of the imposition of a penalty:[3]
(a)punishment, which must be proportionate to the offence and in accordance with prevailing standards;
(b)deterrence, both personal (assessing the risk of re-offending) and general (a deterrent to others who might be likely to offend); and
[3] Australian Building & Construction Commissioner v Construction, Forestry, Mining & Energy Union [2011] FCA 810 at [26] (“ABCC v CFMEU”). Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543 at [93] – [94] (Lander J). The other members of the Full Court – Marshall and Jessup JJ – did not address, in terms, the object of the imposition of a penalty.
(c) rehabilitation.
21.In addition to the objects just noted, the following principles should be taken as providing the relevant jurisprudential touchstones for the current proceedings.
22.In NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission, the Full Court of the Federal Court (Burchett and Kiefel JJ; Carr J agreeing) said:[4]
Cases are authorities for matters of principle; but the penalty found to be appropriate, as a matter of fact, in the circumstances of one case cannot dictate the appropriate penalty in the different circumstances of another case.
[4] (1996) 71 FCR 285 at p.295.
23.Rather more recently, in A & L Silvestri Pty Ltd v Construction, Forestry, Mining and Energy Union, Gyles J said:[5]
A number of authorities discuss the factors to be taken into account in fixing a penalty, many of them borrowing from related fields, including the criminal law. It is sufficient to refer to the recent case of Kelly v Fitzpatrick [2007] FCA 1080; (2007) 166 IR 14 as an example. However, the discretion is at large. There are no mandatory statutory criteria and it is wrong to regard factors seen as relevant by one court as statutory criteria. Indeed, lists of factors can confuse an essentially straightforward task and lead to over-elaborate reasoning.
[5] [2008] FCA 466 at [6].
24.In more detail in Stuart-Mahoney v Construction, Forestry, Mining and Energy Union, Tracey J said (in the legislative context of that case):[6]
[6] (2008) 177 IR 61 at [40]. See also the comments of the Full Court (Moore, Middleton & Gordon JJ) in Construction, Forestry, Mining and Energy Union vWilliams (2010) 262 ALR 417 at pp.428-429 [28] – [33]; Kenny J in White v Construction, Forestry, Mining and Energy Union [2011] FCA 192 at [5], [6] & [8], and Ryan J in Construction, Forestry, Mining and Energy Union v Stuart-Mahoney [2011] FCA 56 at [80] & [82]. His Honour was there sitting as the Full Court. See also the Full Court judgment in Plancor Pty Ltd v Liquor, Hospitality & Miscellaneous Union (2008) 171 FCR 357 at pp.368-369 [35] – [37] (Gray J), and at pp.374-379 [57] – [69] (Branson & Lander JJ).
In my view, potentially relevant and applicable considerations for determining the appropriate penalty for a contravention of the BCII Act include:
• The nature and extent of the conduct which led to the breaches.
• The circumstances in which that relevant conduct took place.
• The nature and extent of any loss or damage sustained as a result of the breaches.
• Whether there had been similar previous conduct by the respondent.
• Whether the breaches were properly distinct or arose out of the one course of conduct.
• The size of the business enterprise involved.
• Whether or not the breaches were deliberate.
• Whether senior management was involved in the breaches.
• Whether the party committing the breach had exhibited contrition.
• Whether the party committing the breach had taken corrective action.
• Whether the party committing the breach had cooperated with the enforcement authorities.
• The need to ensure compliance with minimum standards by provision of an effective means for investigation and enforcement of employee entitlements.
• The need for specific and general deterrence.
25.I note that the comments of Tracey J in Stuart-Mahoney were applied by Gilmour J in ABCC v CFMEU at [35].
26.Three other observations are apposite. First, in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (“McAlary-Smith”)Buchanan J noted, at [91]:[7]
At the end of the day the task of the court is to fix a penalty which pays appropriate regard to the circumstances in which the contraventions have occurred and the need to sustain public confidence in the statutory regime which imposes the obligations.
[7] Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560.
27.Secondly, also in McAlary-Smith, Graham J referred to McHugh J’s comments in Markarian v The Queen and his Honour’s discussion of “instinctive synthesis” as an appropriate approach in determining penalty.[8] In Markarian, McHugh J said:[9] “There is only human judgment based on all the facts of the case, the judge’s experience, the data derived from comparable sentences, the guidelines and principles authoritatively laid down in statutes and authoritative judgments.”
[8] McAlary-Smith 165 FCR at p.577 [78].
[9] Markarian v The Queen (2005) 228 CLR 357 at pp.377-390 [48] – [84]. The quotation cited is at [71].
28.Thirdly, the Court must also have regard to ‘the totality principle.’[10]
[10] In this regard, among many places, see Buchanan J in McAlary-Smith at [98] – [103], with which Gray J essentially agreed, at [18] – [23]. See also Graham J in McAlary-Smith at [66] – [70]. Among other things, Graham J said, at [66]: “The totality principle is designed to ensure that the aggregate of the penalties imposed is not such as to be oppressive or crushing.” His Honour had earlier observed, at [54], that proportionality and consistency “commonly operate as final checks” on the penalty to be imposed.
Discussion & Resolution
29.It was not disputed that the maximum penalty in relation to a contravention alleged and admitted in these proceedings is $33,000 in relation to a corporation, and $6,600 for an individual for each separate contravention.[11]
[11] S.12 of the FW Act states that “penalty unit” “has the meaning given by s.4AA of the Crimes Act 1914 (Cth). There is an identical definition in s.4(1) of the WR Act. Sections 539(2) [Item 11 in the Table] and 546 of the FW Act provide for the requisite penalty units, as does s.904 of the WR Act.
30.Penalty Range: The parties submitted as follows in relation to the appropriate “range” of penalty, thus:
(a) in relation to each breach of s.357(1) of the FW Act, the Applicant submitted that the First Respondent pay a penalty in the order of between $15,000 - $25,000. For its part, the First Respondent submitted that a penalty concerning the breaches of this section of the FW Act should be in the sum of $7000 for each contravention.
(b) in relation to the breach of s.904 of the WR Act, the Applicant submitted that the Second Respondent pay a penalty in the order of between $2000 - $3000. The Second Respondent submitted that he should pay the sum of $1000 for his admitted contravention of s.904 of the WR Act.
31.It was essentially agreed that the appropriate penalty payable by the First Respondent in relation to each of the single breaches of the two awards, being the contravention of the Modern Award and of the ACT Award, was $1500 for each breach. That sum is to be imposed for each contravention as a penalty under s.546 of the FW Act and s.719 of the WR Act respectively.
32.In the course of the hearing, learned Counsel for the Applicant submitted in general terms that a penalty in the ‘low to mid range’ was appropriate in the circumstances of the matters before the Court. For my part, I indicated my agreement with that general assessment. Put another way (in my words), the facts and circumstances that give rise to the contraventions before the Court cannot be categorised as being of such a grievous kind as to warrant the imposition of what might be described as the ‘high end’ of any general or appropriate range of penalty. All of that said, the contraventions are not trivial.
33.The Applicant submitted, more specifically, that (a) Rapid’s business was of sufficient size (i.e. medium size business) as to enable it to have obtained appropriate legal advice; (b) the senior management of Rapid was involved in the breaches; and (c) none of the Respondents have any prior record of contravention (although there was no evidence that Rapid had any relevant compliance program in relation to its employment obligations).
34.The Applicant also submitted that it was relevant to the determination of penalty to have regard to Rapid’s conduct upon the commencement of the investigation. It was submitted that rather than seek to remedy or to regularise the employment arrangements with its workers, Rapid sought legal advice in relation to the preparation of independent contractor agreements. The Applicant submitted that this conduct tended to conceal or to disguise, rather than to reveal, the true nature of the employment relationship.
35.I simply observe here that, in my view, the submissions by both Counsel in relation to ‘independent contractors’ should be seen in the context of the detailed comments by the High Court in Hollis v Vabu Pty Ltd, not least the Court’s emphasis on considering such matters from a ‘practical perspective.’[12]
[12] See Hollis v Vabu Pty Ltd (2001) 207 CLR 21, especially at [32] – [45] (Gleeson CJ, Gaudron, Gummow, Kirby & Hayne JJ), and at [68] – [72] and further at [84] – [100] (McHugh J). I note that much of the Court’s focus in Hollis was on vicarious liability. The comment on viewing ‘independent contractors’ and related matters as a “practical matter” is located at [47] of the plurality judgment.
36.Finally, the Applicant submitted that, because ‘sham’ contracting arrangements were acknowledged by the Respondents to be widespread, but (as contended by the Applicant) notoriously difficult to detect, investigate and prosecute, it was appropriate that the Court have particular regard to the role of general deterrence in the imposition of any penalty.[13] Counsel for the Applicant confirmed to the Court that this was not a case where ‘specific deterrence’ was warranted.
[13] In this regard, see in particular the comments of Gray J in Plancor Pty Ltd v LHMU (2008) 171 FCR 357 at [37], Lander J in Ponzio v B & P Caeli Constructions Pty Ltd (2007) 158 FCR 543 at [93], and by Jessup J, among other places, at [145], and earlier by Finkelstein J in CPSU v Telstra Corporation Limited (2001) 108 IR 228 at pp.230-231 [8] – [9].
37.In my view, it is sufficient to note that the Respondents submitted that there was never any intention on their part to engage in conduct that was or could be interpreted as designed to conceal the true nature of the relationship between Rapid and its workers. The Respondents accept that the contracts mischaracterised the legal relationship between Rapid and its workers. As a consequence, and in the light of the factual matters in the Agreed Statement, it was submitted that an appropriate penalty should be in the ‘low range’ because the objective seriousness or gravity of the admitted breaches tells against anything other than such a penalty.
38.The Respondents also accepted the need for any relevant penalty to be able to operate and be recognised as general deterrence. They also confirmed that there has been full restitution to the workers in question, Mr Brischetto and Ms Donnelly.
39.Learned Counsel for the Respondents also submitted that the Court should adopt an approach whereby the various representations should be regarded as one activity or a single contravention.
Conclusion
40.Having regard to (a) the agreed facts and (b) the relevant statements of principle to which I have referred, not least being the ‘totality principle’ and “the need to sustain public confidence in the statutory regime which imposes obligations”,[14] in my view, the following penalties should be imposed:
(i)The First Respondent pay a penalty of $10,500 under s.546(1) of the Fair Work Act 2009 (Cth) with respect to each contravention of s.357(1) of the Fair Work Act 2009.
(ii)The Second Respondent pay a penalty of $1500 under s.904(1) of the Workplace Relations Act 1996 (Cth) with respect to his contravention of s.900(1) of the Workplace Relations Act 1996.
(iii)The First Respondent pay a penalty of $1500 under s.546 of the Fair Work Act 2009 with respect to its contravention of the Modern Award.
(iv)The First Respondent pay a penalty of $1500 under s.719 of the Workplace Relations Act 1996 with respect to its contravention of the ACT Award.
[14] These comments are taken from the important remarks of Branson & Lander JJ in Plancor Pty Ltd v LHMU (2008) 171 FCR 357 at [60], which are congruent with those by Buchanan J in McAlary-Smith noted earlier in these reasons.
41.Further, in relation to the admitted contraventions, I make the declarations sought by the Applicant as set out at the beginning of these reasons.
42.The penalties are to be paid to the Commonwealth of Australia.
43.There is to be no order as to costs.
I certify that the preceding forty-three (43) paragraphs are a true copy of the reasons for judgment of Neville FM
Date: 1 September 2011
Appendix ‘A’
IN THE FEDERAL MAGISTRATES’ COURT OF AUSTRALIA SYDNEY REGISTRY FAIR WORK DIVISION File No CAG 13 of 2011 AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSIONER
ApplicantRAPID FORMWORK CONSTRUCTIONS PTY LTD
ACN 138 279 115
First RespondentKEVIN PAUL ANDERSON
Second RespondentAGREED STATEMENT OF FACTS
The First Respondent (Rapid) was registered as a company on 14 July 2009. Since 14 July 2009, it has conducted business in the building and construction industry as a formwork company. The Second Respondent (Anderson) has, since 15 January 2002 held an Australian Business Number (ABN) and been a sole trader operating under the name of ‘Kev’s Steelfixing’.
Anderson has been a Director of Rapid since 14 July 2009.
Barry Anderson is Anderson’s father and also performed work for Rapid and Anderson at all relevant times.
Lucas Brischetto
Lucas Brischetto (Brischetto) was employed by Rapid as a steelfixer and formworker and commenced working for Rapid in August 2009. At the time he commenced working for Rapid, he was nineteen years old. At that time, he had no relevant work qualifications or experience in the building industry. Brischetto’s brother also worked in the building and construction industry and introduced Brischetto to Anderson. Anderson offered Brischetto employment as a steelfixer and formworker.
On a Monday morning in August 2009, Anderson picked Brischetto up and took him to a construction site. During the morning, Anderson, acting on behalf of Rapid, and acting within his authority as a Director of Rapid, said to Brischetto:
Get an ABN within two weeks and I can pay you.
In making this statement Anderson intended to, and did, convey to Brischetto that his contract of employment with Rapid was a contract for services under which Brischetto worked as an independent contractor for Rapid.
On 3 September 2009, Brischetto registered with the Australian Tax Office for an ABN. In April 2010 Anderson came to the site where Brischetto was working and gave a contract to him and asked him to sign that contract. Brischetto signed the contract and Anderson witnessed it. The contract provided for a 40 hour week and a $20 hourly rate. There was no time limit on the contract. It had Anderson’s name and letterhead on it.
Brischetto worked approximately 40 hours a week for Rapid. On commencement he signed a safe work method statement. He had no driver’s licence and was transported to and from work sites by Barry Anderson.
Brischetto submitted some invoices to Rapid prior to January 2010, following which he communicated the hours worked to Anderson via telephone approximately every fortnight. He submitted approximately 8 invoices for the total hours worked and Rapid paid these at its convenience. Rapid paid Brischetto $20 per hour in respect of all the hours he worked for Rapid. Anderson and his father Barry Anderson directed Brischetto as to what work was to be performed, his hours of work, break times, meal times, and who he should report to.
Some of Brischetto’s tools, materials and safety equipment were provided by Rapid. It provided Brischetto with three high visibility working shirts with Rapid Formwork embroidered on them, safety glasses, earplugs and workgloves, all power tools and expendable items such as nails. He received supervision and instruction in relation to work to be performed by Barry Anderson. Brischetto worked solely for Rapid. He did not operate a company, advertise his services, or engage other workers to assist him.
Brischetto did not have his own public liability insurance and did not have insurance for sickness or accident. He did not make any contributions towards superannuation and was not registered for Goods and Services Tax and did not submit any Business Activity Statements.
Brischetto did not receive sick pay on days when he was unable to attend work because of illness. Rapid did not register Brischetto for portable construction industry long service leave entitlements and did not contribute to a superannuation fund on Brischetto’s behalf.
In April 2010, Brischetto left his employment with Rapid because he was going to Perth.
Angela Donnelly
In April 2009, Angela Donnelly (Donnelly) was introduced to Anderson by a friend and Anderson told her she could work a ‘trial day’ for him. Donnelly worked a single day for Anderson on a trial basis. At the end of that day Anderson offered to engage Donnelly as an employee. In the course of making this offer, Anderson represented to Donnelly that the contract he was offering to engage her under to perform work for him was a contract for services. Anderson and Donnelly had a conversation to the following effect:
Anderson: Do you want a job? Do you have an ABN?
Donnelly:I do not have an ABN.
Anderson: I have work available and you will need to get an ABN. Until you get an ABN I will pay you $15 per hour cash in hand and increase this to $20 per hour once you get an ABN.
On 1 May 2009, Donnelly commenced employment with Anderson. She was eighteen years old. In June 2009, she got her ABN, following which Anderson continued to pay her $15 per hour.
On 28 July 2009 Donnelly ceased employment with Anderson. On 29 July Donnelly commenced employment with Rapid.
In December 2009, Barry Anderson gave Donnelly a document (the Agreement) and asked Donnelly to sign it. In the course of this conversation between Barry Anderson and Donnelly, he represented to her that if she agreed to work under the terms and conditions set out in the Agreement she would be performing work as an independent contractor under a contract for services with Rapid. Barry Anderson said words to the following effect:
This is actually a way of saving us from putting everyone on wages. Go over it, read through and then sign it and give it back to me as soon as you can.
The Agreement contained a representation that the contract of employment under which Donnelly would be employed if she agreed to work under the terms and conditions set out in the Agreement was a contract for services under which she would perform work as an independent contractor. A copy of the contract is attached to this statement and marked “A”.
Barry Anderson provided the Agreement to Donnelly, and made the statement to Donnelly set out in paragraph 17 above, on behalf of, and within the scope of his authority as an employee of, Rapid.
About two weeks after Donnelly was provided with the Agreement, Anderson asked Donnelly for the contract. Donnelly told Anderson that she was not going to sign it.
During the course of her employment with Anderson and then Rapid, Donnelly performed regular work as a steelfixer and formworker. At the time she was engaged by Anderson, she had no relevant work qualifications or experience in the building industry.
Donnelly worked approximately 35 to 40 hours per week for Anderson and then, Rapid. She had no driver’s licence and was transported to and from work sites by Barry Anderson. Donnelly submitted fortnightly invoices to Anderson or Barry Anderson, recording the hours worked, dates and sites where work was performed.
Donnelly was remunerated by an hourly rate of pay of $15 per hour in respect of all hours worked for Anderson and Rapid. She received supervision and instructions in relation to work to be performed by Barry Anderson and the site Foreman. She worked solely for Anderson until 28 July 2009 and from 29 July 2009 for Rapid. She did not operate a company, advertise her services, or engage other workers to assist her.
Donnelly did not have her own public liability insurance and did not have insurance for sickness or accident. She did not make any contributions towards superannuation and was not registered for Good and Services Tax.
Rapid did not register Donnelly for portable construction industry long service leave entitlements and did not contribute to a superannuation fund on Donnelly’s behalf.
Rapid supplied Donnelly with work shirts with Rapid’s logo on them with Personal Protective Equipment. Her materials for work performed were provided by Anderson and then Rapid.
In March 2010, Donnelly needed to take time off to care for her mother who had a broken arm. With Barry Anderson’s permission she took about a week off in total for this purpose and was not paid for this time.
Donnelly was not paid any for any annual leave, public holidays or sick leave.
Donnelly did not conduct a business on her own behalf.
The Award
Donnelly was a construction worker conducting work primarily in the Australian Capital Territory. For the work performed by Donnelly:
30.1.for Anderson between 1 May and 28 July 2009; and
30.2.for Rapid between 29 July and 31 December 2009
Donnelly's employment was regulated by the Building and Construction Industry (ACT) Award 2002. For the work performed by Donnelly for Rapid from 1 January 2010 until 19 March 2010 Donnelly's employment was regulated by a modern award, namely the Building and Construction General On-site Award 2010. Copies of these awards are attached to this Statement of Agreed Facts and respectively marked “B” and “C”.
By reason of the fact that:
31.1.Anderson paid Donnelly a flat rate of $15.00 per hour for all work performed by Donnelly for Anderson between 1 May and 28 July 2009;
31.2.Rapid paid Donnelly a flat rate of $15.00 per hour for all work performed by Donnelly for Rapid between 29 July 2009 and 19 March 2010
Donnelly has been underpaid approximately $6,015.15. These underpayments are a result of breaches of the following provisions:
a.of the Building and Construction Industry (ACT) Award 2002:
– clause 13.1 (wage rates)
– clause 14.4 (industry allowance)
– clause 14.3 (ACT allowance)
– clause 21.1 (payment of wages)
– clause 21.2 (payment on termination)
– clause 23.2.1 (superannuation contributions)
– clause 28.1 (overtime)
– clause 33 (annual leave)
b.of the Building and Construction General On-site Award 2010:
– clause 19.1 (minimum wages)
– clause 21.1 (special allowance)
– clause 21.2 (industry allowance)
– clauses 31.1, 31.3, 31.4 and 31.5 (payment of wages)
– clause 32.2(a) (superannuation contributions)
– clause 36.2 (overtime)
– clause 38.2(a) and (b) (annual leave)
Anderson’s and Rapid’s Conduct during the Investigation and Proceedings
The ABCC commenced investigations into the conduct of Anderson and Rapid in about May 2010. During the investigations both Anderson and Rapid cooperated fully with the ABCC and provided the necessary documents and information to the ABCC as required.
Prior to the ABCC’s commencement of proceedings on 29 March 2011, Anderson and Rapid, through their solicitors, made a without prejudice offer to the applicant setting out a basis on which it would undertake not to dispute liability of the contraventions.
Since proceedings were commenced by the ABCC on 29 March 2011, Anderson and Rapid have not contested liability.
Anderson and Rapid have taken steps to make repayments to Brischetto and Donnelly of money owed to them due to underpayment of wages and entitlements.
With respect to Donnelly, Anderson and Rapid have provided assistance to ABCC regarding the calculations of the repayment to be made.
Sham arrangements
The practice of sham arrangements is widespread in the building and construction industry throughout the ACT. The practice involves large and small contractors; different trades and includes qualified tradesmen through to labourers.
The practice of sham arrangements has resulted in employers failing to comply with their responsibilities to their employees by not meeting their obligations such as workers compensation, insurances, superannuation guarantee levy and income tax, as well as entitlements such as annual leave and sick leave.
Date: 20 May 2011
………………………..
Craig Rawson
Solicitor employed by
Australian Government Solicitor
Solicitor for the Applicant………………………..
Bill Andrews
Solicitor for the Respondents
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