Balemian v Mobilia Manufacturing Pty Ltd
[2017] FCCA 743
•13 April 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BALEMIAN v MOBILIA MANUFACTURING PTY LTD & ANOR | [2017] FCCA 743 |
| Catchwords: INDUSTRIAL LAW – Fair Work Act 2009 (Cth) – alleged contravention of a general protection – whether the Applicant is an employee or independent contractor – bankruptcy of Second Respondent following institution of proceedings – whether bankruptcy a bar to imposition of civil penalties – classification under the Manufacturing and Associated Industries and Occupations Award 2010– whether employment transferred from previous corporation to First Respondent. |
| Legislation: Fair Work Act 2009, ss.22, 45, 87, 90, 311, 357, 545, 550 Bankruptcy Act 1966 (Cth) ss.58, 82 Superannuation Guarantee (Administration) Act1992 (Cth) Long Service Leave Act 1992 (Vic) ss. 56, 57, 60, 160(1) Taxation Administration Act 1953 (Cth) Part 4-15 Manufacturing and Associated Industries and Occupations Award 2010 |
| Cases cited: Cotis v Macpherson [2007] FMCA 2060 |
| Applicant: | GARO BALEMIAN |
| First Respondent: | MOBILIA MANUFACTURING PTY LTD |
| Second Respondent: | BEDROS BAHAR |
| File Number: | MLG 1432 of 2015 |
| Judgment of: | Judge Hartnett |
| Hearing date: | 19 October 2016 |
| Date of Last Submissions: | 12 December 2016 |
| Delivered at: | Melbourne |
| Delivered on: | 13 April 2017 |
REPRESENTATION
| Solicitor for the Applicant: | Mr Jewell |
| Solicitors for the Applicant: | McDonald Murholme |
| Counsel for the Respondents: | Mr Laidlaw |
| Solicitors for the Respondents: | Bramich Legal |
THE COURT DECLARES THAT:
The Applicant was an employee of:
(a)Auscraft Constructions Proprietary Limited from February 1994 to 10 February 2015; and
(b)the First Respondent from 11 February 2015 to 5 May 2015.
The Applicant’s employment transferred from Auscraft Constructions Proprietary Limited to the First Respondent pursuant to s.22(7) of the Fair Work Act 2009 (Cth).
The Applicant’s annual leave accrual with Auscraft Constructions Proprietary Limited transferred to the First Respondent and accordingly the Applicant had accrued 425 days of annual leave with the First Respondent as at 5 May 2015.
The First Respondent breached s.90(2) of the Fair Work Act 2009 (Cth) by failing to pay accrued annual leave at the cessation of employment.
The First Respondent breached clause 35.2 of the Award and s.45 of the Fair Work Act 2009 (Cth) by failing to make superannuation contributions to the Applicant from 11 February 2015 to 5 May 2015.
The Second Respondent was involved, pursuant to s.550(2) of the Fair Work Act 2009 (Cth), in the civil remedy provision contraventions of the First Respondent.
THE COURT ORDERS THAT:
Within 28 days the parties file a draft minute of orders giving effect to the Court’s findings on the question of compensation.
The matter be listed for a hearing to determine penalty and costs and the sum of compensation in the event the parties are unable to agree upon matters to give effect to order (1) herein.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 1432 of 2015
| GARO BALEMIAN |
Applicant
And
| MOBILIA MANUFACTURING PTY LTD |
First Respondent
And
| BEDROS BAHAR |
Second Respondent
REASONS FOR JUDGMENT
Preliminary
The First Respondent, as did its predecessor corporation Auscraft Constructions Proprietary Limited (‘Auscraft’), operates a business involved in the fabrication of fittings for commercial and other buildings out of premises situate in Lanyon Street Dandenong South. The Second Respondent, Peter Bahar, was the sole director of the First Respondent and was the sole director of Auscraft during the Applicant’s association with both corporations prior to that working association ending in May 2015. Mr Bahar was the effective manager of both corporations. The Applicant, Garo Balemian, commenced a working relationship, its classification subject to dispute, with Auscraft in February 1994, and remained continuously in that relationship with Auscraft and subsequently the First Respondent until May 2015. The Second Respondent and the Applicant, in 1994, were friends who both participated in the local Armenian community. The Applicant had no background in cabinet making or the other aspects of the business of Auscraft, but commenced to perform a range of tasks for Auscraft after discussions had with the Second Respondent. The Second Respondent is a cabinetmaker and builder by occupation.
The Applicant’s claims alleging contraventions of the Fair Work Act 2009 (Cth) (‘the Fair Work Act’) are relevantly as set out in the initiating Form 4 application filed on 25 June 2015 as follows:-
9. From 1 January 2010 the Applicant’s employment was subject to the Manufacturing and Associated Industries and Occupations Award 2010 (‘Award’)
10. At all material times the Applicant was a C9 employee pursuant to the Award.
11. Pursuant to clauses 36.2(a) and 40.1(a) of the Award the Applicant was entitled to receive ordinary pay for the first 38 hours per week, time and a half for the next 3 hours, and double time thereafter. Accordingly, based on a 50 hour week the Applicant was entitled to receive salary for 60.5 equivalent hours being 38 + 3x1.5+9x2.
12. Pursuant to clause 24.1(a) of the Award the Applicant was entitled to receive the following minimum wage:
Period
Hourly
Weekly
1 January 2010 to 30 June 2010
$17.33
$1,048.47
1 July 2010 to 30 June 2011
$18.01
$1,089.61
1 July 2011 to 30 June 2012
$18.63
$1,127.12
1 July 2012 to 30 June 2013
$19.17
$1,159.79
1 July 2013 to 30 June 2014
$19.66
$1,189.43
1 July 2014 to 5 May 2015
$20.25
$1,219.05
13. The Applicant has been underpaid $26,467.60. Accordingly, the First Respondent has breached clauses 24.1(a) and 36.2(a) of the Award. Each breach of the Award constitutes a breach of section 45 of the Fair Work Act 2009 (Cth).
Particulars
Calculations are as follows:
Period
Weeks
Paid
Diff. (Week)
Diff (Total)
1 July 2010 to 30 June 2011
52
$1,050
$39.61
$2,059.72
1 July 2011 to 30 June 2012
52
$1,050
$77.12
$4,010.24
1 July 2012 to 30 June 2013
52
$1,050
$109.79
$5,709.08
1 July 2013 to 30 June 2014
52
$1,050
$139.43
$7,250.36
1 July 2014 to 5 May 2015
44
$1,050
$169.05
$7,438.20
Further particulars will be provided following discovery.
14. The abovementioned breaches of the Fair Work Act 2009 (Cth) have caused the Applicant to suffer loss and damage of $26,467.60.
15. Pursuant to clause 35.1(a) of the Award the Applicant was entitled to receive superannuation.
16. Since 2010 the First Respondent has failed, refused or neglected to pay superannuation. Accordingly the First Respondent has breached clause 35.1(a) of the Award and section 45 of the Fair Work Act 2009 (Cth).
17. The abovementioned breach of the Fair Work Act 2009 (Cth) has caused the Applicant to suffer loss of $29,072.34.
Particulars
Calculations are as follows:
Period
Weeks
Total pay
Super %
Super
1 January 2010 to 30 June 2010
26
$27,260.22
9
$2,453.42
I July 2010 to 30 June 2011
52
$56,659.72
9
$5,099.37
1 July 2011 to 30 June 2012
52
$58,610.24
9
$5,274.94
1 July 2012 to 30 June 2013
52
$60,309.08
9
$5,427.82
1 July 2013 to
30 June 201452
$61,850.36
9.25
$5,721.16
1 July 2014 to 5 May 2015
44
$53,638.20
9.5
$5,095.63
18. Further, at all material times the Applicant was entitled to receive 4 days (sic) annual leave per annum by reason of the operation of:
(a) section 1(a) of Schedule 1 of the Employee Relations Act 1992 (Vic);
(b) section 232 of the Workplace Relations Act 1996 (Cth); and
(c) section 87(1)(a) of the Fair Work Act 2009 (Cth).
19. Accordingly, during the term of the Employment Agreement the Applicant accrued 84 weeks of annual leave.
20. At the Termination the First Respondent failed, refused or neglected to make payment of accrued and untaken annual leave. Accordingly, the First Respondent breached section 90(2) of the Fair Work Act 2009 (Cth).
21.The abovementioned breach of the Fair Work Act 2009 (Cth) has caused the Applicant to suffer loss and damage of $102,400.20 being 84 x $1,219.05.
22. Further, at all material times the Applicant was entitled to receive paid leave on public holidays by reason of the operation of:
(a) section 612 of the Workplace Relations Act 1996 (Cth); and
(b) sections 114 and 116 of Fair Work Act 2009 (Cth).23. The First Respondent failed, refused or neglected to provide paid leave on public holidays and accordingly breached the Workplace Relations Act 1996 (Cth) and the Fair Work Act 2009 (Cth).
24. The abovementioned breaches of the Workplace Relations Act 1996 (Cth) and the Fair Work Act 2009 (Cth) have caused the Applicant to suffer loss and damage of $51,200.10 being 10 days per annum x 21 years x $243.81 per day.
25. Further, during the course of the Employment Agreement the Applicant was employed by one employer within the meaning of section 60 of the Long Service Leave Act (Vic). Accordingly, the Applicant was entitled to long service leave pursuant to section 56 and 57 of the Long Service Leave Act (Vic).
26. The First Respondent has failed, refused or neglected to provide long service leave or make payment at Termination and accordingly has breached 72 of the Long Service Leave Act (Vic).
27. The abovementioned breach of the Long Service Leave Act (Vic) has caused the Applicant to suffer loss of 22,186.71 being 21 years x 13/15 x $1,219.05.
28. At all material times and by reason of the matters pleaded above, the First Respondent misrepresented to the Applicant that his employment was an independent contracting arrangement. Accordingly, the First Respondent breached section 357(1) of the Fair Work Act 2009 (Cth).
29. The abovementioned breach of the Fair Work Act 2009 (Cth) caused the Applicant to suffer loss and damage as detailed in paragraphs 21, 24 and 28.
30. The Second Respondent was involved in each of the breaches by the First Respondent of the Fair Work Act 2009 (Cth) and accordingly by reason of the operation of section 550 of the Fair Work Act 2009 (Cth) is liable for each of the above breaches of the Fair Work Act 2009 (Cth).
No claims were made and no evidence was put before the Court as to the terms and conditions of the Applicant’s alleged employment as an employee of the First Respondent and its predecessor Auscraft being governed by any instruments other than those as set out in the claims referred to in the preceding paragraph. Any claims for underpayment older than six years from the date of these proceedings being commenced on the 25 June 2015, so claims earlier than 25 June 2009, are statute barred by reason of s.544 of the Fair Work Act.
In support of his claims, the Applicant relies upon affidavits affirmed by him on 29 February 2016, 31 May 2016 and 18 October 2016. The Applicant was cross-examined as to the contents of his affidavit evidence during the course of the proceedings.
In an amended response filed 18 April 2016, the First and Second Respondents seek that the Applicant’s application be dismissed and that the Applicant pay the Respondents’ costs. Contained in that amended response are amended grounds of opposition in response to the Applicant’s claims. The Respondents rely upon an affidavit sworn on 20 May 2016 by the Second Respondent. The Second Respondent was cross-examined as to the contents of his affidavit evidence during the course of the proceedings.
The parties also rely upon submissions filed by the Applicant on 2 November 2016 together with further submissions dated 12 December 2016 being submissions in reply to the Respondents closing submissions on which the Respondents rely and which are dated 1 December 2016.
The First Respondent was incorporated on 2 December 2014. Auscraft went into external administration on 12 February 2015. Both corporations conducted, and the First Respondent continues to conduct, the manufacturing cabinetmaker business of the First Respondent for a combined continuous period of some 30 years. The business has throughout operated out of the same premises.
The Applicant seeks a declaration that he was at all material times an employee of the First Respondent and its predecessor corporation, Auscraft. The Applicant asserts the First Respondent employed the Applicant in the period from January to May 2015. Otherwise, and for a period approaching 21 years the Applicant asserts Auscraft employed the Applicant. The Respondents concede that if the engagement between the Applicant and Auscraft was a contract of service (which the Respondents deny) then pursuant to s.311 of the Fair Work Act2009 (Cth) (‘the Fair Work Act’) from January 2015 the First Respondent was the successor in law of Auscraft.
The Second Respondent became a bankrupt on 12 August 2016, following the commencement of these proceedings, and on his own debtor’s petition. He remains an undischarged bankrupt. Accordingly, ss.58 and 82 of the Bankruptcy Act 1966 (Commonwealth) (‘the Bankruptcy Act’) require consideration.
Section 58 of the Act is relevantly as follows:-
“BANKRUPTCY ACT 1966 - SECT 58
Vesting of property upon bankruptcy--general rule
(1) Subject to this Act, where a debtor becomes a bankrupt:
(a) the property of the bankrupt, not being after-acquired property, vests forthwith in the Official Trustee or, if, at the time when the debtor becomes a bankrupt, a registered trustee becomes the trustee of the estate of the bankrupt by virtue of section 156A, in that registered trustee; and
(b) after-acquired property of the bankrupt vests, as soon as it is acquired by, or devolves on, the bankrupt, in the Official Trustee or, if a registered trustee is the trustee of the estate of the bankrupt, in that registered trustee.
…
(3) Except as provided by this Act, after a debtor has become a bankrupt, it is not competent for a creditor:
(a) to enforce any remedy against the person or the property of the bankrupt in respect of a provable debt; or
(b) except with the leave of the Court and on such terms as the Court thinks fit, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding…”
Section 82 of the Act is relevantly as follows:-
“BANKRUPTCY ACT 1966 - SECT 82
Debts provable in bankruptcy
(1) Subject to this Division, all debts and liabilities, present or future, certain or contingent, to which a bankrupt was subject at the date of the bankruptcy, or to which he or she may become subject before his or her discharge by reason of an obligation incurred before the date of the bankruptcy, are provable in his or her bankruptcy.
…
(3) Penalties or fines imposed by a court in respect of an offence against a law, whether a law of the Commonwealth or not, are not provable in bankruptcy…”
There are two parallel claims against the Second Respondent in these proceedings. One is the accessory liability claim that he be liable for compensation for all the breaches that are claimed against the First Respondent. The second component to the relief sought is the payment of penalties sought to be paid to the Applicant by the Second Respondent.
In respect of the Applicant seeking that the payment of penalties be paid to him by the Second Respondent, I refer to the decision of Fair Work Ombudsman v Goldfinger Facility Management Proprietary Limited [2016] FCCA 356. In that decision Judge Lucev referred to the decision of Driver FM (as His Honour then was) in Cotis v Macpherson [2007] FMCA 2060 wherein His Honour:-
a)agreed with submissions made by the Applicant Workplace Inspector to the following effect:-
i)“In order to determine if leave is required unders.58(3) of the Bankruptcy Act it is necessary to consider whether the relevant proceedings are as specified in that provision ‘in respect of a provable debt’. The words ‘in respect of’ are widely construed, particularly in light of the policy underlying that provision and the Bankruptcy Act generally of ensuring a fair distribution of the bankrupt’s assets among creditors, so that no one creditor receives undue advantage (see Re Sharp; Ex Parte Tietyens Investments Pty Ltd (in liq) [1998] FCA 1367 at 7 and Green v Schneller (2001) 189 FLR 82 at 85-87).
The nexus required between the proceeding and the provable debt may be both direct and indirect (Melnik v Melnik [2005] FCAFC 160 at [45]-[48]).
It is therefore necessary to examine whether or not the civil penalty and declarations sought in the application give rise to a ‘provable debt’. If they do not then s58(3) does not apply. The term ‘provable debt’ is broadly defined in s.82(1) of the Bankruptcy Act and would appear to apply to the recovery of, for example, payments sought from the Respondent to satisfy any outstanding employee entitlements (Storey v Lane [1981] HCA 47; (1981) 147 CLR 549). As defined the term would clearly not apply to declaratory relief. However, in relation to the penalty sought to be imposed on the Respondent, the penalty is not a provable debt (Mathers v Commonwealth [2004] FCA 217; (2004) 134 FCR 135 at [13]-[14] and [22]-[29] and Australian Winch & Haulage Co Pty Ltd v State Debt Recovery Office [2005] NSWSC 423; (2005) 189 FLR 315 at [10] and is therefore not subject to the prohibition in s.58(3) against the commencement of legal proceedings”; and
ii)determined that, “for the purposes of s.82(3) of the Bankruptcy Act, the penalties sought by the Applicant in this proceeding are penalties for fines imposed by a court in respect of an offence against a law of the Commonwealth and hence are not provable in bankruptcy. It follows that s.58(3) of the Bankruptcy Act provides no bar to the present proceedings. It also follows that any penalties imposed by the Court would remain payable after the discharge of [x] from bankruptcy, and that bankruptcy provides no release in respect of them.”
The Court concurs in the view that s.58(3) of the Bankruptcy Act is inapplicable to these proceedings as a consequence of the operation of s.82(3) of the Bankruptcy Act. There is no bar to the Applicant proceeding against the Second Respondent in respect of the payment of penalties by the Second Respondent to the Applicant. As to the orders sought for compensation for breaches that are claimed against Auscraft, those that are liquidated claims, not service-based entitlements, due by Auscraft to the Applicant, if they are, and not transferrable to the bankrupt Second Respondent.
The Applicant relies upon s.22(7) of the Fair Work Act. Section 22(7) of the Fair Work Act is as follows:-
“FAIR WORK ACT 2009 - SECT 22
Meanings of service and continuous service
Meaning of transfer of employmentetc.
(7) There is a transfer of employment of a national system employee from one national system employer (the first employer ) to another national system employer (the second employer ) if:
(a) the following conditions are satisfied:
(i) the employee becomes employed by the second employer not more than 3 months after the termination of the employee's employment with the first employer;
(ii) the first employer and the second employer are associated entities when the employee becomes employed by the second employer; or
(b) the following conditions are satisfied:
(i) the employee is a transferring employee in relation to a transfer of business from the first employer to the second employer;
(ii) the first employer and the second employer are not associated entities when the employee becomes employed by the second employer.
Note: Paragraph (a) applies whether or not there is a transfer of business from the first employer to the second employer.”
The Applicant asserts there was not a break of more than three months, in fact there was no break, following his cessation of employment with Auscraft and commencement of employment by the First Respondent and that Auscraft and the First Respondent were associated entities when the Applicant became employed by the First Respondent. At the time of transfer of employment, the sole common director was the Second Respondent. The Respondents in closing submissions conceded that a transfer of employment arose for the purposes of s.22(7) of the Fair Work Act in the same manner as the concession made in the amended response filed 18 April 2016 (see paragraph eight herein), that is, subject to the Applicant being declared by the Court to be an ‘employee’ of the First Respondent employer.
The consequences of the application of s.22(7) of the Fair Work Act are as set out in s.22(5) of the Fair Work Act which is as follows:-
“FAIR WORK ACT 2009 - SECT 22
Meanings of service and continuous service
When service with one employer counts as service with another employer
(5) If there is a transfer of employment (see subsection (7)) in relation to a national system employee:
(a) any period of service of the employee with the first employer counts as service of the employee with the second employer; and
(b) the period between the termination of the employment with the first employer and the start of the employment with the second employer does not break the employee's continuous service with the second employer (taking account of the effect of paragraph (a)), but does not count towards the length of the employee's continuous service with the second employer.
Note: This subsection does not apply to a transfer of employment between non-associated entities, for the purpose of Division 6 of Part 2-2 (which deals with annual leave) or Subdivision B of Division 11 of Part 2-2 (which deals with redundancy pay), if the second employer decides not to recognise the employee's service with the first employer for the purpose of that Division or Subdivision (see subsections 91(1) and 122(1)).”
At the core of these proceedings is the factual dispute as to the circumstances in which the Applicant commenced to perform work for Auscraft and the First Respondent. The Respondents submit to the Court that the Applicant was in fact an independent contractor throughout, and not an employee of Auscraft and the First Respondent, as contended by the Applicant.
There is no dispute between the parties that the Manufacturing and Associated Industries and Occupations Award 2010 (‘the Award’) applied to the workplace.
Statements of fact in these reasons are findings of fact on the balance of probabilities.
Evidence
In or around 1994, the Applicant commenced his working relationship with Auscraft. At that time and in the 21 years that followed, the Applicant and the Second Respondent had no discussion as to whether the Applicant was an employee of, or independent contractor to, Auscraft, and subsequently the First Respondent. The Applicant’s evidence is that:-
“The money and payment was never a discussion point. I didn’t work there for money to start with…”
and the arrangement was one of,
“word of mouth and trust. We never had any agreement at all.”
In response to the question as to why the Applicant was working for Auscraft and the First Respondent, the Applicant’s evidence was further:-
“Because we (being the Applicant and the Second Respondent) had an agreement and we made a decision, we started together from scratch and I was supportive of him.”
At the commencement of the working relationship, the Applicant was asked by the Second Respondent to submit to Auscraft, fortnightly invoices, for the hours he worked. It was not a regime insisted on by the Applicant and the evidence of the Applicant is preferred to that of the Second Respondent in this regard. The Second Respondent told the Applicant to write on the invoices the words ‘as quoted.’ The Applicant already had an ABN in respect of earlier businesses operated by him, but obtained a further one in respect of this working relationship (ABN 1919 742 903) at the request of the Second Respondent. The Applicant was provided with, by the Second Respondent, his first three invoice books to render invoices. The Applicant submitted invoices according to the hours worked by him as calculated by him. In 2008 the Applicant was directed by the Second Respondent to complete timesheets and he complied to the satisfaction of the Second Respondent by attaching a form of timesheet to the invoices submitted by him. The Second Respondent claimed to be concerned that the Applicant was claiming payment for periods of time when he was not working in the workplace. When asked by Counsel for the Applicant:-
“And you did that because you exerted a certain amount of control over him. You were the boss. You agree?”
The Second Respondent answered:
“Not so much control but, yes, to keep his times honest as that – as honest as we can. Yes.”
The Applicant thereafter documented all the work he performed on Excel spreadsheets contained in the computer system and on his prepared timesheets.
The Applicant added 10 per cent for the Goods and Services Tax (GST) to all of his invoices and the First Respondent paid him the total amount owing including the GST. Throughout the 21 years of the working relationship the Applicant remitted tax on the basis that there had been a taxable supply for which he was obliged to collect and remit the 10 per cent. The Applicant completed his annual taxation returns with the assistance of his long-term accountant. In the nature of the expenses claimed by him, little varied over the years. The Applicant claimed motor vehicle expenses as work-related expenses in the sum of up to $3800 each year in respect of a Mitsubishi Elite vehicle owned by him. He made a claim for 5000 kilometres a year in respect of that vehicle. He generally claimed a small amount for laundry, internet fees, supply stationery and telephone bills.
No written contract was entered into between the Applicant and Auscraft and the First Respondent. The Second Respondent’s evidence was that the Applicant indicated to him, in 1994, that he wished to be self-employed. It is said by the Respondents that the Court should look to the Applicant’s repeated representation to the Australian Taxation Office as to his self-employed status over the 21 year period as a significant factor to be given considerable weight in the determination as to whether or not the Applicant was an employee. I do not accept however that a discussion occurred between the Applicant and Second Respondent as to the status of the working relationship. On the totality of the evidence there was simply an absence of agreement or discussion beyond that payment to the Applicant would be on an hourly rate basis, at the commencement rate of $16.00 an hour, and that the Applicant would submit fortnightly invoices in the manner he did. The Applicant was also able to use an old company car belonging to Auscraft. That use was also available to others in the workplace.
The Applicant’s evidence which is accepted, and contrary to the evidence of the Second Respondent that the Applicant did no work other than ‘take-offs’ and that “(he) was not asked to do any other work”, was that at the commencement of the working relationship he was performing the tasks of estimating, purchasing and managing. Part of the estimating, but not the estimating itself, involved ‘take-offs’. As time passed, and in particular post 2007 when a Project Manager was employed in the business whom the Applicant mentored and trained in some aspects of the business, the Applicant moved into the role of solely estimating.
The Applicant’s role and responsibility as an estimator (including ‘take-offs’) for Auscraft and the First Respondent was to prepare the estimate costing for projects for tender. This involved the preparation of quotations. The preparation of a quote involved the selection of the proposal, in relation to which the business received hundreds of proposals each week; the calculations for the materials and hardware (the ‘take-offs’) and the calculations for labour and profits.
The Applicant and the Second Respondent selected the proposals for quoting together, although the Applicant selected a few smaller proposals for quoting without the Second Respondent’s input on occasion. It was not possible for the Applicant to select all the proposals for quoting, given the volume and complexity of some of the proposals received by the First Respondent.
The Applicant often calculated the labour costs and profits with the Second Respondent and the Second Respondent’s evidence understated the participation of the Applicant in this task. I accept also however that on occasion, the Second Respondent performed this task alone. Once they reached an agreement about the labour and other allowances, and profits, the Applicant generally typed up the quotation and the Second Respondent submitted the tender to the client.
The Applicant did not need someone looking over his shoulder telling him how to do the estimating. Rather, he would make the decision, prioritise certain products and then have a discussion with the Second Respondent at which time a final decision was made. Whilst supervision of his work was not constant he was always, “discussing and talking critical point of project and make decision and estimation accordingly”, with the Second Respondent. He conceded he made mistakes that were corrected by the Second Respondent. He was well respected by the Second Respondent and, whilst he had no expertise in the field itself, he claimed to have, “an expertise on the life and expertise of the personal relationship”. His working relationship with the Second Respondent was based on that.
The Applicant’s evidence was, “I have certain authority but it was not fully independent. No”.
The Applicant’s evidence (not challenged) was that he had some autonomy to decide which jobs he would start working on but otherwise the Applicant agreed with the evidence of the Second Respondent that most of the time he made that decision in conjunction with the Second Respondent, as the decision making was an important part of the job. The Applicant always thought he was the “number one in the company … after Peter Bahar”.
The Second Respondent’s evidence was that he did need to supervise the work of the Applicant because the Applicant was not a cabinetmaker. Under cross-examination the Second Respondent conceded that he supervised the work of the Applicant every day:-
“Did you attend work every day?---Yes.
Did you supervise him every day?---Yes.
He couldn’t work unsupervised, could he?---He couldn’t make a decision unsupervised.
He could work on his own but needed you to authorise the finished product?---Yes.”
The Applicant commenced working on an hourly rate of $16.00 an hour. This sum was by agreement between the Applicant and Second Respondent increased to $18.00 an hour “within five years”, on the Applicant’s evidence, and then $20.00 an hour and then $21.00 an hour from 2005 as claimed by the Second Respondent, and in the “last maybe five years” of the working relationship as claimed by the Applicant, until the cessation of the working relationship. The evidence goes no further than this. The Court prefers the evidence of the Applicant to that of the Respondent as to this matter. The Applicant was a reliable witness throughout, who made appropriate concessions. The Court accepts he was a credible witness. His recall of events was greater than that of the Second Respondent. The Applicant was paid an hourly rate according to the time he worked. He was not paid on the basis of the tasks he completed. The Applicant was provided with the equipment and other materials necessary to complete his work, with the provision of such items being by the First Respondent and Auscraft.
The Applicant commenced work at 7.00am or 7.30am in the morning and concluded at 6.00pm or 6.30pm or 7.00pm in the evening. The Applicant determined the length of his working day. He recorded the times that he had worked, and left the office premises. He would, however, always notify either the secretary of the company or the Second Respondent in the event he was leaving earlier than a full working day. Such notification was verbal, and it generally contained an explanation for the Applicant’s earlier departure. The Applicant’s evidence is that when he was asking or telling the Second Respondent that he was going to leave early, the Second Respondent had no objection.
The hours worked by the Applicant mostly included Saturdays and occasionally Sundays. The Applicant claimed his working hours were, “guided and directed by the demand of the tendering”. If the Second Respondent told him not to come in tomorrow, the place was shut, he would not attend.
The Applicant was provided with an office and factory key. He used the office and factory keys for his own access given that his primary place of work was at the First Respondent’s premises. He also used them to allow tradesmen, truck drivers and other personnel to access the office or factory on weekends. The Applicant rarely worked from home.
Under cross-examination the Second Respondent agreed that he placed some reliance on the Applicant. He also conceded that the Applicant was reliable. His evidence was that he and others in the workplace were used to the Applicant coming to the workplace, apart from holidays, basically every day for 21 years. The Second Respondent said that it was expected by he and the Applicant that the Applicant would be at work performing work and that there was no discussion on a week by week basis as to whether the Applicant was coming in the following week. He agreed that the Applicant performed at least 45 or “maybe 50 hours” of work each week. The Applicant worked very long hours, often exceeding 50 hours for Auscraft.
A finger identification system was put in place in the workplace in approximately 2011. The Second Respondent did not, at any time, approach the Applicant about the new identification system. The secretary of Auscraft informed the Applicant about the new system and he told her that he refused to use it because, firstly, he was not a criminal and, secondly, he already submitted detailed timesheets. The Applicant also said that he felt, as one of the most senior in the business, he should not be subjected to a finger identification system. The Applicant informed the secretary that if the Second Respondent wanted him to use the new system he should discuss the matter directly with him. That never occurred. The Second Respondent’s evidence that the Applicant claimed he would not use the system because he was not an employee is not credible.
The Applicant received no annual leave, personal leave or long service leave entitlements during his working relationship with Auscraft and the First Respondent. He received no payment for public holidays or overtime hours worked for Auscraft or the First Respondent.
The Applicant always informed the Second Respondent if he was unable to attend for work due to illness, and always informed him in advance, if he ever planned to take a holiday. The Applicant regularly took holidays, being two weeks each year, save for in 2006 when he took an eight week holiday which the Second Respondent had approved. The two weeks absence from the workplace each year was generally in January and was discussed by the Applicant with the Second Respondent. During that time the Applicant was not paid. The Applicant’s evidence was that when he wished to take leave and made a request, the Second Respondent “Never said no to me”.
When the Applicant was on leave the Second Respondent attended to the performance of his work for the most part or the work was left to accumulate in anticipation of the Applicant’s return.
Throughout the working relationship, the Applicant was provided with the use of a fully maintained vehicle by Auscraft and then the First Respondent. For the majority of occasions he was able to drive the vehicle home, and drive it back to the business premises the following morning. The ownership of the vehicle remained with each successive corporation. The vehicle was parked at the home of the Applicant when he was not at the business premises but when there, employees of the business were able to use the vehicle and did use the vehicle with the keys to the vehicle being always accessible in the workplace. The vehicle was not given or allocated to the Applicant personally. The vehicle had a fuel card in the dashboard available to whomever it was that was driving the car on any given occasion. On average, the Applicant drove the company vehicle six days out of every week to and from work. On those occasions that he inspected a site or spoke with a client, which may have occurred perhaps twice each month, the Applicant sometimes took his own vehicle and at other times took the company vehicle. The Applicant’s evidence was that:-
“There is a lot of incidents the company vehicle was not available at all.”
On one occasion the Applicant took the company vehicle on his annual two week holiday. He asked the Second Respondent if he could borrow the car and the Second Respondent approved his borrowing of same. This was not surprising given the ongoing relationship of trust which existed between the Applicant and Second Respondent.
On 2 February 2015, the Applicant made a complaint to the Australian Taxation Office and sought an investigation about the failure of Auscraft and the First Respondent, to pay him superannuation from 2010. This was a matter the Applicant had raised many times with the secretary of Auscraft and the First Respondent. He was always told by the Second Respondent that his superannuation would eventually be paid. Under cross-examination the Second Respondent admitted that the Applicant was entitled to superannuation and that Auscraft had ceased paying superannuation in 2010:-
“…because we were losing money. Company wasn’t making money. We didn’t have enough money in the company.
Question:
So you just decided you would stop paying him superannuation?
Answer:
Well, if the company hasn’t got the money…
Question:
Exactly. It wasn’t because he wasn’t entitled to it. It was because you didn’t have the money. Do you agree with that?
Answer:
Yes.”
This evidence was contrary to the Second Respondent’s earlier evidence that superannuation payments had ceased to be made to the Applicant because he was not entitled to them given he was not an employee.
In or around March 2015, the Applicant was informed by the Second Respondent that he would no longer be employed by Auscraft but by the First Respondent and was to render invoices to the First Respondent instead of Auscraft.
In late April 2015, the Second Respondent informed the Applicant that Auscraft was no longer trading. The Applicant was subsequently informed by Auscraft’s accountants that all of his entitlements would be transferred to the First Respondent. In late April 2015, the Applicant was informed that on 12 February 2015 a liquidator had been appointed for Auscraft.
On 5 May 2015, the Applicant ceased his employment with the First Respondent by resignation, without notice.
On 16 August 2016 the Applicant became aware that the Second Respondent had become bankrupt by his own petition on 12 August 2016. The correspondence received by the solicitors acting for the Applicant included notification to the Applicant that he was an unsecured creditor in the bankruptcy in the sum of $200,000. The total for all unsecured creditors listed in the bankrupt estate of the Second Respondent was in the sum of $524,693.42.
The Applicant’s explanation for not discussing his working arrangements in greater detail with the Second Respondent and with Auscraft and the First Respondent in the passage of 21 years was that, “I was very naive and I was even embarrassed to ask him to pay me extra money. Now, that was the feeling I had but, other than that, the entitlement, especially long service and all that, I thought that will always come”.
The Applicant considered himself to be an employee of Auscraft and the First Respondent from 1994 until 5 May 2015.
The Second Respondent conceded in evidence that the Applicant had no capacity to delegate the performance of his work to other persons and that he did not hold himself out as operating his own business or enterprise at least during the course of the working week. At all times he presented to the public as a person working for the First Respondent and, prior to that, Auscraft.
A final part of the evidence requires insertion. The Second Respondent gave evidence at trial that he confronted the Applicant a few times as to the manner in which he was paid. He said:-
“I offered him salary wage, salary. He said, no, he’s not … Australian Government. He’s not going to pay more tax. But this is … the discussion we had”.
No mention of this discussion appeared in the Second Respondent’s affidavit affirmed 20 May 2016. If it was credible evidence it would have. It was evidence the Second Respondent thought might assist him but not evidence, when viewed alone and when viewed in conjunction with the rest of the evidence, that the Court accepts. Likewise the Second Respondent had claimed in earlier evidence that the Applicant approached him for work in 1994 as he had been saying he was a bankrupt. That was denied by the Applicant. In evidence under cross-examination, the Second Respondent, when challenged, said:-
“He said to me he was almost bankrupt.”
The Court prefers the denial evidence of the Applicant as to this matter given the inconsistency in the evidence of the Second Respondent.
Conclusions on the Evidence
The Applicant has the onus of establishing on the balance of probabilities that the relationship was that of employment. The task for the Court in deciding whether the relationship between the Applicant and First Respondent (and its predecessor) in these proceedings is one of employer and employee or principal and independent contractor, is one which requires the Court to identify relevant factors arising from the evidence which can lead the Court to make a determination one way or the other and to then weigh or balance those factors in accordance with established principles.
The approach to characterisation of the relationship has historically been to apply a control test. However, in their joint judgment in Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16, their Honours Wilson and Dawson JJ found that control is no longer the only factor:-
“In many, if not most, cases it is still appropriate to apply the control test in the first instance because it remains the surest guide to whether a person is contracting independently or serving as an employee. That is not now a sufficient or even an appropriate test in its traditional form in all cases because in modern conditions a person may exercise personal skills so as to prevent control over the manner of doing his work and yet nevertheless be a servant: Montreal v Montreal Locomotive Works [1947] 1 DLR 161 at p.16]. This has led to the observation that it is the right to control rather than its actual exercise which is the important thing (Zuijs v. Wirth Bros. Pty Ltd [(1955) [1955] HCA 73; 93 CLR 561 at p.571]) but in some circumstances it may even be a mistake to treat as decisive a reservation of control over the manner in which work is performed for another. That was made clear in Queensland Stations Pty. Ltd. V. Federal Commissioner of Taxation [(1945) [1945] HCA 13; 70 CLR 539], a case involving a droving contract in which Dixon J observed at p.552, that the reservation of a right to direct or superintend the performance of the task cannot transform into a contract of service what in essence is an independent contract.
The other indicia of the nature of the relationship have been variously stated and have been added to from time to time. Those suggesting a contract of service rather than a contract for service include the right to have a particular person do the work, the right to suspend or dismiss the person engaged, the right to the exclusive services of the person engaged and the right to dictate the place of work, hours of work and the like. Those which indicate a contract for services include work involving a profession, trade or distinct calling on the part of the person engaged, the provision by him of his own place of work or his own equipment, the creation by him of goodwill or saleable assets in the course of his work, the payment by him from his remuneration without deduction from income tax. None of these leads to any necessary inference, however, and the actual terms and terminology of the contract will always be of considerable importance.
Having said that, we should point out that any attempt to list the relevant matters, however incompletely, may mislead because they can be no more than a guide to the existence of a relationship of master and servant. The ultimate question will always be whether a person is acting as the servant of another or on his own behalf and the answer to that question may be indicated in ways which are not always the same and which do not always have the same significance.”
The factors considered in Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16 provide a guide and were subsequently endorsed in Hollis v Vabu Pty Ltd [2001] 207 CLR 21.
In Roy Morgan Research Pty Ltd v Federal Commission of Taxation [2010] FCAFC 52; (2010) 184 FCR 448 the Full Court of the Federal Court said:-
“Roy Morgan Centre 37 ATR 528 involved issues and facts very like those in the present appeal. Winneke P, with whom Phillips and Kenny JJA agreed, quoted with approval at 533 a passage from Hall (Inspector of Taxes) v Lorimer [1992] 1 WLR 939 at 944 where Mummery J, speaking of a determination whether a person was a servant or independent contractor, said:
This is not a mechanical exercise of running through items on a check list to see whether they are present in, or absent from, a given situation. The object of the exercise is to paint a picture from the accumulation of detail. The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another.
Winneke P went on to say (at 533):
Although technically it remains true that the question whether a person is engaged on a contract of service or for services is one of mixed law and fact, in reality the task of the trial judge in determining that question, in a case like the present one, involves an assessment and evaluation of evidence for the purpose of identification and isolating factors or indicia which are capable of pointing in one direction or the other, and then weighing or balancing those factors in accordance with established principles, none of which is conclusive, in order to reach a conclusion.
His Honour added that where, as in that case, the resolution of the question is one of ‘fact and degree’ in respect of which views may legitimately differ, it is difficult for an Appellant who cannot identify specific error to demonstrate any error at all on the part of the trial judge. (at 460 [31] – [32]).”
The evidence establishes that Auscraft and the Respondents at all times had the power to direct the Applicant as to what work was to be performed, how it was to be performed and generally when it was to be performed. That power was exercised by Auscraft and the Respondents.
Auscraft and the Respondents had control over the important aspects of the working arrangements and day-to-day activities of the Applicant, including the manner in which the Applicant carried out his duties. The Applicant was not free to use his own discretion for the most part and the manner in which he performed the work was clearly demonstrative of a contract of employment.
The evidentiary findings as set out above, being a consideration of the various indicia of the nature of the relationship between the Applicant and Auscraft and the Respondents, when balanced against each other lead the Court to conclude that the “picture painted from the accumulation of detail”[1] is that the Applicant was at all material times an employee of the First Respondent and its predecessor corporation Auscraft.
[1] Hall (Inspector of Taxes) v Lorimer [1992] 1 WLR 939,944.
Section 357 of the Fair Work Act
Section 357 of the Fair Work Act is as follows:-
“FAIR WORK ACT 2009 - SECT 357
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.
Note: This subsection is a civil remedy provision (see Part 4-1).
(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.”
The Applicant submits that Auscraft and the First Respondent misrepresented the engagement of the Applicant as that of an independent contractor pursuant to s.357(1) of the Fair Work Act.
Auscraft paid superannuation to the Applicant from 1994 until 2010 when, because of financial difficulties it ceased to make such payments. During the course of the working relationship and indeed from its inception it must have been clear to Auscraft and the First Respondent that the Applicant was in fact an employee. The Applicant’s evidence was that he was aware throughout that the hourly rate paid to him was considerably below that paid to a contractor. The Second Respondent’s evidence that $21 an hour was a generous rate of pay from 2005 onward was not credible in the circumstances of the very lengthy hours and overtime and penalty rate hours worked by the Applicant and not by reference to the payment that would have been required to be made to an independent contractor.
The Court finds that Auscraft and the First Respondent knew or ought to have known that the Applicant was an employee of both corporations.
The Court finds such misrepresenting of the Applicant’s employment occurred and that Auscraft and the Respondents have not established on the evidence those matters required as set out in s.357(2) of the Fair Work Act.
The totality of the relationship was that of employment and the arrangement set up by Auscraft and the First Respondent with the Applicant at the very least recklessly disguised the true legal nature of the relationship between Auscraft, the First Respondent and the Applicant.
Liability of the Second Respondent
Section 550 of the Fair Work Act is as follows:-
“FAIR WORK ACT 2009 - SECT 550
Involvement in contravention treated in same way as actual contravention
(1) A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.
(2) A person is involved ina contravention of a civil remedy provision if, and only if, the person:
(a) has aided, abetted, counselled or procured the contravention; or
(b) has induced the contravention, whether by threats or promises or otherwise; or
(c) has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d) has conspired with others to effect the contravention.”
The Second Respondent was the sole director and effective manager and owner of each corporation when each breach was committed. The Second Respondent admitted that he attended the business each day and was the supervisor of the Applicant and decision maker in the business. The Applicant seeks a declaration that the Second Respondent was involved in each breach of the Fair Work Act by Auscraft and the First Respondent. The Court will make such declaration.
Classification
The Applicant maintains that the evidence of the witnesses establishes that he was an Engineering/Manufacturing Tradesperson- Level II in wage group C9 defined in sch.B.3.8(a)(ii) of the Award and therefore his minimum hourly rate under the Award was $21.26.
The Applicant however conceded he had no formal training and no qualifications at all. He failed to establish that he held any minimum training requirement as set out in C10 or any equivalent minimum training requirements. C9 and C10 of sch.B cl.2.1 of the Award are as follows:-
Classification Levels
Classification Title
Minimum Training Requirements
Wage relativity to C10
C9
Engineering/ Manufacturing Tradesperson—Level II
C10+ 20% towards a Diploma of Engineering or equivalent
105%
Engineering/ Laboratory Technician—Level I
Certificate III in Engineering—Technician, or Certificate III in Laboratory Skills, or Certificate III in Manufacturing Technology, provided that the minimum experience required for a Technology Cadet has been completed, or 50% towards a Diploma of Engineering, or equivalent
C10
Engineering/ Manufacturing Tradesperson—Level I
Recognised Trade Certificate, or Certificate III in Engineering—Mechanical Trade, or Certificate III in Engineering—Fabrication Trade, or Certificate III in Engineering—Electrical/Electronic Trade, or equivalent
100%
Engineering/ Manufacturing Systems Employee—Level V
Engineering Production Certificate III, or Certificate III in Engineering—Production Systems, or equivalent
The Respondents argued that the Applicant falls within wage group C13 or 14. C13 and C14 of sch.B cl.2.1 of the Award are as follows:-
Classification Levels
Classification Title
Minimum Training Requirements
Wage relativity to C10
C13
Engineering/ Manufacturing Employee—Level II
In-house training
82%
C14
Engineering/ Manufacturing Employee—Level 1
Up to 38 hours induction training
78%
No evidence was led by the Applicant in relation to the nature and extent of any training received by him. The onus was on the Applicant to establish this case on the balance of probabilities. The Court finds the classification of the Applicant falls within C13 of sch.B cl.2.1 of the Award.
Set off in the award
The Applicant’s period of employment with the First Respondent was from the weekend of 11 February 2015 to 1 April 2015. The minimum rate of pay for C13 was $17.35. It is common between the parties the Applicant was paid during that period at the rate of $21 per hour plus GST. The Applicant conceded in cross-examination that the average number of hours worked was 44, based upon the invoices submitted to the First Respondent, being on average $924 per week before GST. The Court accepts in this limited period the Applicant worked for six hours over the prescribed 38 hour week. The Applicant claimed at paragraph 11 of the form 4 claim that time above 38 hours is to be paid at time and a half for the first three hours and double time thereafter. The Respondents argued, the Applicant has demonstrated no loss and has, in fact, been paid somewhere between $139.55 and $117.22 per week over entitlement during 2015. That is now a matter for further calculation and is said by the Respondents to raise the issue of ‘set-off’.
Clause 7 of the Award provides that an employer and an individual employee may agree to vary the application of certain terms of the Award to meet the genuine needs of the employer and the individual employee, providing that the employee is better off overall at the time the agreement is made. Clauses 7.1 and 7.3 of the Award limit the terms which may be varied by such an agreement with the result that annual leave, superannuation and long-service leave are employee entitlements that cannot be negated by agreement under the Award.
There is no evidence before the Court that any such agreement was entered into by the Applicant and First Respondent.
In James Turner Roofing Proprietary Limited v Peters (2003) WA SCA 28, the West Australian Industrial Appeal Court examined the relevant case law in situations such as the present facts, where the Respondents contend that the amount paid to the employee exceeds the amount to which the employee is entitled to under the Award, and held:
“(21) If the whole or any part of the payment is appropriated by the employer to a particular incident of employment, the employer cannot later claim to have that payment applied in satisfaction of his obligation arising under some other incident of the employment, so a payment made specifically for ordinary time worked cannot be applied in satisfaction of an obligation to make a payment in respect to some other incident of employment, such as overtime, holiday pay, clothing or the like, even if the payment made for ordinary time was more than the amount due under the award in respect of that ordinary time.”
The Respondents arguments that any provision of intrinsic worth such as the use of the motor vehicle by the Applicant and any excess payments that might have been paid to the Applicant are capable of being set off against the amounts owed to him are rejected. Any set-off agreement is limited in scope by the terms of the Award. None of the matters set out in cl.7 are met on the evidence before the Court.
Annual leave claim
Section 87(2) of the Fair Work Act is as follows:-
“FAIR WORK ACT 2009 - SECT 87
Entitlement to annual leave
Accrual of leave
(2) An employee's entitlement to paid annual leave accrues progressively during a year of service according to the employee's ordinary hours of work, and accumulates from year to year.
Note: If an employee's employment ends during what would otherwise have been a year of service, the employee accrues paid annual leave up to when the employment ends.”
Section 90 of the Fair Work Act is as follows:-
“FAIR WORK ACT 2009 - SECT 90
Payment for annual leave
(1) If, in accordance with this Division, an employee takes a period of paid annual leave, the employer must pay the employee at the employee's base rate of pay for the employee's ordinary hours of work in the period.
(2) If, when the employment of an employee ends, the employee has a period of untaken paid annual leave, the employer must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave.”
The primary claim made by the Applicant in these proceedings is a claim for unpaid, accumulated annual leave. The annual leave accrual which transferred from Auscraft to the First Respondent is a debt payable by the First Respondent. This is because there was a transfer of employment pursuant to s. 22(7) of the Fair Work Act which brought into operation s.22(5) of the Fair Work Act. The Applicant is thus taken to have commenced employment with the First Respondent in February 1994 and all unpaid annual leave entitlements of the Applicant that had accrued were transferred from Auscraft to the First Respondent and became a liability of the First Respondent. The breach itself occurred, at the cessation of the employment of the Applicant when no annual leave, referrable to service, was paid to him by the First Respondent.
The period of annual leave is 20 days per annum for a period of 21 years and three months, or 21.25 years. Accordingly, the Applicant is entitled to 425 days of annual leave. The limitation in s.545(5) of the Fair Work Act does not apply to the annual leave claim because the breach occurred at the cessation of employment and, therefore, is within the relevant six year period.
Long service leave
By s.160(1) of the Long Service Leave Act 1992 (Vic) (‘the Long Service Leave Act’), where an employee is owed money under that Act, the employee may take proceedings in the industrial division of the Magistrates Court of Victoria to recover the money owing. The Respondents submit that this Court has no jurisdiction to entertain the claim raised by the Applicant.
The Court is satisfied it has accrued jurisdiction to hear and determine the Applicant’s claim for long service leave as this element of the claim clearly arises out of the common substratum of transactions and facts to which the other elements relate. As stated by the High Court in Fencott v Muller (1938) 152 CLR 570 at 680:
“The scope of a controversy which constitutes a matter is not ascertained merely by reference to the proceedings which a party may institute, but may be illuminated by the conduct of those proceedings and especially by the pleadings in which the issues in controversy are defined and the claims for relief are set out.”
The source of the Applicant’s entitlement to long service leave is contained in the Long Service Leave Act.
Section 56 of the Long Service Leave Act states as follows:-
“LONG SERVICE LEAVE ACT 1992 - SECT 56
Basic entitlement to long service leave
An employee is entitled to—
(a) 13 weeks of long service leave on ordinary pay on completing 15 years of continuous employment with one employer; and
(b) 4 1/3 weeks of long service leave on ordinary pay on completing each period of 5 years of continuous employment with that employer after the first 15 years of continuous employment with that employer.”
Section 57 of the Long Service Leave Act is as follows:-
“LONG SERVICE LEAVE ACT 1992 - SECT 57
Additional entitlement to long service leave if employment stops after 15 years
(1) This section only applies if an employee stops working for an employer after completing 15 years of continuous employment with that employer.
(2) The employee is entitled to an amount of long service leave equal to 1/60th of the period of his or her continuous employment with that employer since he or she last became entitled to long service leave under section 56.
(3) The period of an employee's long service leave that relates to a period of employment before 1 January 1965 and that had not been taken before the commencement of this Division is to be reduced by one quarter.”
Section 60 of the Long Service Leave Act is as follows:-
“LONG SERVICE LEAVE ACT 1992 - SECT 60
Meaning of one employer
(1) This section sets out several situations in which an employee is to be regarded, for the purposes of this Division, as having been employed by the one employer, even though the employee may have worked over the relevant period of time for more than one employer in a strict legal sense.
(2) If an employee is employed by a corporation, he or she is to be regarded as having been employed by that corporation during any period that—
(a) he or she was employed by a related body corporate of that corporation (within the meaning of the Corporations Act); or
(b) he or she was employed by another corporation and—
(i) the directors of that other corporation and the employee's present employer were substantially the same; or
(ii) that other corporation and the employee's present employer were under substantially the same management...”
It is not disputed that Auscraft and the First Respondent are related bodies corporate and had a sole common director who managed the business of both corporations. The Applicant’s service is continuous and he has accrued long service leave in the same manner in which he has accrued unpaid annual leave which would have been payable by the First Respondent had his employment status not been misrepresented as being that of an independent contractor.
The amount of the long service leave owing appears not in dispute and to be 18.42 weeks.
Superannuation
The obligation to pay superannuation to employees arises out of the Superannuation Guarantee (Administration) Act1992 (Cth) (‘the Superannuation Act’) which does not provide employees with the right to sue for superannuation. However, clause 35 of the Award requires employers to pay superannuation contributions for the benefit of an employee. A failure to pay superannuation is thus a breach of the Award and consequential breach of s.45 of the Fair Work Act.
Clause 35 of the Award relevantly states:-
“35. Superannuation
35.1 Superannuation legislation
(a) Superannuation legislation, including the Superannuation Guarantee (Administration) Act 1992 (Cth), the Superannuation Guarantee Charge Act 1992 (Cth), the Superannuation Industry (Supervision) Act 1993 (Cth) and the Superannuation (Resolution of Complaints) Act 1993 (Cth), deals with the superannuation rights and obligations of employers and employees. Under superannuation legislation individual employees generally have the opportunity to choose their own superannuation fund. If an employee does not choose a superannuation fund, any superannuation fund nominated in the award covering the employee applies.
(b) The rights and obligations in these clauses supplement those in superannuation legislation.
35.2 Employer contributions
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 superannuation legislation with respect to that employee…”.
The Applicant acknowledges that there are two distinct periods for which superannuation is claimed:-
a)from January 2010 to 10 February 2015 by Auscraft; and
b)from 11 February 2015 to May 2015 by the First Respondent.
A breach of the Award and consequential breach of s.45 of the Fair Work Act is admitted by the First Respondent. The First Respondent, however, denies that it is liable to make payment of the Auscraft superannuation contributions that remain unpaid.
The Applicant submits that s.22(7) of the Fair Work Act operates to treat the Applicant’s employment as continuous and, accordingly, the obligation to pay superannuation passed from Auscraft to the First Respondent. This argument is rejected.
The Respondents note that whilst clause 35 of the Award is relied upon by the Applicant the Respondents say, nevertheless, the obligation to recover the actual sums involved rests with the ATO.
I accept the submissions of Counsel for the Respondents that payments of superannuation are to be paid quarterly by the relevant employer pursuant to the Superannuation Act. Accordingly, the argument that s.22(7) of the Fair Work Act, in relation to continuation of service, assists the Applicant in claiming the unpaid superannuation from a subsequent employer cannot be sustained. Further, as submitted by Counsel for the Respondents s.46 of the Superannuation Act provides for collection and recovery via Part 4-15 in sch.1 to the Taxation Administration Act 1953 (Cth) and its incorporation in the Award at cl.35.1(a) results in the recovery of same being prohibited by the terms of the Award.
Public holidays
The Applicant concedes that s.545 of the Fair Work Act limits any claim made by the Applicant to a period of six years. The Applicant alleges that the liability for the payment of public holidays passed from Auscraft to the First Respondent, along with the Applicant’s employment. The Court finds such sums as were to be paid by the former employer remain the debt of that entity.
I certify that the preceding ninety-four (94) paragraphs are a true copy of the reasons for judgment of Judge Hartnett
Date: 13 April 2017
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