Beth Susan Fowler v Automated Surveys Pty Ltd
[1995] IRCA 218
•26 May 1995
C A T C H W O R D S
INDUSTRIAL LAW - Termination of employment - claim for unlawful termination - whether contract for services or contract of service - whether casual employment.
INDUSTRIAL RELATIONS ACT 1988, Ss 170EA
INDUSTRIAL RELATIONS REGULATIONS, Regulation 30B(3)
Massey v Crown Life Insurance Company [1978] 1 WLR 676
Building Workers Industrial Union of Australia v ODCO Pty Ltd (1991) 99 ALR 735
Humberstone v Northern Timber Mills (1949) 79 CLR 389
Stevens and Gray v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16
Transport Workers Union v Readymix (1981) WAIG 1705
BETH SUSAN FOWLER v AUTOMATED SURVEYS PTY LTD - WI 462 of 1994
BEFORE: BOON JR
PLACE: PERTH
DATE: 26 MAY 1995
IN THE INDUSTRIAL RELATIONS )
COURT OF AUSTRALIA )
WESTERN AUSTRALIA )
DISTRICT REGISTRY ) No. WI 462 of 1994
BETWEEN BETH SUSAN FOWLER
- Applicant
AND AUTOMATED SURVEYS
PTY LTD
- Respondent
MINUTE OF ORDERS
BEFORE: BOON JR
PLACE: PERTH
DATE: 26 MAY 1995
THE COURT ORDERS AND DECLARES THAT:
The Applicant for the period 13 June 1994 to 16 August 1994 was employed under a contract of service by the Respondent.
The Applicant was a casual employee engaged for a short period within the meaning of Sub-regulation 3 of Regulation 30B of the Industrial Relations Regulations.
The application is accordingly dismissed.
NB.Settlement and entry of Orders dealt with by Order 36 of the Industrial Relations Court Rules
IN THE INDUSTRIAL RELATIONS )
COURT OF AUSTRALIA )
WESTERN AUSTRALIA )
DISTRICT REGISTRY ) No. WI 462 of 1994
BETWEEN BETH SUSAN FOWLER
- Applicant
AND AUTOMATED SURVEYS
PTY LTD
- Respondent
REASONS FOR JUDGMENT
This is an application under Section 170EA of the Industrial Relations Act 1988 for payment of compensation arising out of the alleged unlawful termination of the Applicant's employment by the Respondent. The central issue in this matter is whether the Applicant was an employee or an independent contractor and the Applicant seeks a declaration that the Applicant for the period of 13 June 1994 to 16 August 1994 was employed under a contract of service by the Respondent.
The Respondent says that the Applicant was engaged as an independent contractor and is therefore excluded from the operation of the Act. Alternatively, if this Court finds that the Applicant was indeed an employee, the Respondent says that she was a casual employee engaged for a short period within the meaning of Regulation 30B of the Industrial Relations Regulations and is therefore excluded from the operation of the termination of employment provisions of the Act.
BACKGROUND
The respondent, Automated Surveys Pty Ltd, operates its business in the surveying industry. It uses specialised equipment, including computer equipment. The Director of the Respondent gave evidence that all people engaged by the Respondent receive in house training in how to use the equipment and in how the Respondent's system operates. Project home builders are the target clientele of the Respondent. Much of the work of the Respondent is carried out by party leaders who have expertise in surveying, and survey assistants. For some time now the Respondent company has operated under a scheme whereby it maintains a list of "preferred suppliers". The list of preferred suppliers is a list of names of people whom the Respondent engages as party leaders and survey assistants. The Director of the Respondent, Alistair Millar, and the Operations Manager, Raymond McKinnon, decided who would have their names placed on the list of preferred suppliers. These "preferred suppliers" were said by Mr Millar to supply their labour and expertise.
The Applicant has worked for several years as a casual survey assistant for various employers. In June 1994 she needed money and was looking for more work as a survey assistant. She telephoned the Respondent company and was eventually interviewed by Mr McKinnon. He told the Applicant that the company only offered people subcontracts, and that the Respondent had enough work to guarantee her being able to work 40 hours per week on average. Mr McKinnon told the Applicant that the Respondent would encourage her to work for other companies, but that if she did wish to work for another company, she should give the Respondent at least two days' notice. Mr McKinnon told the Applicant that she would be financially better off under a subcontract system than as an employee, but told her to seek advice from an accountant if she wanted that confirmed. When pressed under cross-examination, Mr McKinnon was unable to specify in what way Ms Fowler, the Applicant, would be better off financially, but said that as it had worked to his own advantage, he assumed it would do so for the Applicant.
Mr McKinnon and Ms Fowler discussed pay rates. He initially offered her $12 per hour but this was, after some discussion, increased to $12.50 per hour. The Applicant agreed to work for $12.50 per hour. During cross-examination Mr McKinnon said that $12.50 per hour was the award rate plus 25% but when pressed admitted that this was the same as the award rate for casual employees.
Mr McKinnon asked Ms Fowler to provide the company with monthly invoices. She refused, and it was agreed that the Applicant would render invoices and be paid on a weekly basis. In fact, the system as operated by the Respondent was that each worker would complete a time sheet supplied by the Respondent and headed "Sole Traders Time Sheet - Automated Surveys". The Applicant was required to fill in the time sheet showing the time she started and finished each day, the total hours worked, the debit hours (for lunch) and the chargeable hours. She would add up the total chargeable hours each week, multiply that by $12.50, work out how much PPS tax should be deducted (at a rate of 20%) and how much the Respondent should pay her. These calculations appeared on an invoice which the Respondent required her to provide. Ms Fowler was at all times paid according to the number of hours worked as distinct from being paid for completing a job.
The evidence of Ms Fowler and of Mr McKinnon's affidavit was that Mr McKinnon told the Applicant that she should arrive at the office at 7.30 am each day to see what work was available. Mr Millar's evidence and Mr McKinnon's verbal evidence conflicted with that of Ms Fowler and Mr McKinnon's affidavit. Mr Millar said that people started work at 7.30 am because they chose to do so. The Respondent was very flexible but 7.30 am was the latest people could arrive unless they had made prior arrangements to start later. Mr McKinnon said that the party leaders start at 6.00 am if they want to. To the extent that there is a conflict of evidence on this point, I prefer the evidence of Ms Fowler and find that Ms Fowler was expected to come in at 7.30 am each day unless she had given two days' notice. It was also agreed between the parties that the Respondent did not have to supply work and if the Respondent had no work for her, it would not have to give Ms Fowler any notice. In fact, the Respondent always supplied work to Ms Fowler except at the time of "termination". Other survey assistants, however, sometimes arrived to find that there was no work for them.
Ms Fowler's evidence was that she was only offered work on a subcontract basis and did not really understand what that entailed. She was really only interested in the money, which she needed. There was no provision for holiday leave or sick leave and she understood it to be very similar to the conditions she was used to being employed under as a casual employee. Although Mr Millar gave evidence that not all people who work for the Respondent have to do so as independent contractors, he did admit that the Respondent does not "employ" people in survey assistant positions. Some people engaged by the Respondent formed companies or partnerships but that was never an issue with the Applicant. All of the evidence points to Ms Fowler being told that her only option if she wanted to work for the company was to agree to work under the "sub-contract" system. It was "take it or leave it".
Mr McKinnon and Mr Millar both gave evidence that the instructions for work came in from clients on the day before the work was to be carried out. At the end of each day or first thing the following morning, these survey instructions would be grouped into geographical areas. Each surveying team engaged by the respondent is comprised of a party leader and a survey assistant. The survey assistant helps the party leader wherever required. The party leader directs the survey assistant as to what to do. Mr Millar said that the Respondent in turn directs the party leader what to do. The purpose of the survey assistant is to assist the party leader. Mr McKinnon offered the party leader and survey assistants a geographical group of survey instructions (called a "run"). In allocating each run, he had regard to the stated wishes of the party leader and survey assistant as to whom they wished to work with or where they wanted to work. He admitted that ultimately, if there was no agreement, he could direct them where to work and who to work with, and it was bad luck if it was not to their liking. This situation, however, was not likely to arise.
Each run was expected to be completed in one day. The Respondent provided a pool of vehicles for use by those party leaders who needed a vehicle. If a party leader used one of the Respondent's vehicles, they were hired to that person. If a party leader used his or her own vehicle, the Respondent paid a kilometre rate and an increased hourly rate to cover the costs of using the vehicle.
Mr McKinnon's affidavit states that no party leader or survey assistant provided their own equipment. The Respondent had the necessary survey equipment in stock, which was hired out to the party leader. If a party leader had their own equipment, or wished to purchase any equipment held by the Respondent, it was up to them. The Applicant's evidence was that she supplied her own field bag and plumb bob but that the Respondent supplied these items to those survey assistants who wanted to use them.
The work of a survey assistant is fairly mundane, although some individual skill and judgment is required from job to job to do it properly. The survey teams mainly surveyed housing allotments in the Perth metropolitan area. The completed surveys were supplied by the Respondent to its clients.
The Applicant gave evidence that she was told by someone from the Respondent that she was required to return to the office at the end of each day. She was told that this was because there might be a message for her. She thought that this was unlikely and assumed that the Respondent wanted to keep an eye on her movements. Although neither Mr McKinnon nor Mr Millar can remember the Applicant being told to return at the end of each day, they did not deny that this was possible and I find on the evidence that Ms Fowler was required to clock in at the office at the end of each day.
THE "TERMINATION"
In Mr McKinnon's affidavit he states that it was not long before the Respondent began receiving complaints from party leaders about Ms Fowler's attitude. He states that "after a few weeks, it was becoming increasingly difficult to find any party leader prepared to work with her, which was threatening her status as a "preferred supplier"".
The Applicant gave evidence that she did not particularly enjoy working for the Respondent. She looked for and obtained other work. She did not think that this would endanger her position with the Respondent as she had been told the Respondent encouraged its "preferred suppliers" to work for other companies. She was offered some better work at the last minute and twice phoned Mr McKinnon at home on a Sunday to tell him she could not come in. Mr McKinnon was annoyed at being phoned at home and considered she was in breach of the agreement that she give two days' notice if she was going to work for someone else.
In mid August Ms Fowler phoned Mr Millar to say that she would not be coming in that day. Mr Millar was aware of previous problems with the Applicant not giving sufficient notice and told Ms Fowler that she should not bother contacting the Respondent any more. She was no longer treated as a "preferred supplier".
THE RELATIONSHIP BETWEEN THE APPLICANT AND THE RESPONDENT
There is no easy test to distinguish an employee from an independent contractor. A body of case law has developed in Australia and a number of tests have been applied by various courts. In Australia the right to "control" is an important indicator of the existence of an employment relationship. It is, however, not the only test, and the courts now look at a number of indicia to determine the nature of the relationship. The modern emphasis is to look at the whole relationship.
The fact that the form of the engagement was expressed to be one of "contract for services" does not necessarily mean that the Applicant was an independent contractor. In Massey v Crown Life Insurance Company [1978] 1 WLR 676 at 679, Lord Denning stated "the law, as I see it, is this: If the true relationship of the parties is that of master and servant under a contractor of service, the parties cannot alter the truth of that relationship by putting a different label upon it.... On the other hand, if the relationship is ambiguous and is capable of being one or the other [ie either service or agency] then the parties can remove that ambiguity, by the very agreement itself which they can make with one another. The agreement itself then becomes the best material from which to gather the true relationship between them." These dicta were quoted and followed in Building Workers Industrial Union of Australia v ODCO Pty Ltd (1991) 99 ALR 735 at 755. Counsel for the Applicant submitted that in looking at the expressed intention of the parties one should consider the relative bargaining strength of the parties. In the present case Ms Fowler was given no option if she wanted to work for the Respondent. She would only be given work if she agreed to call herself an independent contractor. Ms Fowler's evidence was that she needed the money and although she did not fully understand the implications of working as an independent contractor, she accepted the
position because that was the only basis upon which Respondent would engage her and the conditions were the same as those she was used to in her previous casual jobs.
In Humberstone v Northern Timber Mills (1949) 79 CLR 389 at 404, Dixon J said that "the essence of a contract of service is the supply of the work and skill of a man". On the other hand, the essence of a contract for services seems to be that the independent contractor is working primarily for himself or herself. In the present case the Applicant supplied her labour and expertise to the Respondent, and that points to the existence of an employment relationship within the meaning of Dixon J's dicta rather than a contract for services, but is in itself not determinative.
A prominent indicator of the nature of the engagement is the extent to which the "employer" may control the work of the person engaged - see Stevens and Gray v Brodribb Sawmilling Company Pty Ltd. In Humberstone's case, Dixon J said at 404 that "the question is not whether in practice the work was in fact done subject to a direction and control exercised by an actual supervision or whether an actual supervision was possible but whether ultimate authority over the man in the performance of his work resided in the employer so that he was subject to the latter's order and directions". In the present case Ms Fowler was required to start at a certain time (although there may have been a small amount of flexibility possible if she had taken this up with the Respondent); she was told who to work with (if this was unable to be agreed); where to work; what work to do; the party leader told her how to do the work; and she was required to return to the office at the end of each day. Mr Millar made much of the fact that they encouraged flexibility in the working day. In the Applicant's case, however, this was negligible and not a significant factor. Although the Respondent's management did not stay at each site and direct the Applicant as to what to do and how to do it, I have little doubt that it was understood between them that ultimately the Respondent's management had the right to direct her. In his verbal evidence, Mr Millar admitted that the party leader had the right to direct the survey assistant, and the Respondent directed the party leader to direct the survey assistant. In these circumstances, I find that the Applicant was subject to direction by the Respondent and this points to the existence of an employment relationship.
In Stevens and Gray v Brodribb, Mason J said that other relevant matters include, but are not limited to, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and provision for holidays, the deduction of income tax and the delegation of work by the putative employee.
In this case, the Applicant was paid weekly according to the number of hours worked and not by the job. If she had been paid by the job that would point to the relationship being one of a contract for services. The mode of remuneration in this case, despite this requirement for the Applicant to submit an invoice, points to the existence of an employment relationship.
Counsel for the Respondent urged this Court to find that the provision of equipment by the Applicant, namely the field bag and plumb bob, pointed to the existence of a contract for services. I am unable to agree with that submission. In the first place, the evidence is that the Applicant provided this equipment as a matter of personal choice, and that the Respondent in fact provided field bags and plumb bobs for the use of survey assistants. Secondly, the amount of equipment supplied by the Applicant is negligible compared with the equipment needed for the work done for the Respondent ie. vehicles, pegs, stakes, tools, theodolite and total stations and tripods. The field bag and plumb bob do not come anywhere near the kind of equipment necessary to do the work and is easily distinguishable from the equipment used by the "owner/driver" contractors in Transport Workers Union v Readymix (1981) WAIG 1705.
As to the obligation to work, the Applicant agreed that she would give two days' notice if she did not want to work for the Respondent. It is clear that it was agreed that the Respondent was not obliged to provide work from day to day. This points to the relationship being one of a contract for services or one of casual employment. Similarly, the hours of work and the fact that there was no provision for holidays are equally consistent with the relationship being one of casual employment or a contract for services. The Applicant filled in time sheets and submitted invoices for payment. The Respondent deducted 20% PPS income tax from the Applicant's pay and this without more points to the existence of a relationship being of a contract for services. However, as Counsel for the Applicant pointed out, the Respondent wanted the world to view this as a relationship between principal and independent contractor and that is why the tax deducted was called "PPS tax".
Mr McKinnon and Mr Millar both said that the Applicant could send someone to work in her place. However, it is clear from their evidence that the substitute person would not be automatically accepted by the Respondent. The management would want to find out who they were and had the ultimate right to refuse them work. It is not correct in these circumstances to say that the Applicant had the right to delegate work to another person. In practice, the work was done by people on the list of "preferred suppliers" and the Respondent company had the right to refuse work to any substitute the Applicant may have wanted to send along in her place.
When looking at the total relationship, the Court may also consider whether the Applicant worked for herself or was an integral part of the Respondent's business. It is the Respondent's submission that this case was analogous to that in Stevens and Gray v Brodribb in that the Respondent was an agency which co-ordinates work for its contractors. In his affidavit, Mr McKinnon states "essentially, we operate like an agency, where we co-ordinate the allocation of survey instructions on a daily basis to contractors looking for work". This is what happened in Brodribb's case. The verbal evidence, however, showed that the Respondent was not actually operating as an agency, but supplied the completed surveys to its clients on its own account. Mr Millar himself said that the Respondent got its name "Automated Surveys Pty Ltd" because they carried out survey work using specialised computer equipment, and the party leaders and survey assistants had to know how to use it because it was "his product going out the door". That is quite different from the situation in Brodribb's case. Here the Respondent supplied a product to its client and the work performed by the party leaders and survey assistants was an integral part of the Respondent's business.
In looking at whether the Applicant was in business on her own behalf the Court may look at the ratio of her expenses incurred in earning the income to the income earned. Authorities show that the higher the ratio, the more consistent it is with carrying on a business on one's own behalf. In this case the Applicant had no expenses in earning her income, for the employer supplied everything necessary for doing the job. She was unable to make any taxation deductions in relation to plant and equipment.
From looking at the totality of the relationship between the parties, I am satisfied on balance that it was one of employer and employee.
I have taken into account all of the above factors and the evidence shows that the only way in which this job differed from the Applicant's previous positions of a casual survey assistant is that the Respondent chose to call her an independent contractor; it required her to provide an "invoice" to claim her pay; and the tax deducted was said to be PPS tax. The degree of control able to be exercised by the Respondent points to the Applicant being an employee. The Respondent's witnesses freely admitted that it was in the Respondent's interest to operate in this way because it avoided the necessity for paying sick leave, holiday pay, superannuation and the other responsibilities which flow from an employment relationship. The only advantage to the Applicant is that she received a rate of pay higher than the base rate for an ordinary employee. Although it was represented to the Applicant by Mr McKinnon that there were other positive advantages to Ms Fowler in working under this arrangement, this does not seem to be the case. It may be that the true nature of the relationship between the Respondent and some of its other workers, particularly those who have formed companies and partnerships, is actually that of principal and independent contractor, but I do not find that that is so in Ms Fowler's case.
It now remains for this Court to determine the nature of the employment relationship. Ms Fowler's evidence was that her employment with the Respondent was very similar to that of her previous positions as a casual employee. She admitted that it was agreed that the Respondent had no obligation to provide her with work from day to day, although it was understood that the Respondent had enough work to keep her fully employed each week. There is no common law definition of casual employment. Sub-regulation (3) of Regulation 30B of the Industrial Relations Regulations, however, clearly envisages a situation in which a casual employee may be employed on a regular and systematic basis for a sequence of periods of employment and in which the employee has a reasonable expectation of continuing employment by the employers. I find that the Applicant was a casual employee for a short period within the meaning of Regulation 30B. As the Applicant had been employed for a period of less than six months, she is excluded from the operation of the unlawful termination provisions of the Industrial Relations Act and her application must be dismissed.
I certify that this and the preceding ten pages are a true copy of reasons for judgment of Judicial Registrar Boon.
Associate:
Date:
Counsel for the Applicant: Mr D H Schapper
Solicitors for the Applicant: D H Schapper
Counsel for the Respondent: Mr M C Hotchkin
Solicitors for the Respondent: Hotchkin, Hanly
Date of Hearing: 9 & 10 May 1995
Date of judgment: 26 May 1995
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