Bachelet v S&M Services Group Pty Ltd and Abdullah v S&M Services Group Pty Ltd

[2019] FCCA 2481

FEDERAL CIRCUIT COURT OF AUSTRALIA

BACHELET v S&M SERVICES GROUP PTY LTD and ABDULLAH v S&M SERVICES GROUP PTY LTD [2019] FCCA 2481

Catchwords:
INDUSTRIAL LAW – SMALL CLAIMS – principal-contractor relationships – employer-employee relationships – consideration of Commercial Sales Award 2010 – underpayment of wages, superannuation and allowances on termination.

Legislation:

Fair Work Act 2009 (Cth), ss.45, 323, 357, 548

Commercial Sales Award 2010, cls.3, 4, 13, 16, 20

Applicant: ELODIE BACHELET

Respondent: S&M SERVICES GROUP PTY LTD

File Number: MLG 43 of 2019

Applicant: MUHAMMAD NAZRIN ABDULLAH

Respondent: S&M SERVICES GROUP PTY LTD

File Number: MLG 65 of 2019

Judgment of: Judge Mercuri

Hearing date: 12 August 2019

Date of Last Submission: 12 August 2019

Delivered at: Melbourne

Delivered on: 14 August 2019

REPRESENTATION

Advocate for the Applicants: In person

Solicitors for the Applicants: Mr Oldham

Advocate for the Respondent: In person

Solicitors for the Respondent: None

ORDERS

1. In proceeding MLG43/2019: Within 21 days, the respondent pay to the applicant:

   (a)the sum of $1,578.84 in respect of unpaid wages and allowances.

   (b)superannuation entitlement in accordance with clause 20 of the Commercial Sales Award 2010. 

2. In proceeding MLG65/2019: Within 21 days the respondent pay to the applicant:

   (a)the sum of $1,175.47 in respect of unpaid wages and allowances.

   (b)superannuation entitlement in accordance with clause 20 of the Commercial Sales Award 2010. 

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLG 43 of 2019

ELODIE BACHELET

Applicant

and

S&M SERVICES GROUP PTY LTD

Respondent

MLG 65 of 2019

MUHAMMAD NAZRIN ABDULLAH

Applicant

and

S&M SERVICES GROUP PTY LTD

Respondent

REASONS FOR JUDGMENT

(revised from the transcript)

1. These reasons for judgment were delivered orally. They have been corrected from the transcript. Grammatical errors have been corrected and an attempt has been made to render the orally delivered reasons amenable to being read.

Background

1. Ms Bachelet and Mr Abdullah brought proceedings in this court’s small claims jurisdiction seeking unpaid wages arising from their engagement by S&M Services Group Pty Ltd trading as Sunline Energy.  Given the similarity in the legal and factual issues arising in these matters I ordered that these proceedings be consolidated and heard together.

2. The applicants were represented by Mr Oldham in respect of whom leave was granted to appear given the nature of the issues raised in the proceedings.  The respondent was represented by Mr Carolan who advised the court that he was employed as a manager with the respondent and was authorised to appear on its behalf.

3. The issues in each of these cases is whether the applicants were engaged as employees or independent contractors.  It was submitted on behalf of the applicants that they were employees and ought to have been paid pursuant to the Commercial Sales Award 2010 (“the Award”) as probationary travellers. The respondent’s position was that the applicants were engaged as contractors and therefore the Award did not apply.

4. Notwithstanding orders made on 6 May 2019 requiring the respondent to file and serve a response and to file and serve an affidavit setting out the evidence upon which it would seek to rely, no such material was filed by the respondent.  The applicants had each filed and served the following affidavit material upon which they sought to rely.  There was an affidavit of Ms Bachelet affirmed on 6 August 2019 and an affidavit of Mr Abdullah affirmed 24 June 2019. 

5. The respondent did not seek to cross-examine either of the applicants and their affidavits were therefore relied upon without challenge.  Mr Carolan gave evidence at the hearing before me on 12 August 2019.

Applicants’ Evidence

Ms Bachelet

1. The facts in this matter are not largely in dispute.  Ms Bachelet is a French citizen who was in Australia from 20 April 2018 to 20 April 2019 on a working holiday visa. During that time she worked for the respondent for a three week period from 14 May 2018 until 1 June 2018 as a door-to-door salesperson. This role required her to try to generate leads for the respondent’s solar installation business in regional Victoria.

2. Ms Bachelet said that she applied for the role through a Facebook advertisement listing jobs for backpackers.  She stated that she attended an interview with Ms Kier, a customer services officer for the respondent, at their premises in Collins Street Melbourne.  She further said that during the interview she was told she would be paid:

   a)a flat rate plus commission;

   b)$800.00 for the first week; and

   c)$500.00 per week thereafter, plus a bonus for any leads generated for each week.

3. Ms Bachelet annexed to her affidavit a text message received confirming the offer of work.  Relevantly, that text message said:

   Your start date will commence Monday 14 May 2018.

   …

   Once you arrive at our Melbourne office you will have to fill in some employment forms.  To make this process as smooth as possible, please bring the following:

   ·ABN (Australian Business Number) - use your TFN to apply for this through the Australian Government website - I can send you information to help with this…

4. Ms Bachelet also gave evidence that when she commenced on 14 May 2018 she was again asked for an ABN by Ms Kier.  She stated that she queried why she needed an ABN as she did not run her own business.  She did not provide an ABN and the issue was not discussed again.  Ms Bachelet stated that she was paid $800.00 for her three weeks of work during which she worked a total of 92 hours and was required to live away from home.

Mr Abdullah

1. Mr Abdullah received the same message regarding his engagement with the respondent as set out above.  He was engaged by the respondent from 14 May 2018 until 25 May 2018 as a door-to-door salesperson.  Mr Abdullah is a Malaysian citizen currently in Australia on a bridging visa. He gave evidence that he worked for the respondent for a total of 60.9 hours, was required to live away for two weeks and was paid $400.00. This evidence was not challenged by the respondent. 

2. Mr Abdullah stated that he obtained an ABN and provided it to the respondent, at the request of the respondent.  He said, however, that he did not understand that to mean that he was conducting his own business. 

3. Both applicants have given evidence that during their engagement:

   a)the respondent would transport them to a regional area;

   b)they would be given a map of the area in which they were to work for that day;

   c)they would work in that area until the respondent arranged for them to be collected and returned to their accomodation at the end of the day;

   d)travel and accommodation expenses were met by the respondent;

   e)the respondent provided the applicants with clothing marked with the respondent’s logo to wear whilst they were working;

   f)the respondent provided the applicants with customer forms and vouchers;

   g)given the work required for the respondent, it was not practicable for the applicants to undertake any other work for other people; and

   h)the respondent provided the applicants with training in relation to how to pitch for leads. 

Respondent’s evidence

1. As stated, the respondent did not file any responding material.  Mr Carolan’s evidence in the witness box, however, did not challenge the evidence given by the applicants as to the nature of the work performed and the manner in which they were recruited. 

2. In giving evidence, Mr Carolan stated that:

   a)the industry in which the respondent operates is a highly competitive one;

   b)whilst the respondent provided t-shirts, they did not provide a uniform as such;

   c)the applicants were engaged as contractors and it was ultimately up to them how much they worked and therefore how much they earned;

   d)the respondent had a “work hard, play hard culture”; and

   e)the respondent paid for the contractors’ accomodation in regional Victoria and their food, which was a benefit to them.

3. Mr Carolan also said that the applicants would have been made aware of the terms of their engagement and would have understood that they were engaged as independent contractors and not as employees.  He did not give any direct evidence which contradicted the evidence given by the applicants about the manner of their individual engagements and the information provided by Ms Kier.  He confirmed that he was not involved in the recruitment of either of the applicants.

4. Mr Carolan also confirmed that the respondent transported the applicants to various regional centres, gave them maps as to where they would be doorknocking on any given day and on occasion transported them between those locations and their accomodation at the beginning and end of each day. 

Applicant’s Submissions

1. It was submitted on behalf of the applicants that they were employed by the respondent to go out as a field marketing force to obtain customer interest in the respondent’s business.  Their contract of employment was partly in writing (through social media) and partly oral (being the representations made by representatives of the respondent as to their terms and conditions). 

2. The applicants argue they were employees and that the Award applies. In particular, the applicants rely upon:

   a)the coverage clause which is found at clause 4.1 of the Award;

   b)the classification and wages clause at clause 13.1 which includes a probationary commercial traveller, and at clause 13.4, includes a statement to the effect that any commission or other method of remuneration cannot be below the minimum rate prescribed; and

   c)clause 16.5, which provides for a living away from home allowance. 

3. It was submitted that, by failing to pay the applicants in accordance with the Award, the respondent has breached section 45 of the Fair Work Act 2009 (Cth) (“FW Act”). In the alternative, the applicants also argued that if the court did not come to the view that the Award applied to the applicants, the court should, in any event, find that the respondent had breached section 323 of the FW Act by failing to pay the applicants’ wages in the agreed manner. The applicants also argued that there was a misrepresentation of the employment as being in the nature of an independent contractor arrangement in breach of section 357 of the FW Act.

Respondent’s submissions

1. Mr Carolan said he had been employed as a manager with the respondent for approximately two years.  He said the respondent is a small company in a very competitive market and has to run a streamlined operation. One part of the respondent’s marketing strategy is to get people into regional areas to doorknock potential customers.  The applicants were taken on as contractors to perform that role.

2. He said the respondent has created a “work hard, play hard culture” and the role has a high attrition rate as it is a difficult role and many people drop out of it because it involves hard work.  However, he went on to say that those who do stay on take to it very well and earn decent money.

3. Mr Carolan also said the respondent takes contractors such as the applicants to regional destinations and provides them with food and accommodation. He stated that the respondent pays them for “seen appointments” that they generate, which he explained is an appointment by a sales consultant which occurs as a result of a lead provided by one of the door-to-door contractors.  He also stated that, given the competitive nature of the industry, the respondent’s business has to provide value to its clients in order to survive, and that if contractors are not performing, they do not remain on performing the work.

4. Mr Carolan stated that many of the contractors like the arrangement because it gets them out to see other parts of Victoria. He also said the respondent engages contractors through the use of an ABN.  As stated, Mr Carolan was not personally involved in the recruitment of the applicants and did not have any discussions with the applicants about their particular terms and conditions of engagement. 

5. He confirmed that the contractors, including the applicants, would have been trained in how to pitch to potential customers. In cross-examination he stated that the respondent could not survive if it were required to pay the award rate for all hours spent by these people in regional areas in addition to superannuation, accommodation, food and the like. 

6. In substance, Mr Carolan seemed to suggest that, although both applicants were aware at the time of their engagement that they were being engaged as contractors, they have subsequently sought to

   
   

   re-characterise their status after receiving advice.  Mr Carolan also stated that whilst there are legislated hours which regulate when doorknocking is permitted, other than that, it is up to contractors to determine their hours of work. He denied that the contractors are required to wear a uniform, but he did concede that they were given a

   
   

   t-shirt to wear to alleviate any customer anxiety. 

Independent contractors and employees

1. It is well accepted that in determining whether a person engaged to perform services for another for reward is engaged as an employee or an independent contractor, the court must have regard to a number of factors.  The case law in this area makes it clear that no single factor is determinative on its own, but rather, the court must apply a multifaceted test. 

2. Importantly, the intention of the parties, or indeed, of one of the parties, whilst relevant, will not be determinative.  In addition to any expressly stated intention of the parties, the other factors which are relevant in determining the true nature of the relationship include but are not limited to:

   a)the extent to which the putative employer has control over the work performed;

   b)mode of remuneration;

   c)provision and maintenance of equipment;

   d)hours of work;

   e)provision of leave;

   f)deduction of tax;

   g)provision of superannuation;

   h)whether there’s an obligation to work; and

   i)the ability of the putative employee to delegate their duties.

3. I will deal with each of these factors in turn. 

Parties’ intention

1. The respondent said that its intention was to engage the applicants as independent contractors, that this was made clear to them at the time of engagement and that this was understood and agreed to by the applicants.  However, the only documentation relating to the applicants’ engagement produced to the court is that produced by each of the applicants and annexed to their affidavits, and it is, to say the least, scant. 

2. The messages from the respondent to each of the applicants simply talks about the applicants being required to complete some “employment forms” and request an ABN.  Mr Abdullah did obtain an ABN at the request of the respondent.  Ms Bachelet did not.  I find that the fact that Mr Abdullah had an ABN does not indicate an independent contractor arrangement. 

3. The respondent did not produce any documentation regarding the nature of the relationship between itself and either applicant.  Even accepting that it was the respondent’s intention to establish a contractor relationship, I do not accept that this was the applicants’ intention.  There is simply no evidence of this. 

4. Ms Bachelet expressly refused to obtain an ABN on the basis that she did not understand why she needed one as she did not believe she was conducting her own business.  Moreover, it is clear from the applicants’ evidence, particularly that of Ms Bachelet, that it was her understanding that she would be paid at a base rate for each week worked, in addition to accommodation, food and a commission or bonus payment over and above that on the basis of performance.  The question of the parties’ intention does not clearly point to the existence of an independent contractor arrangement. 

Control

1. The factor of control is a very important factor in determining whether an employee-employer relationship exists.  The respondent argued that the applicants had significant flexibility to determine how hard they worked and what they did during their time.  Implicit in this is a suggestion that the applicants were not subject to the level of control required to evidence an employer-employee relationship. 

2. The applicants submitted that the respondent exercised significant control over the work performed and the manner in which it was to be performed.  They pointed to the following factors:

   a)the respondent provided training to them about how to pitch for work with potential customers;

   b)the applicants were taken by the respondent to locations which the respondent determined;

   c)the applicants were provided with street maps setting out the areas that they were to work in on any particular day;

   d)the respondent often drove them to those designated areas at the beginning of the day and then collected them at the end of the day; and

   e)

   the applicants were required to wear t-shirts and caps with the respondent’s logo on them, making it clear to the public that they were representatives of the respondent and part of their business. I note that the respondent denied that the applicants were required to wear uniform but indicated that they were required to wear

   
   

   t-shirts.

3. The applicants argued that this level of control is more akin to an employer-employee relationship than that of an independent contractor. 

4. I am satisfied that the respondent had significant control over when, where and how the applicants performed their duties. This level of control is indicative of an employer-employee relationship.

Remuneration

1. It is evident that the applicants were not paid consistently with the Award.  Ms Bachelet’s evidence is that she would be paid a base rate of pay and then additional commission on top of that.  Mr Abdullah gave similar evidence.  Ultimately, the applicants were not even paid on this basis.  Indeed, there does not appear to have been any consistency in the manner in which the applicants were paid at all. 

2. Mr Carolan’s evidence in relation to payments was unclear.  On the one hand he stated that there was no base payment at all, but rather the arrangement was the applicants would be provided with accommodation and food and then were paid $50.00 per “seen appointment”.  He added that the applicants were not very good at their jobs and that this impacted their earning capacity.  However, the respondent did not produce any evidence as to the applicant’s performance over their respective periods of engagement and how this reflected the payments that they received. 

3. I prefer the evidence of the applicants in relation to what they were actually paid.  I accept their evidence that the agreement reached at the time of engagement was that they would be paid a flat rate of pay, plus a bonus for any leads they generated.  This form of remuneration is itself consistent with more with an employer-employee relationship than that of a principal and independent contractor. 

Provision and maintenance of equipment

1. The applicants did not require any specific equipment to perform their duties.  To the extent that they had to physically get to different regions and particular locations in which to perform their duties, the respondent provided transport to and from those locations as well as meeting the applicants’ expenses, including food and accommodation. 

Hours of work

1. The respondent submitted that the applicants could control their hours of work subject to working within legislated restrictions on when they could knock on doors.  Having said that, the respondent conceded that it provided the applicants with a map of the area in which they were to doorknock on any particular day and that, where necessary, the respondent would drive them to and from those locations at the beginning and end of each day. 

1. Mr Carolan also gave evidence that it was the expectation of the respondent that the applicants would work hard to generate the necessary leads and that the respondent’s business was dependent upon that.  Indeed, his evidence was that the respondent was able to determine how effective a person was within the first week of working and that, if the person was not effective, their services would be terminated. 

2. Whilst in theory it may have been possible for the applicants to regulate how many homes they approach, I find on the balance of the evidence before me that the respondent expected the applicants to work for the duration of each day that they were allocated an area, and that a failure to do so would effectively give rise to the risk of termination of their engagement.  This is a factor which is indicative of an employment relationship. It is not consistent with an independent contractor arrangement where the contractor has the right to set and regular their own hours. 

Annual leave, taxation and superannuation

1. It is conceded in this case that the respondent did not provide the applicants with any accrued annual leave and nor did it deduct tax or make any superannuation payments. 

Obligation to work and ability to delegate

1. The respondent’s evidence was that it expected and indeed relied upon the applicants working hard.  The applicants required training in how to pitch the respondent’s products and services, and the respondent gave evidence that it spent significant time on training its people. 

2. On the balance of probabilities I find that the applicants were not in a position to delegate their duties to another person and, once they were transported to a particular location, they were required to perform the services personally. 

Other factors

1. As noted in the case law, this list of factors is not exhaustive and it is open to the court to have regard to other relevant factors.  In this case, the respondent stressed the competitive nature of the industry in which it operates, the fact that the respondent provides an opportunity for backpackers to visit regional areas, and that it provides not only accommodation and food, but also the opportunity for them to work. 

2. Whilst these may be factors relevant to how the respondent structured its business, they are not of themselves relevant to determining whether or not the applicants’ engagement with the respondent is properly characterised as an employer-employee relationship or as a principal-independent-contractor relationship. 

Analysis and findings

1. As stated, no one indicia is determinative of the nature of the relationship.  On balance, however, having regard to all of the relevant factors identified above, I find that the relationship between the applicants and the respondents was one of employer and employee.

2. I have had particular regard to:

   a)the significant level of control which the respondent had over the work performed by the applicants;

   b)the absence of any real capacity for the applicants to delegate their duties;

   c)the fact the respondent not only directed what work was to be performed, but transported the workers from Melbourne to their work locations;

   d)the respondent providing the applicants with maps on a daily basis as to the target areas for that day’s working;

   e)the applicants being required to wear clothing which identified them as part of the respondent’s business; and

   f)the respondent providing the applicants with training on how to pitch work for the respondent. 

The Award

1. Having reached that conclusion, I also find that the Award applies to the applicants’ employment. 

2. Clause 3.1 of the Award defines “commercial traveller” to mean:

   a person employed substantially away from the employer’s place of business for the purpose of soliciting orders for wholesale sales, for resale or for use in or in connexion with the production and/or preparation and/or distribution of the commodities for sale by the customer.

3. This clearly reflects the work that the applicants were required to perform. 

4. Clause 4.1 provides that the Award “covers employers throughout Australia with respect to commercial travellers and those employees” and therefore applies to these applicants.  Clause 13.1 further provides various classification levels, which include the “probationary traveller”, and clause 13.4 provides that no arrangement can result in a commercial traveller being remunerated at a level below that prescribed in the Award. 

5. The pay guide for the Award at the relevant time shows that the hourly rate of pay for a casual probationary traveller was $24.04.  The pay guide also provides for a living away from home allowance of $55.72 per week. 

Conclusion

1. Mr Abdullah’s evidence was that he worked a total of 60.9 hours and was required to live away from home for two weeks.  He should have therefore been paid $1,575.47 inclusive of the living away from home allowance.  He was in fact paid $400.00.  I therefore order that the respondent pay him an additional amount of $1,175.47 in respect of unpaid wages and allowances. 

2. Ms Bachelet’s evidence again unchallenged was that she worked a total of 92 hours and was required to live away from home for a period of 3 weeks.  Ms Bachelet therefore ought to have been paid $2,378.84 but was paid $800.00.  I therefore order that the respondent pay her an additional $1,578.84 in respect of unpaid wages and allowances. 

3. The applicants also seek an order for the payment of superannuation.  Clause 20.2 of the Award provides that:

   an employer must make such superannuation contributions to a superannuation fund for the benefit of an employee as will avoid the employer being required to pay the superannuation guarantee charge under the superannuation legislation with respect to that employee. 

4. As set out earlier, the respondent maintained that the applicants were not employees and therefore there was no obligation to make superannuation contributions on their behalf.  In light of the conclusions that I have reached about the nature of the relationship between the respondent and each of the applicants, I do not accept that submission.  Therefore the respondent is to make such payment as is required to comply with its obligations under clause 20.2 of the Award. 

5. The applicants also seek interest on any amounts ordered to be paid. The applicants did not identify in their submissions the power on which they rely for any such order of interest. These proceedings, however, have been brought in the court’s small claims jurisdiction. That jurisdiction is limited by the terms of Part 4-1 Division 3 of the FW Act. Relevantly a matter can proceed in the small-claims jurisdiction, if among other things, it relates to an amount specified in subsection 548(1A). Those amounts do not include any claim for interest. In the absence of any other power to do so, to which I have not been directed, I do not propose making an order for interest in this instance.

6. Similarly, the applicants argued that there has been a misrepresentation of employment as being in the nature of an independent contractor in breach of section 357 of the FW Act. Section 357 of the FW Act is not a matter which the court can deal with in its small claims jurisdiction, and therefore I do not propose to deal with that aspect of the claim any further.

I certify that the preceding sixty-two (62) paragraphs are a true copy of the reasons for judgment of Judge Mercuri.

Associate: 

Date: 9 September 2019