Alice Tsang v Department of the Chief Minister

[1996] IRCA 18

DECISION NO:   18/96

CATCHWORDS

INDUSTRIAL LAW - UNLAWFUL TERMINATION -  EMPLOYEE  or independent consultant - whether termination at the INITIATIVE OF THE EMPLOYER - whether CONTINUOUS EMPLOYMENT or series of contracts.

Narich Pty Ltd v Commissioner of Pay-Roll Tax (NSW) (1983) 50 ALR 417
Australian Mutual Provident Society v Allan and Chaplin (1978) 52 ALJR 407
Re Porter (1989) 34 IR 179
Jason Deslandes Lawrence v Colin Nicholas Constantine t/as Carls Milk Supply (IRCA, unreported, 29 August 1995, No WI 1441 of 1995, Parkinson JR)
Performing Right Society Limited v Mitchell & Booker Ltd [1924] 1 KB 762
Zuijs v Wirth Bros (1955) 93 CLR 561
Humberstone v Northern Timber Mills (1949) 79 CLR 389
Sgobino v  State of South Australia (1987) 46 SASR 292
Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16
O’Neill v Australian National University  (IRCA No AI 1176 of 1995, unreported, 29 August 1995, Linkenbagh JR )
Martinac v AWU West Australian Branch, (IRCA, unreported, 15 September 1995, Ryan JR)
D’Lima v Board of Management, Princess Margaret Hospital for Children (IRCA, unreported, 25 August 1995, Marshall J)
John Ferry v Minister for Health, Western Australia (IRCA, unreported, 25 August 1995, Marshall J)

ALICE TSANG V DEPARTMENT OF THE CHIEF MINISTER

No DI 1147/95

BEFORE:  BLOKLAND JR

PLACE:     DARWIN

DATE :      5  February 1996

IN THE INDUSTRIAL RELATIONS
COURT OF AUSTRALIA
DARWIN REGISTRY

BETWEEN:

ALICE TSANG
(Applicant)

AND:

DEPARTMENT OF THE CHIEF MINISTER
(Respondent)

MINUTE OF ORDERS

THE COURT ORDERS THAT:

1. The application be dismissed.

REASONS FOR JUDGMENT

The Application

The applicant Alice Tsang makes application for a remedy pursuant to Part VIA - Div 3 Industrial Relations Act (1988) alleging unlawful termination of employment. At the directions hearing the Court was advised that the major issue to be confronted was whether or not the applicant was an employee or whether she was an independent consultant. Rather than deal with that matter separately as a preliminary point, the Court has heard the application on its merits. The hearing  has nevertheless necessitated the resolution of the following questions: is the applicant an employee?  was the alleged termination “at the initiative of the employer” as required by the Industrial Relations Act or did the employment contract come to an end by expiration according to its terms ? In answering these questions, the Court has been asked to find that the various contractual arrangements amounted to a sham, masking the true nature of the employment relationship. The alleged sham comprises  the execution of a series of contracts which on their face are of one year in duration. It is alleged that the true situation is one of continuous employment.   

Factual Background

The applicant commenced employment as a Chinese interpreter with the respondent in 1988. The applicant was assigned to the Royal Darwin Hospital as part of a joint Commonwealth/Northern Territory initiative to improve and increase the level of interpreter services in the delivery of hospital services. The interpreter program at the Royal Darwin Hospital started as a pilot program in 1986 - 1987: (Evidence of Jenny Medwell, the applicant and Aurora Quinn ). The interpreter service  has been described by witnesses for both parties as a priority area within the Office of Ethnic Affairs. Its purpose is to provide interpreters to people of a non-English speaking background in the medical setting. In 1988 at the commencement of  the employment the applicant was employed to work as an interpreter for four hours daily at the hospital. This time-frame was described as being suitable for reasons of management efficiency: (Evidence of  Jenny Medwell); and also ensured that there were set times at which interpreters could be contacted. The applicant was paid an hourly rate and the employment was described in evidence as being covered by a “general contract”: (Evidence of Jenny Medwell). I have taken this to mean that the applicant was employed, at least initially, on a continuous basis. There was no written agreement between the parties at that stage: (Evidence of applicant). Evidence has been given which I accept that employment within the Northern Territory Public Service is not considered permanent by the relevant authorities unless various steps are taken within the Northern Territory public sector framework (Evidence of Rachel Shanahan). From the totality of the evidence I have heard however, it appears the applicant was initially employed on a continuing basis, although that employment was on a  part-time basis.

On 29 June 1992 the employment relationship changed in that the applicant was asked, and agreed to sign a contract entitled “Agreement”. This contract between the parties describes the applicant as a “consultant” in which the applicant agrees to provide interpreting and associated services to the respondent. That contract was due to conclude on 30 June 1993. On 15 June 1993 the applicant entered into a similar contract entitled “Consultancy Agreement” for the following year. On 11 August 1994 the applicant entered into a further agreement of a similar nature for a further year. That contract was due to expire on 30 June 1995. Towards the end of the third and final contract the applicant was advised that her position would be advertised, that she was free to compete for the position but that the contract would not necessarily be awarded to her.

As events turned out, the applicant was not offered a further contract. A new Chinese interpreter was employed by the respondent. The parties agreed the applicant would work for another short period until the new interpreter commenced duties and the applicant’s employment with the respondent concluded on 21 July 1995.

The Court has heard evidence from the following persons:

Alice Tsang (the applicant) who gave evidence concerning the history of the employment relationship with the respondent, the cessation of her employment and her unfulfilled expectations concerning continuation of employment with the respondent.

Jenny Medwell: a former coordinator of language services for the Office of Ethnic Affairs, called in the applicant’s case, who gave evidence concerning the establishment of the interpreter service at the Royal Darwin Hospital, her understanding of the applicant’s employment conditions and the accreditation of interpreters.

Ms Pam Soriszinski: Dean of the Faculty of Foundation Studies, Northern Territory University, called in the applicant’s case who gave evidence about the availability of interpreter / translator training programs in the Northern Territory and a proposed course at the Northern Territory University.

Dr Nirandna Rao: the applicant’s treating doctor who gave evidence of the applicant’s ear disorder, subsequent operations and treatment.

Mr Theo Tsikouris: a former interim director of  the Office of Ethnic Affairs called in the respondent’s case who gave evidence about discussions with the applicant and another interpreter concerning the fact that their contracts would not be renewed.

Ms Aurora Quinn and Ms Janicean Price: respectively the language manager of the Office of  Ethnic Affairs  and the director of the Office of Ethnic Affairs. Both gave evidence in the respondent’s case concerning the applicant’s level of competence as an interpreter, the employment policies concerning interpreters, the various contracts which were entered into between the parties, the duties of the applicant and the cessation of employment.

Ms Rachel Shanahan: an officer for the Commissioner for Public Employment (Northern Territory) gave evidence in the respondent’s case concerning relevant employment practises and procedures in the Northern Territory Public Service.

As a preliminary observation it should be noted that the applicant’s skills as an interpreter in some six (6) languages have received genuine praise by witnesses for both sides. Her work evaluations, (some of which have been tendered in evidence) are of  the highest standard. The applicant has given evidence of her overwhelming distress at not being offered a further contract. She is most concerned about the loss of face in her community which has resulted from the cessation of employment. Financially her position is serious and worrying to her as she supports her family. What occurred is that the respondent  made a decision to ensure that all interpreters and translators would have the appropriate level of accreditation being National Accreditation Association of Translators and Interpreters (NAATI), Level Two (2). The applicant’s representatives do not take issue with the correctness or otherwise of  that policy and have indicated support in principle to the Court. The applicant’s argument would be that the implementation of the policy did not justify termination of employment.

The applicant possesses the appropriate NAATI level in translating skills, but she has not yet been successful in the NAATI interpreter tests. This lack of success has been due to the applicant’s serious ear condition requiring surgery and ongoing medical care: (evidence of the applicant and of Dr Rao).

The Court has been told that the applicant was not successful in securing the continuation of her employment with the respondent because another applicant with the relevant NAATI qualifications applied and was successful. The Court has also been told that the hospital regularly used interpreters who did not have the appropriate qualifications. As an example, the Court was told that from all the Aboriginal language groups, there were only two accredited interpreters in total in Darwin: (Evidence of Aurora Quinn). These factors would all be highly relevant to questions of procedural fairness, whether or not there was a valid reason for the termination and whether or not the termination was harsh unjust or unreasonable. The hearing of this matter has proceeded on the basis that these issues are only live if the applicant is entitled to bring the application under the Industrial Relations Act . As is noted above however, the applicant faces a variety of jurisdictional hurdles.

Is the applicant an employee?

As indicated, the respondent disputes that the applicant is an employee within the meaning of the Industrial Relations Act . I have had the benefit of detailed argument from both Ms Andelman who appeared for the applicant and Mr Lisson, counsel for the respondent. I have proceeded on the basis that although the written contract is labelled “Consultancy Agreement”,  the Court is required to examine the true nature of the relationship between the parties based on the facts at the relevant time as presented to the Court. I accept that it is appropriate for parties to employment agreements to express their intentions in a declaratory form such as the one used in the agreement at hand. Further, in the body of the contract at issue it is stated that [the applicant] “perform  the services as an independent contractor  in accordance with her own methods, the terms of this Agreement and applicable laws and regulations.”  I have examined a variety of factors in determining whether or not the description given to the contract should be accepted as conclusive of the nature of the relationship between the parties.

In favour of the respondent’s argument is the express term in the contract that independent contractor is the agreed state of affairs. Further factors in the respondent’s case are that the applicant worked with a significant degree of independence. She was properly considered a professional who worked in a manner appropriate for professionals. She exercised independent professional judgment during the various assignments she was given. The general practise was that the applicant would be notified that an interpreter was required and she would attend the particular site at the hospital  to undertake the particular interpreting assignment. In the vast majority of cases the applicant did not initiate the interpreting assignment.

The respondent also points to flexibility in hours. Ms Medwell and a number of other witnesses have given evidence that the interpreters “set their own day”. The contract states (Schedule 3) that the applicant was to provide services “on an average of five (5) hours per day, Monday to Friday, for not less than 48 weeks over the period of this contract.” In practise there were set hours which were a practical arrangement to permit the public and the hospital staff to know when an interpreter was available. The applicant was expected to be in attendance during these times. The applicant was expected to “manage” her work within the terms of the contract : (evidence of Ms Janicean Price). The applicant did not receive the benefit of the full Northern Territory public sector superannuation scheme, (NTGPAS), a benefit reserved for permanent employees: (evidence of Rachel Shanahan). She was however covered by the Northern Territory Supplementary Superannuation Scheme, a  minimum superannuation levy.

The respondent did not directly provide a room for the applicant and her colleague, although the Royal Darwin Hospital (being the recipient of the service), did provide a room and a beeper. Paper, pens and appointment books were provided by the respondent. The applicant would organise her own typing either by use of her own computer or a hospital type-writer.

If for some reason the applicant could not attend the hospital during the appropriate times the applicant was entitled, (possibly expected) to find a replacement interpreter. This was however very much the exception. She was expected to exercise her own judgment in this regard. The applicant was not prohibited from being engaged as an interpreter for other organisations. She was on the Telephone Interpreter Service (TIS) list of interpreters and had occasionally taken assignments for the Department of Immigration. The applicant was required to provide invoices to the respondent detailing the hours worked.

Factors militating in favour of the applicant’s argument are that her hours and other conditions were regulated in a way consistent with being an “employee”. She possessed professional independence in the manner that her interpreting was carried out, however she was assigned work from the various parts of the hospital and rarely initiated the work herself. If  she was present at the hospital, she was  expected to attend to calls for an interpreter. While there was flexibility in the hours, in that the type of interpreting the applicant was undertaking  was not capable of being realistically confined to set office hours, on the whole of the evidence I conclude that the applicant was required to be present at the hospital at the hours specified. Those hours were advertised to the public at large: (Exhibit A9).

The flexibility afforded to the applicant in her working hours, when seen in its proper context was strikingly similar, if not the same as the “flexi-time” scheme available to many persons who are clearly employees. Ms Aurora Quinn gave evidence that the applicant  was in fact on the flexi-time scheme, however Ms Janicean Price gave evidence that the applicant was not able to benefit from flexi-time, although her hours were flexible. Mr Lisson, counsel for the respondent, has explained to the Court that flexi-time in the Northern Territory Public Service is regulated separately and is subject to a variety of other terms and conditions which did not form part of the applicant’s employment. This is no doubt the case, however, given Ms Aurora Quinn’s closeness to the work place, her ability to comment directly on the issue of flexi-time coupled with the applicant’s own understanding that at least until some time in 1994 she was on flexi-time, I have found that the applicant was subject to work practises which put her in a very similar, if not the same situation as an employee who enjoyed the benefits of  flexi-time. The applicant used her flexi-time when she was sick. She was not entitled to sick leave but was told by Aurora Quinn to keep her medical certificates during the periods she was absent. The applicant was covered by workers’ compensation.

The applicant  and other interpreters had PAYE deducted from their pay. I have been told in evidence that it was not the wish of the respondent to have PAYE deductions in respect of interpreters. This was because some of the interpreters engaged from time to time by the respondent would have been disadvantaged by the PAYE scheme given the small number of annual assignments for interpreters of lesser used languages: (Evidence of Jenny Medwell). The Court can only note that in these circumstances a decision has been made to bring the applicant within PAYE even though the decision may have been made against the wishes of the respondent. The applicant was required to keep time sheets of a similar nature to employee time sheets. She was also required to write monthly and annual reports.

Although the applicant was required to submit invoices for payment, that factor must be seen in the context of the evidence before the Court. The submission of invoices did not invoke payment for interpreting assignments. The invoices were submitted well after the various assignments and payment for those assignments. In some cases the invoices  were submitted in a bundle covering lengthy periods well after payment for the services had taken place: (Evidence of the applicant and Aurora Quinn). The applicant was entitled to annual leave which, if not taken in the year it fell due could be taken the following year.

It is proper for the parties to expressly declare their intentions by declaring the nature of the relationship in the contract. However, where the agreement does not reflect the true state of the relationship or where the parties have departed from the expressed intention by their conduct or otherwise, the Court may scrutinise the employment relationship: (Cam & Sons Pty Ltd v  Sargent (1940) 14 ALJR 162; Narich Pty Ltd v Commissioner of Pay-Roll Tax (NSW) (1983) 50 ALR 417; Australian Mutual Provident Society v Allan and Chaplin (1978) 52 ALJR 407; Re Porter (1989) 34 IR 179; Jason Deslandes Lawrence v Colin Nicholas Constantine t/as Carls Milk Supply ,IRCA, unreported, 29 August 1995, No WI 1441 of 1995, Parkinson JR).

The variety of tests at common law to determine whether there is a “contract of service” or a “contract for services” have been comprehensively argued by both representatives before the Court. The respondent would argue in relation to the “control test”, that the applicant was not subject to the requisite degree of control expected of an employee. There is some support for this view in the older authorities: ( Performing Right Society Limited v Mitchell & Booker Ltd [1924] 1 KB 762). In that case McCardie J said that an independent contractor “[I]s one who undertakes to produce a given result, but so that in the actual execution of the work he is not under the order or control of the person for whom he does it, and may use his own discretion in the things not specified beforehand.” I have already noted that the manner in which the applicant executed each particular interpreting assignment was a matter for her professional judgment. A variety of modern authorities stand for the proposition that although the execution of the service to be provided may be subject to the discretion of the person employed, if the person employed remains subject to the employer’s control in other matters, then the person is an employee: (Zuijs v Wirth Bros (1955) 93 CLR 561; Humberstone v Northern Timber Mills (1949) 79 CLR 389). I have proceeded on the basis that in relation to professionals, such as interpreters, it is appropriate to use the more relaxed view of the control test. The case of Sgobino v  State of South Australia (1987) 46 SASR 292 firmly rejected the argument in relation to interpreters that the employer did not exercise the degree of control over the interpreters that would be expected of a contract of service. The majority noted that there were a number of occupations (interpreters being one of them) for which there was little scope for control in the assignment but still a contract of service existed. In the case at hand, the applicant was required to fulfil many administrative requirements as detailed above. This has lead me to the conclusion that adopting the control test, she was an employee.

In relation to the integration test or the organisation test, the question is whether the person is employed as part of a business and their work is done as an integral part of the business (in which case they will be considered an employee) or their work is done for the business as an accessory to the business, (in which case they will be considered to be an independent contractor). The respondent’s witnesses have been at pains to point out that the provision of interpreters is considered to be so important in the circumstances of the Royal Darwin Hospital as to be a “life and death” matter. The countervailing argument is that although this is the position, funding remains a difficult issue to be determined on an annual basis and requires funding arrangements to be made by both the Northern Territory and the Commonwealth. I do not consider that the funding question is solely determinative of the issue. The evidence is clear that the respondent would like to integrate the interpreter service into the hospital. Witnesses for the respondent have stated that eventually it is hoped that the hospital will fund the interpreter positions. The witnesses for both parties have stressed that the provision of interpreters to the hospital is a priority area for the respondent. The applicant’s expertise in many Chinese languages has been relied upon heavily by the Royal Darwin Hospital in the provision of medical services.  In Market Investigations Ltd v Minister for Social Security [1969] 2 WLR 1 the integration test was applied in finding that a part-time interviewer for a company was an employee. In that case the employee could complete her work in the designated time and was permitted to work for others. The Court considered her ability to work for others was not inconsistent with the status of employee. Neither should the ability to take interpreting assignments for others be determinative in this case.

I note the criticisms of this test: (Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16; Sgobino v State of South Australia  (above); Creighton and Stewart, “Labour Law”, Federation Press, 1994, 2nd ed, at 133.) and the view that  integration is but one of the factors to be considered. An application of this test as one of a variety of  standards to be applied does however reinforce the conclusion I have come to that the applicant is an employee. 

The application of the reasoning in Re Porter (1989) IR 179 in which the significant issues to be examined include the degree of economic dependence of one party on another further reinforces the conclusion that the applicant is an employee. In this regard I note the submission that the applicant could not be considered to be in business on her own account, in particular in the sense that her activity with the respondent did not involve carrying a risk of financial loss or opportunity to make a profit from the work.

Was the termination of employment “at the initiative of the employer”?

Although I have found that initially the applicant was employed on a continuous basis, that situation clearly changed in 1992 when the applicant signed a contract for one year and subsequently signed two further contracts. The evidence clearly points to the applicant being employed on a series of three contracts, each of one year duration. These contracts are not contracts for “a specified period of time” within the meaning of Regulation 30B(1)(a) as each contains a termination clause: (Anderson v Umbakumba Community Council (1994) 126 ALR 121; Cooper v Darwin Rugby League (1994) 1 IRCR 130). The applicant is not excluded from relief purely on this basis, however, the final contract has come to conclusion on its own terms. By a further oral agreement, (although I am not told precisely how this occurred), the applicant agreed to work a further short period before the new interpreter commenced. This initially alerted me to the possibility of evidence of continuous employment but on all the evidence the facts point to the third written contract coming to an end on its own terms and a further short contract coming to an end as clearly agreed.

There is authority for the proposition that a contract coming to an end pursuant to its own terms is not a “termination at the initiative of the employer”: (O’Neill v Australian National University , IRCA No AI 1176 of 1995, 29 August 1995, Linkenbagh JR ). This point was initially raised as a “no case to answer” submission by counsel for the respondent during the hearing of the matter. I ruled against the respondent on that occasion as on the evidence the applicant had at one point stated that she believed she would work for the respondent for the rest of her working life. The evidence was not totally clear but at that point it was possible that the applicant would point to evidence in the respondent’s case which would show a basis for that belief. No further facts have been pointed to and I  now rule that the termination was not at the initiative of the employer. The contract came to a conclusion by the operation of its own terms. Although there was a further agreement for the applicant to work until the new interpreter commenced duties, it has not been suggested that that agreement indicated to the applicant that she could expect employment to continue once the new interpreter had commenced duties. Put another way, there must be a contract of employment entered and in effect at the relevant time for the Court to make any determination on termination: Martian v WA West Australian Branch, (IRCA, unreported, 15 September 1995, Ran JR). I have had regard to D’Lima v Board of Management, Princess Margaret Hospital for Children (IRCA, unreported, 25 August 1995, Marshall J and John Ferry v Minister for Health, Western Australia (IRCA, unreported, 25 August 1995, Marshall J) but those cases are clearly distinguishable on their facts. In D’Lima v Board of Management, Princess Margaret Hospital for Children  the contracts were as a matter of practise generally extended beyond their expiree dates. The practises in that case were of a distinctly different nature than in the case presently before the Court.

The applicant gave evidence that she believed she would work for the respondent for the rest of her working life. When asked what she meant by this however, she said it was her “hope” that her contract would be renewed. It has not been suggested that anyone in the respondent’s case has led the applicant to believe that she would be employed on a continuous basis.

It has not been alleged that any representative of the respondent made any false promises to the applicant. None of the respondents’ witnesses appear in any way to be against the applicant in a professional or personal manner. It may be, as Ms Andelman has suggested, that the change in the employment status in 1992 has put the applicant to a disadvantage. The problem for the applicant is that she has signed the contracts which stipulated one year and in evidence has indicated that she knew it was possible that her contract would not be renewed. The evidence does not support a sham. There may have been irregularities in the employment arrangements but that does not make the contract a sham capable of being set aside in all of its terms. It appears that the respondent specifically wanted fixed term contracts given the funding circumstances and the changing policies in relation to interpreters. To infer any other time apart from that which was stated would be artificial in the extreme. The evidence does not disclose that the applicant was “strung along” and led to believe anything other than that the contract would come to an end.

In her application for the renewal of her contract which turned out to be unsuccessful, the applicant has re-stated her understanding that she was employed on a one year contractual basis. Even taking into account the applicant’s weak bargaining position at the point of her application and the possibility that she wrote the letter  in a way to seek to please the recipients, it is very difficult to conclude that the parties intended anything other than a contract of one year in duration. In evidence the applicant confirmed that the contents of her letter of application for a further contract represented correctly the state of affairs as she understood them to be. Although I have found that in relation to the true state of affairs between the parties the applicant was an employee, and not an independent consultant, this does not of itself permit the Court to set the contract aside in its entirety and “rewrite the terms”. I note the submission of Ms Andelman that to find the applicant an “employee” working pursuant to the terms and conditions in the contract means that the applicant should be entitled to redundancy and other Award entitlements. That may be the case however it does not alter my decision on the question of whether or not the contract concluded on its own terms. In coming to the conclusion that I did in relation to the applicant being an employee, it may mean that the applicant should have had further protection from relevant awards. I cannot however give effect to the award conditions as though they form part of the contract.

Ms Andelman asked for leave at the conclusion of the case to formulate and file claims for unpaid leave and over-time. I declined to grant leave at such a late stage of the case as I did not think it fair to begin hearing again after all of the witnesses had already been called. Although I would have been prepared to grant a considerable degree of latitude throughout the hearing, I did not think it proper to adjourn and commence the hearing again after the close of evidence and submissions, especially in circumstances where the claim was not before the Court in writing. I note Mr Lisson’s intention to ascertain the full extent of the applicant’s entitlements on the basis of  the ruling that she is an employee. It is hoped that the parties will attempt to settle any outstanding differences. In relation to the applicant’s deep feelings of hurt over the cessation of her employment, she should understand that she has never been dismissed from her employment. Her agreement for her employment did not go further than that specified. The oral and documentary evidence before the Court have shown the applicant has an excellent employment history. In the circumstances of her case however, the Court does not have jurisdiction to grant her a remedy.

The order that I make is that the application be dismissed.

I certify that this and the preceding nine (9) pages are a true copy of the judgment of Judicial Registrar

Blokland........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...

Ms Andelman appeared for the applicant.

Mr Lisson appeared for the respondent instructed by Ms Shanahan.