Brett Powell v Group Messengers Pty Ltd
[2021] FWC 6039
•1 OCTOBER 2021
| [2021] FWC 6039 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Brett Powell
v
Group Messengers Pty Ltd
(U2021/995)
DEPUTY PRESIDENT MASSON | MELBOURNE, 1 OCTOBER 2021 |
Application for an unfair dismissal remedy – jurisdictional objection- whether the applicant was an employee of the Respondent – jurisdictional objection upheld - application dismissed.
Introduction
[1] On 8 February 2021, Mr Brett Powell (the Applicant) lodged an application pursuant to s 394 of the Fair Work Act 2009 (the Act) in which he asserts that he had been employed by Group Messengers Pty Ltd (the Respondent) and was unfairly dismissed on 18 January 2021.
[2] The Respondent objects to the application being heard on the basis that the Applicant was not an employee, that he was engaged as an independent contractor and consequently could not have been dismissed within the meaning of s 386 of the Act.
[3] The matter was initially set down for hearing of the Respondent’s jurisdictional objection on 1-3 June 2021 but was subsequently adjourned and re-listed for hearing on 22-23 July 2021. Both parties filed material in accordance with the Commission’s directions and were granted permission to be represented by legal counsel pursuant to s 596(2) of the Act. The Applicant was called to give evidence and the Respondent called the following witnesses;
Martin Flaherty: Victorian State Manager of Capital Transport.
Kevin Duong: Victorian Fleet Manager of Group Marketing and Administration Services Pty Ltd which is an associated entity of the Respondent.
Timothy Forster: National Support Analyst with Group Marketing and Administration Services Pty Ltd.
Background and evidence
The Respondent’s business
[4] The Respondent is part of the Capital Transport Group (Capital Transport) which was established in 1990 and is the largest privately owned courier and taxi truck business in Australia. Capital Transport has offices in Sydney, Melbourne, Brisbane and Perth, has a sub-contractor fleet of over 1500 vehicles and provides a range of transport and logistics services, mainly to commercial customers, including;
• On-demand transport services (couriers and taxi trucks);
• Permanent vehicles for hire by business;
• Home delivery solutions including whitegoods and furniture; and
• Logistics which includes access to Capital Transport’s national warehousing and distribution network 1.
[5] Capital Transport operates via a collection of associated entities that operate and cover different business across Australia. There are multiple brands within Capital Transport that provide different services, including for example Comet Transport, Titan Taxi Trucks and Advance Transport 2. Relevantly for the purposes of the present matter, the following three entities exist within Capital Transport;
• Group Messengers Pty Ltd is the corporate entity that engages owner drivers;
• Group Marketing and Administration Services Pty Ltd is the corporate entity that employs employees of Capital Transport; and
• Capital Transport Services (Vic) Pty Ltd is the corporate entity that engages with and enters into contracts with customers 3.
[6] Contracts entered into by Capital Transport with its customers have standard conditions 4 including that;
• Capital Transport is able to sub-contract the relevant service;
• Capital Transport reserves the right to determine the manner, means, route or procedure to be adopted for the services; and
• that delivery of the service is agreed to occur within a particular time parameter 5.
[7] According to Mr Flaherty, all owner-drivers who perform work for Capital Transport are engaged by the Respondent as sub-contractors, are engaged pursuant to written sub-contractor agreements, are not based at Capital Transport’s office (in Clayton North) and operate their own vehicles and businesses 6. While revised sub-contractor agreements are issued to sub-contractors from time to time reflecting changes in business requirements or relevant legislation7, the ability of a sub-contractor to negotiate changes to the proposed agreement are rare8. Capital Transport currently engages approximately 320-350 sub-contractors in Victoria9. There are different types of driving work available to sub-contractors including;
• Courier loads which are smaller loads and usually performed by smaller vehicles;
• Taxi truck loads, which are larger loads, usually performed by larger trucks on an ad-hoc basis in response to individual customer bookings; and
• Contract work, which may be smaller or larger loads, but is related to delivery work servicing ongoing contracts with regular customers 10.
[8] On entering into written sub-contractor agreements with the Respondent, sub-contractors are also provided with a rate sheet that sets out rates that apply according to the type of jobs performed and the vehicle/truck used by the sub-contractor 11. Sub-contractors are able, and do on occasion, negotiate higher rates than those provided in the rate sheet, this being due to the sub-contractor having a particular vehicle or providing a particular service the Respondent values more highly12. Seasonal factors may also play a part in some sub-contractors’ capacity to negotiate higher rates, such as during the busier period between October and Christmas13. Aside from some sub-contractors’ ability to negotiate higher rates, rates payable to sub-contractors tend to be static14.
[9] In addition to the hourly/vehicle rates set out in the rate sheet, the Respondent also puts in place from time to time ‘minimum incentive payments’ as a means of encouraging coverage of drivers at peak times or on any given day. According to Mr Duong, these payment arrangements were introduced around the time he commenced with Capital Transport in 2016 as a tool to negotiate with or retain a driver 15. The incentive payment does not guarantee a minimum number of jobs on a particular day but rather is designed to ensure a sub-contractor is available to work between agreed hours and requires them to accept delivery job bookings (Job Bookings) during those hours to be eligible for the minimum payment. If a driver agrees to participate in the minimum incentive payment arrangements, they are required to be available from 6.00am each weekday, remain available throughout the day and accept all bookings offered. According to Mr Flaherty there are currently no minimum incentive payments in place and when they were in place, only operated for short periods of time.
[10] Prior to being provided with any work by the Respondent, sub-contractors are required to undertake an induction process 16. This includes compliance checks to ensure the sub-contractor satisfies minimum legal requirements including checks on ABN registration, vehicle ownership or leasing status, insurance coverage, working rights in Australia and possession of a valid driver’s license17. On completion of the compliance checks, sub-contractors are required to undertake induction training which focuses on OH&S and policy requirements of Capital Transport as well as on the correct operation of the personal digital system (PDA) which, along with a 2-way radio, is provided to sub-contractors by the Respondent18.
[11] The allocation of work to sub-contractors is via the PDA system. This occurs following the receipt of a Job Booking from a customer which is logged into Capital Transport’s transport management system (TMS) and then sent via TMS to radio operators in the fleet department whose job it is to allocate Job Bookings to sub-contractors via the PDA system 19.
[12] In order to gain Job Bookings sub-contractors are required to log on to the PDA system which alerts Capital Transport that the sub-contractor is available to accept work 20. When logged on, the PDA system allows Capital Transport to identify the location of a sub-contractor. Conversely, unless a sub-contractor is logged on to the PDA system, there is no system visibility of the sub-contractor’s location. The longer a sub-contractor is logged on to the PDA system the more likely it is that the sub-contractor will secure work21.
[13] On receipt of a Job Booking radio operators also receive from TMS a list of sub-contractors that are logged on that the job could be allocated to depending on various factors including vehicle suitability, the sub-contractors geographic location and whether the allocation of the work to a particular sub-contractor would ensure a timely service to the customer. Regard is also had to whether there is sufficient work allocation to particular sub-contractors 22. The radio operator will, in allocating a Job Booking, identify and select a suitable sub-contractor in the relevant geographical area23 and offer the job via the PDA system. The selected sub-contractor will then receive a Job Booking allocation alert on their PDA which will include details of the customer, delivery destination and required delivery timeframe24. If a Job Booking is not accepted within 3 minutes the Job Booking disappears from the selected sub-contractor’s PDA and returns to the radio operator for allocation to another sub-contractor25. If the sub-contractor wishes to accept the Job Booking they are required to press ‘accept’ on the relevant PDA screen26.
[14] Mr Flaherty states that when looking at the pattern of Job Bookings requiring delivery on a particular week-day, 30-40% of those bookings require pickup between 7-8 am and consequently require allocation to sub-contractors on the previous evening. Of the balance of job bookings for a particular week-day 40-50% are allocated in the morning and approximately 10% are allocated during the afternoon. In the case of sub-contractors engaged for taxi truck work (such as the Applicant), the volume of work is weighted to the morning 27. In order to allocate jobs in the late afternoon/evening for the following day, it is sometimes necessary for sub-contractors to be contacted by phone if not enough of them have their PDAs switched on in the late afternoon/evening28.
[15] As regards the PDA and job allocation system, the following matters are also relevant;
• Sub-contractors are under no obligation to accept a particular Job Booking and may decline by simply not accepting the Job Booking on their PDA or alternatively by contacting the radio operator to decline the job. It is common for sub-contractors to not accept Job Bookings 29.
• Radio operators may follow up with a sub-contractor who has not accepted a Job Booking to gain an understanding of why they may be declining work 30.
• TMS does not capture data on non-acceptance of Job Bookings and there are no negative consequences for sub-contractors in not accepting particular jobs although if a particular sub-contractor was consistently unavailable for work that would be likely to impact on the future allocation of work 31.
• On acceptance of a Job Booking, the PDA provides the sub-contractor with an option to follow the fastest route calculated by the GPS function within the PDA and TMS system, although they are not obliged to follow that route and may choose their own preferred route. The above-referred GPS route functionality on the PDA is a recent development (last 12 months) and was not available on the PDA used by the Applicant 32.
• The only exception to the route selection flexibility described above is where the sub-contractor is completing a ‘VIP service’ Job Booking which attracts a higher rate, imposes a timeframe on delivery of the service and requires the sub-contractor to follow the fastest designated route 33.
The Applicant’s engagement
[16] In his initial witness statement, The Applicant stated that he commenced working for the Respondent in 2005 and did not work for any other business while working for the Respondent 34. In a further witness statement, he changed his evidence and confirmed that he also undertook work for The Herald and Weekly Times (HWT) delivering bulk newspapers at night during the period he was also working for the Respondent between 2005 and 201335.
[17] Documents were produced by HWT in response to an Order made by the Commission pursuant to s 590(2) of the Act. One of the documents produced, a letter dated 9 May 2013 signed by HWT’s then Regional Logistics Manager, states that as at that date the Applicant had “served as a contractor with the Herald & Weekly Times now News Victoria Production & Logistics for approximately 20 years” 36. This suggests that the Applicant commenced working as a contractor with HWT in or around 1993. The Applicant agreed with this date although he states that he secured his own contract with HWT in 1999 and prior to that had worked spasmodically on his father’s ‘run’ for HWT37.
[18] The Applicant confirmed that he took on the extra work with the Respondent in 2005 in addition to the HWT work as he was not earning enough under the HWT contract at the time 38. He also confirmed that he applied for and was unsuccessful in retaining the contract with HWT in 2013. The Applicant sought to characterise the end of his HWT contract as due to his concerns over fatigue arising from servicing both the HWT and Respondent contracts39.
[19] There were periods following the Applicant’s engagement by the Respondent when he was not available to accept work for the Respondent 40. His engagement by the Respondent was recorded in various sub-contractor agreements, the most recent executed agreement dated 1 November 202041 (the 2020 Agreement). The Applicant also entered into a series of prior agreements variously dated 15 January 2008, 28 August 2013, 3 February 2014, 12 March 2018 and 9 August 201942. Each of the sub-contractor agreements entered into by the Applicant was as an individual/sole trader with an Australian Business Number (ABN) of 1317284311643.
[20] The 2020 Agreement was entered into following a period of several months during which the Applicant was unable to perform work due to injury which was accepted as a compensable workplace injury. Each new agreement was accompanied by a rate sheet which the Respondent states the Applicant was at liberty to negotiate on in order to seek to obtain higher rates 44. The Applicant states that on commencement with the Respondent in 2005 he was able to negotiate his job rates however from 2013 onwards there was no room for negotiation on the rates as the Respondent enforced the rates contained in the issued rate sheets45.
[21] The Applicant was re-inducted at various times following his initial engagement, the most recent induction being on 19 August 2019 46. The relevant policies that were the focus of the inductions were contained in Capital Transport’s Occupational Health and Safety Induction Manual which is designed to ensure that Capital Transport meets its obligations in respect of the Occupational Health and Safety Act 2004 (Vic) and the Heavy Vehicle National Law under the Heavy Vehicle National Law Application Act 2013 (Vic). The Applicant was also periodically sent emails from the Respondent regarding safety matters including fatigue management, load management and load strapping procedures47.
[22] The Applicant owned and drove a 6 tonne taut liner truck which he purchased in around September 2005 at a cost of $95,000 48. The size and nature of the vehicle allowed him to perform taxi truck work for the Respondent49. In order to provide services to the Respondent, he was required to also provide various equipment including straps, pallet jacks, personal protective equipment (PPE) and a mobile phone50 in addition to the truck. He was responsible for all running costs associated with the truck51 including fuel, registration, maintenance and insurance, the latter obtained through a Capital Transport group insurance policy that the Applicant opted into and for which premiums were deducted from fees payable to the Applicant52. The Applicant was not required to obtain separate workers compensation insurance as he was covered by the Respondent’s workers compensation policy which applies to unincorporated owner drivers as they are considered “workers” under the Victorian workers compensation legislation53.
[23] The Applicant states that he had no separate place of business such as an office or warehouse to that of the Respondent. He conceded however that he stored his truck at his home when it was not in use, he maintained an office at his home and the Respondent’s head office made no provision for storage of sub-contractors’ trucks or vehicles54. He also confirmed that he incurred various business expenses (other than his truck) for which income tax deductions were made, including for his home office 55, motor vehicle56 and a security camera installed at his property57.
[24] The 2020 Agreement 58 includes various terms, including the following;
• Clause 3.1 specifies that engagement is subject to verification of particular matters including licensing, right to work in Australia and criminal convictions.
• Clause 3.2 specifies that the Respondent may “offer” a contract for a job which the Applicant was at liberty to accept or reject.
• Clause 3.3 provides that each Job Booking offered is made subject to inclusion of additional information; place of departure, name of customer, destination, departure time and estimated time of arrival.
• Clause 3.4 provides that the Applicant’s engagement was for the provision of “owner-driver transport services” only.
• Clause 5.1 contains confirmation and acknowledgement that the Applicant was and would remain for the duration of the contract an independent contractor conducting a business in his own right.
• Clause 5.2 provides that the Applicant was the “sole and exclusive” employer of any employees engaged by him and that he was responsible for all “salaries, benefits, taxes, contributions, dismissal/indemnities and other obligations”.
• Clause 8.3 is a set off provision in which payments made under the contract may be set off against any employment related obligations deemed at any time to be owed to the Sub-Contractor.
• Clause 9 provides for the Respondent to prepare a Recipient Created Tax Invoice for each payment period.
• Clause 10 provides that the Respondent was under no obligation to make superannuation contributions and that the Superannuation Guarantee (Administration) Act 1992 (SGAA) had no application to the contractual relationship.
• Clause 11.2(a) requires the sub-contractor (or delegate) to comply with policies and procedures of the Company that are applicable to the sub-contractor.
• Clause 11.2(b) precluded the Applicant from delegating the performance of the contracted work without “making the necessary enquiries with respect to health and safety including ensuring all of the obligations” which applied to him were met by the person to whom the work was delegated.
• Clause 11.2(c) requires the sub-contractor to comply with all reasonable instructions, directions, standards and specifications of the Company including instructions in respect of use and maintenance of any equipment to ensure health and safety of the sub-contractor and other persons.
• Clause 11.2(d) requires that the Applicant be in his vehicle and available to accept work from 7.00am (Monday to Friday) on those days he is performing contracts of cartage.
• Clause 11.2(g) prohibits the sub-contractor or delegate from doing anything that may “prejudice the goodwill and business reputation enjoyed by the Company”.
• Clause 11.2(i) requires the sub-contractor to “perform the Services in a diligent and prompt manner using the highest standards of skill and expertise.”
• Clause 11.2 also includes a series of sub-clauses ((p)-(z)) that specifies the Applicant’s responsibilities in relation to the provision and maintenance of a vehicle, registration and insurance, maintenance and provision of all necessary equipment (e.g. load binders, ropes, chains, tarpaulins, trolleys etc).
• Clause 11.2(aa) requires persons performing obligations under the contract to wear the Respondent’s uniform at all times while doing so.
• Clause 11.3 requires that the sub-contractor or any delegate not drive, operate or control the vehicle while under the influence of alcohol or any drugs.
• Clause 15.1 expressly allows the sub-contractor to delegate his authority to contract for the carriage of goods or performance of any obligations under the agreement. Any delegate was responsible for observing the obligations in the agreement and the Applicant remained “primarily liable” for the fulfilment of all obligations under the agreement.
• Clause 16 states that the Applicant was at liberty to determine the route by which the carriage of goods was to be taken.
• Clause 18 states that assignment of the agreement by the Applicant could not occur unless the Respondent agreed in writing and such agreement would not be unreasonably withheld.
• Clause 19 sets out the matters that the Applicant was solely responsible for indemnifying the Respondent against including;
a) loss or damage to Goods or Company equipment;
b) loss or damage to Company communications equipment incurred by inappropriate use;
c) all claims from Goods Consignor or any other person for injury to person or property arising from use of the Applicant’s vehicle or failure to deliver Goods in accordance with the terms and conditions of the Agreement;
d) loss, damage or delay arising from carriage of Goods;
e) all reasonable costs and charges incurred arising from recovery of all or part of the Goods and any Company equipment in the event of a vehicle accident; and
f) any excess on any insurance policy of the Company on which the Company was required to make a claim for damages to Goods, Vehicle, Company equipment or any consequential third party liability arising from the Carriage of Goods.
• Clause 20.2 states that the Applicant was responsible for obtaining workers compensation insurance for any employee he engaged.
• Clause 22 sets out the various insurances the Applicant was required to maintain at his own cost including;
g) Compulsory third party insurance;
h) Comprehensive vehicle insurance;
i) Third party property insurance;
j) Workers compensation insurance for any employee of the Applicant;
k) Carriers insurance policy; and
l) Personal sickness and accident insurance.
• Clause 23 states that the Respondent may make deductions from any freight charges payable to the Applicant for any monies owed to the Respondent and any payments due to authorities (including but not limited to amounts due under the Income Tax Assessment Act (Cth)).
• Clause 28 specifies that the sub-contractor may not solicit or compete for the business of any customer that had been engaged by the Company in an 18 month period preceding termination of the Agreement within the specified geographical area during the 18 month Restraint Period following termination of the agreement. Clause 28 further restrains the sub-contractor from soliciting or endeavouring to obtain the services during the Restraint Period of an employee, consultant or contractor engaged by the Company at any time during the 12 month period preceding termination of the agreement.
• Clause 29 sets out the agreement “termination” provision and provides for 3 months’ notice (in the case of the Applicant based on his vehicle size) for “any reason” and for immediate termination without notice in circumstances of serious misconduct or a material breach of contract by the Applicant.
• Schedule E specified no minimum hours.
[25] According to Mr Flaherty the Applicant was not subject to set hours of work or a roster during his engagement and that clause 11.2(d) of the 2020 Agreement (and predecessor agreements) was not enforced 59. He further states that the Applicant was at liberty to accept or reject any particular Job Bookings, was not required to notify the Respondent that he was unavailable on a particular day and that if he wished to work he simply logged onto the PDA system60.
[26] As regards annual leave and carers leave, the Applicant was not required to apply for such leave as he was not entitled to payment for those absences. It was however the practice that sub-contractors were expected to advise the Respondent of planned leave periods, particularly over the Christmas/New Year period, such notice assisting the Respondent with its planning in what is a busy period. The Applicant routinely notified the Respondent when he was planning on taking leave 61.
[27] Under the terms of the 2020 Agreement and prior agreements the Applicant was contractually able to delegate work, although any delegate had to be notified to the Respondent and inducted before undertaking work 62. The Applicant agreed that he had a similar capacity to delegate work when he had been engaged by HWT. He stated that he did not delegate work as he did not like other drivers driving his truck63. He did however concede that it would have been possible for him to delegate notwithstanding his concerns as to the financial viability of delegating64 and he had in fact done so during a period of illness although such delegation may have been in relation to his HWT ‘run’65. As regards undertaking work for other transport companies while engaged by the Respondent, the Applicant conceded that notwithstanding the financial viability and fatigue management concerns he held, it would have been possible for him to have arranged his affairs to do other work at times66.
[28] The Applicant states that during the period of his engagement by the Respondent, he worked 5 days a week (Monday to Friday) for around 10 hours a day and an average of 50 hours per week 67, save for periods of leave that he took or when his truck was undergoing maintenance. He claimed that ‘run sheets’ of Job Bookings maintained by him, which were not submitted in evidence, confirmed these working hours68. He further states that he made himself available from 6.00am to 6.00pm Monday to Friday69.
[29] The Applicant’s evidence as to his hours of work appeared to be contradicted by data prepared by the Respondent which revealed that the Applicant’s hours of work and allocated jobs were not subject to a guaranteed minimum, averaged 7.8 hours per day and fluctuated significantly, ranging between 5 and 11 hours per day 70 and from 20 hours to over 40 hours per week71. The number of Job Bookings each day was also subject to fluctuation with the Applicant sometimes completing only one Job Booking and on other days he accepted up to 6 Job Bookings72. The fluctuations in hours of work was also evident through a spreadsheet provided by Mr Flaherty which revealed the fluctuations in the Applicant’s fortnightly earnings in the period from 17 July 2017 to 15 February 202073. An analysis of the Applicant’s starting and finishing times prepared by the Respondent also revealed that while the Applicant regularly started around 7.00am, there was also considerable fluctuations in both start and finishing times.
[30] The Applicant states that the Respondent’s analysis of his hours of work did not take into account his travelling to his first job or return home from his last job when he did not have his PDA switched on at times 74. He did however state that he would have his PDA switched on from either between 6.00am and 7.00am to 9.00am each day but that at times he would then switch off his PDA early in the day and either not leave home or would return home. He said this occurred in circumstances where he had not received any Job Bookings by around 9.00am and it was unlikely based on his experience of the normal pattern of Job Bookings during the day that he would secure much if any work after that time75. He also states that he kept his PDA on between 3.00pm and 6.00pm each day in order to receive Job Bookings for the following morning. He further states that 90% of his work was secured through Job Bookings accepted by him in the late afternoon that required pick-up and delivery the following morning.
[31] The Applicant states that it was his understanding that he was prevented from placing his own branding on his truck 76 based on his recollection of his first contract with the Respondent in 2005, a copy of which he was unable to produce. Mr Flaherty rejected the Applicant’s evidence and stated that the Applicant was not prohibited from placing such branding on his truck77 as was clear from the 2020 Agreements and all preceding agreements, the oldest of which that was located and in evidence was from 2008. Notwithstanding his belief that he had been prevented from branding his truck in his claimed 2005 agreement, the Applicant accepted that the 2008 and subsequent agreements contained no such prohibition78.
[32] Mr Flaherty also pointed to other sub-contractors that placed their own branding on their vehicles 79. The Respondent reserved the right to place Capital Transport branding on sub-contractor trucks but only did so when the vehicle met particular eligibility criteria relating to the type and age of the vehicle. The Applicant’s vehicle did not meet the criteria, was not approved for Capital Transport branding and consequently did not carry Capital Transport’s logo, name or any other identifying insignia80.
[33] Prior to November 2019, the Respondent provided sub-contractors with uniforms for a period of time that were branded with the logo of Capital Transport 81. The Applicant received various branded uniform items including jackets and t-shirts and claims that around 85% of drivers wore such branded clothing at the time of his termination82. That estimate was challenged by Mr Flaherty who also states that the provision of uniforms to sub-contractors ceased from November 2019 despite the 2020 Agreement including a requirement for the Applicant to wear a company provided uniform83, this term he said had not been enforced since late 201984. The Applicant also states that he “felt warned” by Mr Duong in respect of not wearing the Capital Transport uniform on one occasion85, a claim rejected by Mr Duong who states that he recalls having spoken to the Applicant in the Clayton office approximately 2 years ago when he (the Applicant) was visibly untidy and was told by Mr Duong that he needed to wear high visibility clothing for safety reasons86.
[34] As regards work performance, the Applicant gave evidence that he was provided with a PDA around 2012, prior to which Job Bookings were allocated to him by phone calls 87. He was also provided with a 2-way radio. Both the PDA and two-way radio remained the Respondent’s property and were required to be returned by the Applicant on termination of his contract. The Applicant claimed that the Respondent “tracks” the time drivers log on and that he was required to log on to the PDA by 7.00am Monday to Friday and by 6.00am if he was in receipt of the minimum incentive payment guarantees that were in place at various times88. Contrary to the evidence of the Respondent regarding the PDA functionality, the Applicant states that his PDA was an older version and that an available Job Booking did not ‘disappear’ after 3 minutes of not being accepted. Rather the PDA continued to provide an alert for the offered Job Booking which he says caused him to turn off the PDA at times to remove the distraction of the alert. He also states that he was unable to ‘close’ the Job Booking but nonetheless conceded that he was not forced to accept particular offered Job Bookings89.
[35] The Applicant states that on acceptance of a Job Booking he was directed where to go, when to go and was directed to follow the fastest route for all jobs, not just in respect of VIP jobs. He further states he was also subject to direction in relation to the order of deliveries 90. While the Applicant states that jobs were “assigned” to him rather than “offered”91, he concedes that he did not accept all jobs allocated to him and estimates that over the period of his engagement he rejected fewer than 20 jobs92.
[36] Mr Flaherty rejected the Applicant’s statements as to the level of control exercised by the Respondent over his performance of work and variously stated that;
• Sub-contractors including the Applicant were under no obligation to “accept” particular Job Bookings and if the Applicant did not want to “accept” he could simply not press the “accept” icon on his PDA or alternatively call the radio operator to decline the Job Booking 93;
• The Applicant was not required to keep the PDA on his person and logged on 94;
• The Applicant was not required to log on by 7.00am (if not subject to an incentive payment) and there was no set time by which he was required to log on 95;
• The Respondent does not “track” the time drivers log on, however the later a driver logs on the less likely they are to receive Job Bookings on a particular day 96;
• Non-acceptance of a particular job by a sub-contractor would not mean that no Job Bookings were offered for the rest of a particular day and there was no minimum number of bookings per day that must be accepted by a sub-contractor 97;
• Beyond the obvious loss of an immediate Job Booking, there was no adverse consequences for a driver in not accepting a particular job booking, the key reason for that being the Respondent did not have the “luxury” of a surplus of available drivers but rather had more jobs than available drivers 98;
• It is the case that consistently unreliable sub-contractors would tend to be allocated less Job Bookings 99;
• Save for VIP Job Bookings, the Applicant was not directed to take the fastest route for Job Bookings and was entirely responsible for the route he took for a particular Job Booking 100;
• The Applicant may have been directed on occasions to make Job Booking deliveries in a particular order if he had multiple Job Bookings on his truck in circumstances where there were earlier Job Bookings that required delivery in a certain timeframe 101;
• The Applicant was able to delegate work as evidenced by the fact that at the time of Mr Flaherty making his statement there were thirty four non-owner drivers (delegates) performing work in Victoria for the Respondent 102.
[37] While the PDA system was the required means by which drivers are offered and accept/reject Job Bookings, the Applicant had made various complaints about the system 103. Upon his return to work following a workers compensation injury in 2020 the Applicant successfully negotiated to use less functionality of the PDA system and use hard copy paper run sheets for his Job Bookings rather than logging Job Bookings on the PDA system104.
[38] In terms of payment, the Applicant was paid a job rate according to the relevant rate provided in the rate sheet per the “hourly, VIP, country or grid rate”. The Applicant states that he was unhappy with the standard rates he received from the Respondent and raised those concerns on many occasions. Mr Flaherty stated that the Applicant raised such concerns on two occasions 105 but that his vehicle was not in high demand. Mr Flaherty also pointed to conduct of the Applicant which militated against negotiation of higher rates. Mr Duong stated that while the Applicant raised his dissatisfaction with his rates from time to time, he never sought to formally negotiate his rates106, save with respect to minimum incentive payments which he was able to secure an uplift to when he was in receipt of such payments107.
[39] The Applicant agreed to participate in minimum incentive payment arrangements for periods totalling approximately 15 months over the time he was engaged by the Respondent 108. When on such payments the Applicant was expressly required to keep his PDA on from 6.00am onwards and accept all jobs offered. The Applicant was able to negotiate an uplift in the minimum incentive payment from $300 to $350 per day, for certain periods that the minimum incentive payments operated109. The periods during which the Applicant accepted and received minimum incentive payments were as follows;
• 16 May 2017 to 31 August 2017 for which he received a minimum daily payment of $300.00.
• 13 June 2018 to 31 August 2018 for which he received a minimum daily payment of $300.00.
• 16 September 2018 to 15 December 2018 for which he received a minimum daily payment of $350.00.
• 1 February 2019 to 30 April 2019 for which he received a minimum daily payment of $350.00.
• 1 May 2019 to 31 July 2019 for which he received a minimum daily payment of $350.00.
[40] The Applicant was paid in accordance with an invoice prepared on his behalf on a fortnightly basis by the Respondent which he was required to review and submit corrections to after checking his own records. He was paid on a weekly basis in arrears 110 and while deductions were made for the group insurance he took out, no contributions for superannuation or deductions for tax were made111.
[41] The Applicant injured himself at work in February 2020 and was unable to work until November 2020 when he returned to work on light duties for two weeks following which he returned to full duties. His claim for workers compensation was accepted by the insurer CGU. While off on workers compensation he received payment for the first 13 weeks at 95% of a rate of pay calculated by CGU and then after 13 weeks at 80% of the calculated rate until his return to work 112. In making his workers compensation claim the Applicant states that he was guided by the Respondent’s administrator Ms Leanne Haines to tick the contractor box, a claim refuted by Mr Flaherty113.
The Applicant’s financial records
[42] Financial reports and tax returns were produced by the Applicant in response to an Order of the Commission. The relevant details are set out below.
[43] Financial statements for Powell Transport Pty Ltd for the financial year ending 30 June 2010 114 revealed total income of $155,227 and total expenses of $94,568. Expenses included Depreciation and amortisation ($5,926), Employee benefits expenses ($24,907) and other expenses ($54,259)115. From a profit before income tax of $58,408, an income tax expense of $18,198 was incurred and a dividend of $13,000 was paid by the company. For the financial year ending 30 June 2010 the Applicant’s personal income tax return revealed total income of $42,179, a taxable income of $37,436 and a tax refund estimate of $3,481116.
[44] Financial statements for Powell Transport Pty Ltd for the financial year ending 30 June 2011 117 revealed total income of $140,592 and total expenses of $125,191. Expenses included; Wages ($40,000), Fuels and Lubricants ($24,174), Repairs and Maintenance ($18,230), Depreciation - motor vehicles ($5030), Depreciation – office furniture and equipment ($1,048), sub-contractors ($6,960) and Superannuation Contributions ($3,600). On a net operating profit before income tax of $15,402, an income tax refund of $333 was received by the company. For the financial year ending 30 June 2011 the Applicant’s personal income tax return revealed a taxable income of $40,458 and a tax refund estimate of $787118.
[45] Financial statements for Powell Transport Pty Ltd for the financial year ending 30 June 2012 119 revealed total income of $131,917 and total expenses of $118,434. Expenses included; Wages ($40,000), Fuels and Lubricants ($25,302), Repairs and Maintenance ($14,045), Depreciation - motor vehicles ($4,275), Depreciation – office furniture and equipment ($524), sub-contractors ($2,042) and Superannuation Contributions ($3,600). On a net operating profit before income tax of $13,483, a tax refund of $174 was received and a dividend of $7,000 was paid. For the financial year ending 30 June 2012 the Applicant’s personal income tax return revealed a taxable income of $50,783 and a tax refund estimate of $118120.
[46] Financial statements for Powell Transport Pty Ltd for the financial year ending 30 June 2013 121 revealed total income of $93,214 and total expenses of $105,698. Expenses included; Wages ($45,000), Fuels and Lubricants ($21,639), Repairs and Maintenance ($10,710), Depreciation - motor vehicles ($3,634) and Depreciation – office furniture and equipment ($305). On a net operating loss before income tax of $12,484, a tax refund of $3,755 was received. For the financial year ending 30 June 2013 the Applicant’s personal income tax return revealed a taxable income of $42,270 and a tax refund estimate of $945.95122.
[47] Financial statements for Powell Transport Pty Ltd for the financial year ending 30 June 2014 123 revealed total income of $63,845 and total expenses of $64,606. Expenses included; Wages ($18,497), Fuels and Lubricants ($13,099) and Repairs and Maintenance ($2,215). On a loss of $761 a tax refund of $6,216 was received. No personal income tax return was prepared by the Applicant for that year.
[48] Financial statements for Powell Transport Pty Ltd for the financial year ending 30 June 2015 124 revealed total income of $66,674 and total deductions of $73,855. Expenses included; Wages ($40,000), Fuels and Lubricants ($13,190), Repairs and Maintenance ($3,594) and Depreciation ($4,633). A loss of $5,860 was incurred. For the financial year ending 30 June 2015, the Applicant’s personal income tax return revealed a taxable income of $35,958 and a tax refund estimate of $1,335125.
[49] Financial statements for Powell Transport Pty Ltd for the financial year ending 30 June 2016 126 revealed total income of $80,584 and total deductions of $92,639. Expenses included; Wages ($40,000), Fuels and Lubricants ($14,209) and Repairs and Maintenance ($9,050), Depreciation - SB general pool($10,810), Council rates – home office ($289) and Registration and insurance ($4,747). A loss of $12,055 was incurred by the company. For the financial year ending 30 June 2016 the Applicant’s personal income tax return revealed a taxable income of $36,492127 and a tax refund estimate of $1,1,974128.
[50] Financial statements for Powell Transport Pty Ltd for the financial year ending 30 June 2017 129 revealed total income of $80,126 and total deductions of $70,433. Expenses included; Wages ($40,000), Fuels and Lubricants ($15,427) and Repairs and Maintenance ($1,173), Council rates – home office ($149) and Registration and insurance ($4,844). On a profit of $9,692 no tax was payable by the company. For the financial year ending 30 June 2017 the Applicant’s personal income tax return revealed a taxable income of $36,590 and a tax refund estimate of $1,224130.
[51] Financial statements for Powell Transport Pty Ltd for the financial year ending 30 June 2018 131 revealed total income of $29,749 and total deductions of $26,692. Expenses included; Wages ($16,390), Fuels and Lubricants ($4,332) and Repairs and Maintenance ($133) and Registration and insurance ($2,321). On a profit of $3,057 no tax was payable by the company.
[52] Financial statements for Brett Arthur Powell for the financial year ending 30 June 2018 132 revealed total income of $73,668 and total deductions of $33,525. Expenses included; Fuels and Lubricants ($14,443), Repairs and Maintenance ($2,543) and Registration and insurance ($4,455). For the financial year ending 30 June 2018 the Applicant’s personal income tax return revealed a taxable income of $38,413 and an estimate of tax payable of $4,053133.
[53] Financial statements for Brett Arthur Powell for the financial year ending 30 June 2019 134 revealed total income of $78,629 and total deductions of $41,428. Expenses included; Fuels and Lubricants ($14,443), Repairs and Maintenance ($7,090) and Registration and insurance ($5,072).
[54] Financial statements for Brett Arthur Powell for the financial year ending 30 June 2020 135 revealed total income of $63,065 and total deductions of $29,904. Expenses included; Fuels and Lubricants ($8,343), Repairs and Maintenance ($3,345), Registration and insurance ($2,990) and Home office - water and electricity costs ($636).
Statutory framework and relevant principles
[55] A person is protected from unfair dismissal under the Act if the person is an employee as defined. Section 382 of the Act which further qualifies that position is expressed as follows:
“382 When a person is protected from unfair dismissal
A person is protected from unfair dismissal at a time if, at that time:
(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and
(b) one or more of the following apply:
(i) a modern award covers the person;
(ii) an enterprise agreement applies to the person in relation to the employment;
(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.”
[56] In the present matter the Respondent contends that the Applicant was not an employee at the time of the dismissal but rather was an independent contractor. As a consequence, the Respondent submits that the Applicant is not entitled to pursue his application for an unfair dismissal remedy for want of jurisdiction. It is therefore necessary for me to determine as a matter of jurisdictional fact 136 whether the Applicant was an employee for the purpose of an application for an unfair dismissal remedy made under s.394 of the Act.
[57] Both parties agreed that the relevant authorities on the distinction to be drawn between an employee and an independent contractor are well established and were helpfully summarised by a Full Bench of the Commission in Jiang Shen Cai trading as French Accent v Michael Anthony Do Rozario 137(French Accent) where it relevantly stated as follows;
“[30] The general law approach to distinguishing between employees and independent contractors may be summarised as follows:
(1) In determining whether a worker is an employee or an independent contractor the ultimate question is whether the worker is the servant of another in that other’s business, or whether the worker carries on a trade or business of his or her own behalf: that is, whether, viewed as a practical matter, the putative worker could be said to be conducting a business of his or her own of which the work in question forms part? This question is concerned with the objective character of the relationship. It is answered by considering the terms of the contract and the totality of the relationship.
(2) The nature of the work performed and the manner in which it is performed must always be considered. This will always be relevant to the identification of relevant indicia and the relative weight to be assigned to various indicia and may often be relevant to the construction of ambiguous terms in the contract.
(3) The terms and terminology of the contract are always important. However, the parties cannot alter the true nature of their relationship by putting a different label on it. In particular, an express term that the worker is an independent contractor cannot take effect according to its terms if it contradicts the effect of the terms of the contract as a whole: the parties cannot deem the relationship between themselves to be something it is not. Similarly, subsequent conduct of the parties may demonstrate that relationship has a character contrary to the terms of the contract.
(4) Consideration should then be given to the various indicia identified in Stevens v Brodribb Sawmilling Co Pty Ltd and the other authorities as are relevant in the particular context. For ease of reference the following is a list of indicia identified in the authorities:
• Whether the putative employer exercises, or has the right to exercise, control over the manner in which work is performed, place or work, hours of work and the like.
Control of this sort is indicative of a relationship of employment. The absence of such control or the right to exercise control is indicative of an independent contract. While control of this sort is a significant factor it is not by itself determinative. In particular, the absence of control over the way in which work is performed is not a strong indicator that a worker is an independent contractor where the work involves a high degree of skill and expertise. On the other hand, where there is a high level of control over the way in which work is performed and the worker is presented to the world at large as a representative of the business then this weighs significantly in favour of the worker being an employee.
“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.” “[B]ut 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, a case involving a droving contract in which Dixon J observed 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.”
• Whether the worker performs work for others (or has a genuine and practical entitlement to do so).
The right to the exclusive services of the person engaged is characteristic of the employment relationship. On the other hand, working for others (or the genuine and practical entitlement to do so) suggests an independent contract.
• Whether the worker has a separate place of work and or advertises his or her services to the world at large.
• Whether the worker provides and maintains significant tools or equipment.
Where the worker’s investment in capital equipment is substantial and a substantial degree of skill or training is required to use or operate that equipment the worker will be an independent contractor in the absence of overwhelming indications to the contrary.
• Whether the work can be delegated or subcontracted.
If the worker is contractually entitled to delegate the work to others (without reference to the putative employer) then this is a strong indicator that the worker is an independent contractor. This is because a contract of service (as distinct from a contract for services) is personal in nature: it is a contract for the supply of the services of the worker personally.
• Whether the putative employer has the right to suspend or dismiss the person engaged.
• Whether the putative employer presents the worker to the world at large as an emanation of the business.
Typically, this will arise because the worker is required to wear the livery of the putative employer.
• Whether income tax is deducted from remuneration paid to the worker.
• Whether the worker is remunerated by periodic wage or salary or by reference to completion of tasks.
Employees tend to be paid a periodic wage or salary. Independent contractors tend to be paid by reference to completion of tasks. Obviously, in the modern economy this distinction has reduced relevance.
• Whether the worker is provided with paid holidays or sick leave.
• Whether the work involves a profession, trade or distinct calling on the part of the person engaged.
Such persons tend to be engaged as independent contractors rather than as employees.
• Whether the worker creates goodwill or saleable assets in the course of his or her work.
• Whether the worker spends a significant portion of his remuneration on business expenses.
It should be borne in mind that no list of indicia is to be regarded as comprehensive or exhaustive and the weight to be given to particular indicia will vary according to the circumstances. Features of the relationship in a particular case which do not appear in this list may nevertheless be relevant to a determination of the ultimate question.
(5) Where a consideration of the indicia (in the context of the nature of the work performed and the terms of the contract) points one way or overwhelmingly one way so as to yield a clear result, the determination should be in accordance with that result. However, a consideration of the indicia 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 of the relationship 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. The ultimate question remains as stated in (1) above. If, having approached the matter in that way, the relationship remains ambiguous, such that the ultimate question cannot be answered with satisfaction one way or the other, then the parties can remove that ambiguity a term that declares the relationship to have one character or the other.
(6) If the result is still uncertain then the determination should be guided by “matters which are expressive of the fundamental concerns underlying the doctrine of vicarious liability” including the “notions” referred to in paragraphs [41] and [42] of Hollis v Vabu.” (footnotes omitted)
[58] More recently another Full Bench in Amita Gupta v Portier Pacific Pty Ltd; Uber Australia Pty Ltd t/a Uber Eats 138 (Gupta) reaffirmed French Accent as the relevant authority but in doing so cautioned against the use of the multi-factorial approach as merely an arithmetic exercise when they stated;
[64] In French Accent, a Full Bench of this Commission usefully summarised the considerations, derived from various court authorities, which may be relevant in the application of the multi-factorial test referred to in Brodribb. However as was stated by Winneke P in the Victorian Court of Appeal decision in The Roy Morgan Research Centre P/L v The Commissioner of State Revenue, the task in applying the test is not to be approached as a mechanical exercise of running through items on a checklist, but is rather “a matter of obtaining the overall picture from the accumulation of detail”. This 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”. (footnotes omitted)
[59] As also stated by the Full Bench in Gupta, conduct of the “multi-factorial evaluative approach” proceeds on the premise that “the individual in question personally performs work pursuant to a contractual relationship with another person or entity” 139. On that premise the question to then be answered by use of the multifactorial approach is that of whether the work is performed as a contractor or as an employee. I am satisfied on the basis of the material before me that the Applicant personally performed work for the Respondent pursuant to a contractual relationship. It is therefore necessary for me to determine whether he did so as an independent contractor or as an employee.
Terms of the contract
[60] The 2020 Agreement (which is in similar terms to predecessor agreements) provides an appropriate starting point in considering the nature of the relationship between the Applicant and Respondent. Both the Applicant and Respondent point to clauses they say are persuasive, if not decisive, as to establishing the true nature of the contractual relationship. The relevant clauses are summarised above at [24].
[61] The Respondent submits that many of the 2020 Agreement clauses are neutral and do not assist the Applicant’s case and that there are provisions within the 2020 Agreement that decisively point to the Applicant being an independent contractor to the Respondent; including;
• Clause 5.1 unequivocally describes the intended relationship as one of principal and independent contractor.
• Clause 5.2 which states that the Applicant is the sole and exclusive employer of his employees.
• Clause 3.2 which provides the Applicant with a right to accept or reject any offered Contract.
• Clause 11.2(c) which allows the Applicant to delegate work.
• Clauses 11.2(p)-(bb) imposed various obligations on the Applicant to supply and maintain the vehicle and associated equipment required to deliver the contracted Service.
[62] While the Applicant concedes that clause 5.1 states that the Applicant was and would remain an independent contractor conducting his own business for the duration of the contract, that characterisation should in his submission be viewed with scepticism when regard is had to a range of other terms in the 2020 Agreement. When the terms of the 2020 Agreement are properly viewed, it supports a conclusion that the Applicant was an employee. The relevant terms referred to include;
• Clause 3.3 which sets out the additional details required to accompany each Job Booking including pick-up and delivery addresses and delivery timeframe.
• Clause 11.2(a) requiring the Applicant to abide by all applicable policies and procedures of the Respondent.
• Clause 11.2(b) which prevented the Applicant from delegating the work without making necessary OH&S enquiries.
• Clause 11.2(c) which required the Applicant to follow all reasonable instructions and directions related to the use and maintenance of equipment so as to ensure the health and safety of the Applicant and others.
• Clause 11.2(d) which required the Applicant to be in his vehicle and ready to accept work from 7.00am on those days he was performing cartage work for the Respondent.
• Clause 11.2(g) which required the Applicant to not do anything to prejudice the goodwill and business reputation of the Respondent.
• Clause 11.2(i) which required the Applicant to perform the services in a diligent and prompt manner to the highest standards of skill and expertise.
• Clause 11.2(aa) which required the Applicant or delegate to wear the supplied uniform at all times while performing work for the Respondent.
• Clause 11.3 which prohibited the Applicant or delegate from driving the vehicle while under the influence of alcohol or any drugs.
• Clause 14.3 which allowed the Respondent to place its brand livery on the Applicant’s vehicle at any time at its cost.
• Clause 28 Restraint which variously restrains the Applicant from ‘poaching’ customers, consultants and employees of the Respondent within an 18 month period following cessation of his contract.
[63] The Full Bench in Gupta summarised the various authorities that bear upon the importance of the contractual provisions, when in referring to the terms of the Services Agreement between Mr Gupta and Uber Eats the following was said;
“[39] However all the above provisions may be regarded as merely labelling or characterising the nature of the contractual relationship between Ms Gupta and Portier Pacific/Uber; none of them set out the substantive rights and obligations of that relationship. It is well established that such labels cannot alter the substantive nature of the relationship. As was stated by Isaacs J in Curtis v Perth & Fremantle Bottle Exchange Co Ltd:
“Where parties enter into a bargain with one another whereby certain rights and obligations are created, they cannot by a mere consensual label alter the inherent character of the relations they have actually called into existence. Many cases have arisen where Courts have disregarded such labels, because in law they were wrong, and have looked beneath them to the real substance.”
[40] More recent decisions of the Federal Court Full Court have elucidated this principle in the context of the identification of whether an employment relationship exists. In ACE Insurance Limited v Trifunovski, Buchanan J (with whom Lander and Robertson JJ agreed) said that “the nature of the relationship may be legitimately examined by reference to the actual way in which work was carried out”. In Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd, North and Bromberg JJ (with whom Barker J relevantly agreed) said that: “...appellate courts in Australia and the United Kingdom have been particularly alert, when determining whether a relationship is one of employment, to ensure that form and presentation do not distract the court from identifying the substance of what has been truly agreed. It has been repeatedly emphasised that courts should focus on the real substance, practical reality or true nature of the relationship in question...”. And in WorkPac Pty Ltd v Skene the Full Court said “The conduct of the parties to the employment relationship and the real substance, practical reality and true nature of that relationship will need to be assessed.
[64] More recently in WorkPac Pty Ltd v Rossato 140 (Rossato) the High Court emphasised the central importance of contractual terms when determining whether the relationship in that case was one of casual employment or permanent employment. While noting that Rossato was not concerned with determination of whether the particular contractual relationship was one of employment or independent contractor, another Full Bench of the Commission dealing with that latter issue recently identified that Rossato raises a number of questions relevant to an appeal before it in Deliveroo Australia Pty Ltd v Franco141 (Deliveroo) and set out those particular questions in a Statement issued on 6 August 2021142. Determination of the Deliveroo appeal has been adjourned pending High Court determination of appeals of two Federal Court decisions in Jamsek v ZG Operations Australia Pty Ltd (Jamsek)143 and Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd (Personnel Contracting)144which may provide more authoritative guidance on the issues central to determination of Deliveroo.
[65] Notwithstanding the potential for further authoritative High Court guidance through forthcoming decisions in Jamsek and Personnel Contracting, both parties submit that I should proceed to determine the matter before me based on current authorities as previously set out above and summarised in French Accent and Gupta.
[66] Returning to the terms of the 2020 Agreement, the explicit agreement of the parties that the relationship entered into by the Applicant was one of independent contractor to the Respondent, the capacity of the Applicant to accept or reject work and/or to delegate work and the absence of a prohibition on the Applicant working for others all strongly point to the Applicant being an independent contractor. Balanced against those provisions are terms that reserve rights of control to the Respondent. I refer in particular to the uniform and truck branding livery provisions, the requirement to follow directions of the Respondent and comply with applicable policies and the restraints imposed on the Applicant under clause 28.
[67] In my view the terms of the contract point to an independent contractor relationship on balance. However, the authorities make clear that while the terms of the 2020 Agreement may be relevant, they are not decisive and it is necessary to also consider the substance of the relationship rather than just the form as expressed in the contract. It is to that I now turn.
Control
[68] A significant factor to be assessed in determining the true nature of the relationship between the Applicant and the Respondent is the right of control that resides with the Respondent, not just the practical exercise of that right 145. The High Court in Stevens v Broddribb emphasised that while the degree of control was significant it was not however the “sole criteria by which to gauge whether the relationship is one of employment”. Before turning to consider other indicia it is appropriate to firstly consider both the right of control and actual exercise of that control by the Respondent over the Applicant in his performance of work. These are considered below.
Rate negotiation
[69] The Applicant commenced with the Respondent in 2005 and on his own evidence had a degree of bargaining power at that point and was able to achieve rates at a level sufficient to make it viable for him to contract to the Respondent. He says those circumstances changed from 2013 onwards when the rates were then unilaterally set by the Respondent with little if any room for negotiation. I accept the evidence that rates were generally static despite some sub-contractors being able to negotiate higher rates from time to time, that capacity being a function of the features of and demand for particular sub-contractors’ vehicle/s or being due to a peak period of business demand.
[70] The Respondent submitted that the Applicant was able to negotiate higher Job Booking rates but had not been active in pursuing such negotiation. It appears to me however that the Applicant was driving a vehicle that was in less demand than when he commenced with the Respondent some 15 years ago. In those circumstances the submission that the Applicant was able to negotiate higher rates seems to overstate the practical capacity of the Applicant to do so. Balanced against that position was the Applicant’s capacity to negotiate higher minimum incentive payments during periods that such incentives were offered to him.
[71] An individual’s practical capacity to negotiate higher rates is not in my view a feature uniquely present in independent contracting relationships. The presence or absence of such a capacity features in both employment and independent contracting relationships alike. The contended control that the Respondent’s rate setting indicated was in my view due to the respective bargaining positions of the parties. Ultimately, the Applicant was at liberty to continue to accept work on the basis offered by the Respondent or seek work or contracts with other clients. Having regard to the above, I don’t regard the issue of the negotiation and setting of rates in the present matter as pointing to either an employment or independent contractor relationship. It is a neutral consideration.
Hours of work
[72] The Applicant’s hours of work averaged 7.8 hours per day Monday to Friday although the evidence summarised above at [28]-[30] indicates significant fluctuations in both hours worked per day, start/finishing times and number of Job Bookings accepted. In closing submissions, the Respondent summarised the fluctuations in hours worked by the Applicant in the following manner;
• Less than 6 hours work was performed by the Applicant on 27% of available days.
• Between 6 and 7 hours work was performed on 20% of available days.
• Between 7 and 10 hours work was performed on 45% of available days.
• Over 10 hours work was performed by the Applicant on 8% of available days.
[73] The Applicant in reply to the Respondent’s analysis provided his own analysis as follows;
• Up to 4 hours work was performed on 12% of available days.
• 5 hours work was performed on 14% of available days.
• Between 6 and 9 hours work was performed on 66% of available days.
• Over 10 hours work was performed on 8% of available days.
[74] The differences above appear due to use of different hours cut-offs and do not speak to any fundamental differences in the analysis of the parties. It supports my earlier observation that there were significant fluctuations in the hours worked by the Applicant.
[75] Clause 11.2(d) of 2020 Agreement required the Applicant to be in his vehicle and available to accept work from 7.00 am on those days that he was performing cartage work. The fact that clause 11.2(d) referred to days that cartage work was being performed indicates that the Applicant was not required to be available for cartage work every day of the week unless he was on a minimum incentive payment arrangement. Furthermore, the 2020 Agreement did not specify minimum hours and the hours analysis undertaken by the Respondent did not support the Applicant’s submission that he started work at least by 7.00 am each day.
[76] Added to the above, it was clear on the Applicant’s evidence that he variously turned off his PDA, went home early on some days or did not leave home in circumstances where he had not received any Job Bookings by mid-morning. The incidence of this occurring was not clear and was certainly not a daily or perhaps even a weekly occurrence given the patterns of the Applicant’s hours and earnings. It was however clear that the Applicant was forthright in his dealings with the Respondent in deciding if and when he would be available to accept work, this being consistent with his rights under the terms of the 2020 Agreement.
[77] The exception to the above-described flexibility in hours of work was when the Applicant was in receipt of minimum incentive payments, the periods and payments for which are set out above at [39]. The Respondent submits that the time periods over which the Applicant was in receipt of minimum incentive payments totalled 15 months over his total engagement of 183 months, this being approximately 8% of his engagement period.
[78] The Applicant submits that based on Mr Duong’s evidence; minimum incentive payment arrangements were only introduced from September 2016. Further, the Applicant was off work for 10 months due to an injury in 2020 and the Respondent did not offer minimum incentive payments during 2020 due to the Covid pandemic. When these factors are taken into account the Applicant submits he was in receipt of minimum incentive payments for 15 months out of 53 months that such payments were potentially available to him, representing 28% of the that time.
[79] Taking the Applicant’s case at its highest in respect of the minimum incentive payments, he was in receipt of such payments for 28% of the time between when these payments were said to have been introduced in September 2016 and when his contract was terminated in January 2021. Participation in the minimum incentive payments brought with it obligations, specifically the requirement to be available to commence work from 6.00 am and to accept all Job Bookings offered during the day. These features evidence a degree of practical control exercised by the Respondent save for one critical factor. The Applicant was not obliged to accept an offer to participate in the minimum incentive payments arrangements and could withdraw from them with the only apparent consequence being he would cease to be entitled to the minimum incentive payment.
[80] I accept that the average hours worked by the Applicant of 7.8 hours per day approximates that of a full time employee. However, with the exception of when minimum incentive payment arrangements were in place, which were not mandatorily imposed on the Applicant, the Applicant had the freedom to log on and off when he chose. The practical reality of course is that being unavailable for Job Bookings would impact his income which acted as a disincentive to log off. That in my view is unremarkable. The Applicant was clear in his evidence as to his exercising his right to decline work, to log off and go home early when there was little or no work or not make himself available for Job Bookings on some days when he had not received Job Bookings by mid-morning. Such behaviour is consistent with the Applicant having control over when he made himself available to accept Job Bookings.
Job assignment
[81] The Applicant contends that the manner of Job Booking allocation points to control being exercised by the Respondent. He says he was required to accept job bookings allocated, that he rarely declined allocated jobs, was fearful of the consequences of declining work and that the PDA is used by the Respondent to track drivers. Significantly, clause 3.2 of the 2020 Agreement states that the Respondent may “offer” a job which the Applicant was at liberty to accept or reject.
[82] The method and pattern of allocating Job Bookings is set out above at [12]-[14]. The evidence of the Applicant and Mr Flaherty conflicted over the manner of accepting or declining work via the PDA. Mr Flaherty says that the Job Booking notification to a driver required the driver to either accept the booking and if not accepted the notification would disappear from the drivers PDA after 3 minutes. The Applicant in his evidence states that the notification could not be declined by pressing a ‘close’ button on his PDA screen and further, the Job Booking on the PDA screen did not disappear after 3 minutes if not accepted.
[83] Not much turns in my view on the difference described above as on the Applicant’s own evidence he did decline work from to time. The Applicant also gave evidence that he would at times leave the PDA buzzing without accepting a Job Booking, turn his PDA off, and/or go home or not leave home if he had not received any Job Bookings by a certain time. Such conduct is not consistent in my view with his submission as to the level of control exercised by the Respondent in allocating work.
[84] As regards the Applicant’s contention that the PDA was used as a tracking device, I disagree. When a driver turned their PDA device on it alerted the Respondent that the driver was available to accept work. By its GPA positioning functionality, the PDA when turned on allows the Respondent’s fleet allocators to determine the proximity of drivers for the purpose of offering Job Bookings that ensures timely pick-up and delivery of goods. There was no evidence that the PDA was used for any other purpose that would support the Applicant’s contention as to the level of control it allowed over him.
[85] The claims of the Applicant that he was fearful of losing work if he did not accept Job Bookings were also not supported by any evidence. It is self-evident that a more reliable contractor was likely to obtain more work, a point confirmed by Mr Flaherty in his evidence. There was however no evidence of negative consequences for the Applicant or any other sub-contractor in declining particular Job Bookings, which the Applicant on his own evidence occasionally did. The point simply made by Mr Flaherty in response to this claim was that the Respondent could not afford to snub their sub-contractors for declining Job Bookings because it simply didn’t have enough drivers to cover all of the required work.
[86] I am satisfied that contrary to the Applicant’s evidence and submissions, Job Booking notifications were not ‘assigned’ to drivers but were offered and it was open to the Applicant and other drivers to accept or decline particular jobs. Beyond the obvious consequence of obtaining less work, there was no evidence of other negative consequences flowing from non-acceptance of particular Job Bookings. I do not regard the manner of work allocation as pointing towards a level of control exercised by the Respondent. To the contrary, the Applicant’s practical capacity to decline work points to him having control over his performance of work in my view.
Follow directions regarding each Job Booking
[87] The evidence indicated that on acceptance of a Job Booking the Applicant received the necessary job details such as pick-up and delivery addresses and the required timeframe for delivery. Contrary to the Applicant’s submission, with the exception of VIP Bookings which required a driver to take the designated fastest route, determination of the route for a particular Job Booking was a matter for the Applicant, this being consistent with clause 16 of the 2020 Agreement. For his part the Applicant saw his expertise in determining his route for pick-up and delivery of goods as being a function of his experience and knowledge gained over many years of driving. It was also clear in the evidence that the Applicant did not have GPS navigation functionality available on the supplied PDA.
[88] I don’t regard the provision of pick-up, delivery and delivery timeframe details as indicative of a level of control exerted by the Respondent that pointed to an employment relationship. Given that the Respondent is a transport company it is hard to imagine how the Applicant could have undertaken his work without such information.
Right to delegate or sub-contract work
[89] Clause 11.2(b) and clause 15 of the 2020 Agreement deal with the capacity of the Applicant to delegate work. The clauses relevantly provide as follows;
“11.2 The Sub-Contractor will (and will ensure that any delegates will);
GENERAL
…………….
b) not delegate the performance of its duties to other persons, including any servant, employee or contractor of the Sub-Contractor, without making the necessary enquiries with respect to health and safety including ensuring that all of the obligations herein which apply to the Sub-Contractor are met by that person:
……………………..
15. POWER OF DELEGATION
15.1 The Sub-Contractor may and is expressly authorised by the Company to delegate its authority to contract for the Carriage of the Goods and the performance of any of their obligations under this Agreement, to such other person, firm, or company as the Sub-Contractor may think fit, save that such delegate will observe the obligations of the Sub-Contractor under this Agreement”
[90] Other clauses within the 2020 Agreement also reinforce the delegation right, including;
• Clause 5.2 which refers to the sub-contractor being solely responsible for the legal obligations in respect of any “employees’; and
• Clause 20.2 which describes the sub-contractors obligations in respect of workers compensation for any “employees”.
[91] The Applicant characterised the right to delegate performance of work as a “fettered right” and referred to the Respondent’s requirement that any proposed delegate must undertake the standard induction and also satisfy the Respondent’s requirements in relation to the possession of the necessary work rights and licenses. These requirements imposed by the Respondent were not in dispute. The Applicant gave evidence which I accept that he chose not to delegate work as he believed it was not financially viable and also that he did not have confidence in other drivers to look after his truck.
[92] It is well established that a capacity to delegate points to a relationship of independent contractor 146. In the present case the Applicant had a clear contractual ability to delegate the work although he chose not to for reasons including the financial viability of doing so. He nonetheless conceded during cross-examination that he was able to do so and did in fact delegate driving work to his father, although the Applicant stated that it was in respect of work associated with the HWT contract. The “fettered right” claimed to arise from the delegate induction and licence checks was not in my view a significant barrier to delegation. This is supported by the unchallenged evidenced of Mr Flaherty of the number of other drivers that delegated work.
[93] I accept that a totally unfettered right to delegate work may weigh more strongly towards a finding of an independent contractor relationship. At the other end of the spectrum, as in Jensen v Cultural Infusion (Int) Pty Ltd 147(Jensen), a contractor may be contractually prohibited from delegating any work which would point towards the relationship being one of employment. The latter circumstance, that of a prohibition on delegation, was not present in the case of the Applicant’s contractual arrangements. The Applicant was contractually able to delegate the performance of work without significant impediment. The fact that the Applicant chose not to do so was not because of contractual barriers but rather was due to the perceived financial viability and his desire not to have other drivers operating his truck.
[94] In the above circumstances I regard this indica as weighing against a finding of a contractual right or practical control exercised by the Respondent over the Applicant. It consequently points to the existence of an independent contractor relationship.
Ability to work for others
[95] The Applicant submits that despite the 2020 Agreement being expressed as non-exclusive he was in a practical sense unable to work for others, was economically dependent on the Respondent and felt compelled to accept the rates and jobs offered to him so as not to put himself at risk of receiving fewer jobs.
[96] The following may be said about the above points. Firstly, contrary to his submission that he was unable to work for other clients, the evidence indicated the Applicant did in fact work for the HWT and the Respondent for an overlapping period of approximately eight years between 2005 and 2013. The Applicant’s evidence that he ceased working for the HWT due to fatigue management concerns was unconvincing. It was clear enough that he applied for and was unsuccessful in securing a renewed contract with the HWT in 2013. Had he secured a further contract with HWT in 2013 on terms he considered acceptable it is entirely likely in my view that the Applicant would have continued working for both the Respondent and HWT for an indeterminate period of time.
[97] Secondly, despite resisting the proposition, the Applicant conceded during cross examination that he would have been able to arrange his affairs so that he could have undertaken work for other clients when he was not performing work for the Respondent.
[98] I am satisfied that the Applicant had a genuine ability to perform work for other clients. This does not support a conclusion that the Respondent had a right to control the Applicant’s performance of work for others save for the operation of the restraint provisions in the 2020 Agreement, which I will return to. The Applicant’s ability to perform work for other clients points strongly to the relationship of the Applicant with the Respondent being one of an independent contractor.
Public presentation of worker
[99] The Respondent contractually reserved the right at clause 14.3.1 of the 2020 Agreements to place its livery on the Applicant’s truck at its cost. It determined not to do so for reasons of the age and type of the vehicle owned by the Applicant. The Respondent also mandated at clause 11.2(aa) of the 2020 Agreement that persons performing work pursuant to the 2020 Agreement were required to wear the Respondent’s uniform at all times while doing so.
[100] The Applicant gave evidence that he was issued with uniforms over the course of his engagement by the Respondent and claimed that he was warned by Mr Duong at one point for not wearing the issued uniform when in the Respondent’s office. While Mr Duong rejected that such a warning was issued, the contractual provisions provide support for the Applicant’s evidence and was accordingly more persuasive. The Respondent’s witnesses gave evidence that the contractual provision described above was not enforced from 2019 onwards when the Respondent ceased providing uniforms. No documentation supporting such a change was in evidence. Why the Respondent did not amend or remove the relevant uniform clause from the Applicant’s 2020 Agreement was not satisfactorily reconciled with its evidence that it ceased to provide or enforce the uniform requirement in 2019.
[101] I find that the absence of any formal documentation of the claimed change in the Respondent’s uniform policy/practice in 2019 and the fact that no alteration was subsequently made to the uniform provisions in the Applicant’s 2020 Agreement does not assist the Respondent’s submissions that the uniform wearing requirement was removed or not enforced from 2019 onwards. I consequently favour the Applicant’s evidence that he was required to wear the Respondent’s issued uniform during his period of engagement by the Respondent, at least for the vast majority of the period that he was engaged by the Respondent.
[102] The Applicant was not prevented from placing his own company livery on his truck despite claiming that his first contract, which he was unable to produce, contained such a prohibition. I found that evidence unconvincing given that all subsequent agreements including the 2020 Agreement contained no such prohibition. There was also evidence adduced by the Respondent that revealed other sub-contractors of the Respondent had placed their own branding on their trucks. While the Applicant challenged the reliance that ought be placed on that evidence, there was nothing to suggest that the photos produced by Mr Flaherty were not of sub-contractors engaged by the Respondent. I consequently accept that evidence.
[103] The requirement of a worker to wear a uniform of the principal can be a relevant factor that points towards a relationship of employment 148. In the present matter I am satisfied that was the case, at least for the vast majority of the period of time over which the Applicant worked for the Respondent. While that may indicate the Applicant was presented as an emanation of the Respondent’s business, the significance of that was diminished by the fact that the Applicant’s truck bore no branding of the Respondent despite it having the right to place its livery on the Applicant’s truck. The wearing of the Respondent’s uniform by the Applicant in the absence of the Respondent’s livery being placed on the truck would not be a strong and visible emanation of the Respondent’s business to persons other than direct customers of the Respondent.
[104] In the above circumstances I am satisfied that the public presentation of the Applicant imposed through the requirement to wear the Respondent’s uniform evidences a degree of control exercised over the Applicant as does the Respondent’s reserved right to place its livery on the Applicant’s truck. This indicates a right of control able to be exercised by the Respondent over the Applicant and weighs in favour of an employment relationship existing, albeit not strongly for the reasons set out above.
Indemnities and Insurance
[105] The Respondent submits that the range of insurances that the Applicant was required to maintain was indicative of an independent contractor relationship 149 as was the requirement of the Applicant to indemnify the Respondent in a range of circumstances150 including with respect to; claims relating to pre-existing medical conditions of delegates of the Applicant, cost of repair of communications equipment or livery supplied by the Respondent to the Applicant damaged by the Applicant’s negligent or wilful misconduct, and various indemnities in respect of the Applicant’s failure to deliver goods in accordance with contractual terms.
[106] The obligation of the Applicant to maintain a range of insurances and indemnify the Respondent in a broad range of circumstances does not in my view lend weight to the submission advanced by the Applicant as being evidence of a high level of control. Such arrangements are in my view common in commercial arrangements entered into between a principal and contractor. They are not features that would ordinarily be present in an employment relationship and for that reason point towards an independent contracting relationship. The fact that the Respondent maintains a group insurance policy which it allows sub-contractors to join does not alter my view.
Company policies and restraints
[107] The Applicant submits that there are a number of provisions within the 2020 Agreement that point towards a degree of control able to be exercised by the Respondent including; Clause 28 Restraint, clause 11.2(a) (obligation to comply with relevant policies), clause 11.2(c) (obligation to comply with reasonable instructions regarding OH&S), clause 11.3 (alcohol and drug prohibition while driving), clause 11.2(g) (not to prejudice Company’s goodwill or reputation).
[108] As regards compliance with relevant policies (clause 11.2(a)), following reasonable instructions and directions regarding OH&S (clause 11.2(c)), alcohol and drug prohibitions while driving (clause 11.3) and ensuring that action is not taken to prejudice the Company’s goodwill and reputation (clause 11.2(g)), I am not persuaded that these contractual provisions point to an employment relationship. I agree with the Full Bench’s observation in Gupta 151 where it was stated “There is nothing particularly unusual about a principal establishing and enforcing performance and quality standards in respect of independent contractors engaged to perform work”. Those observations are in my view particularly relevant in the context of OH&S requirements in the transport industry.
[109] As regards the restraint provisions (clause 28), the Respondent submits that the clause was not enforced. That may be the case but that does not remove the Respondent’s contractual right to apply it and the Applicant was entitled to believe the term might be enforced. The provision appeared consistently in a succession of agreements entered into by the parties. If the Respondent intended not to enforce the term it could have amended the terms of the agreements entered into with the Applicant and other sub-contractors. The fact that the Respondent did not remove or vary the restraint term suggests the Respondent wanted to either reserve its rights or alternatively convey a position to the Applicant and other sub-contractors that soliciting customers, consultants or employees of the Respondent carried a significant legal risk.
[110] I accept the Applicant’s submission that the Respondent’s reserved right to enforce the restraint provisions was a cogent barrier to the Applicant competing directly with the Respondent by “poaching” customers, consultants and/or clients of the Respondent. While such provisions may also be common in terms of client/contractor relationships it does support a finding that the Respondent exercised a degree of control over the Applicant in respect of his capacity to undertake an independent business.
Summary on control
[111] There are a small number of factors that point to the Respondent having a right to control the Applicant’s performance of work, those being the imposition of the uniform wearing requirement at least up until late 2019 and the 2020 Agreement’s restraint provisions. Some matters are neutral and there are a number of significant matters that tell strongly against the Respondent having a contractual and/or practical right to control the Applicant’s performance of work. Specifically, the Applicant retained the right to accept or reject work, he was able to delegate work and undertake work for other clients as evidenced by his contract with HWT, he maintained a range of insurance policies, indemnified the Respondent and he exercised a high degree of control over the key requirement of his role, that of determining the best route for effecting the pick-up and delivery of goods.
[112] The matters considered above in relation to the right and practical capacity of the Respondent to exercise control over the Applicant point to the Applicant being an independent contractor and not an employee.
Other Indicia
Separate place of work and advertising of services
[113] The Applicant states that he had no separate place of business to that of the Respondent. I find that contention unconvincing for the following reasons. Firstly, he kept his truck at his private residential address when he was not using it, he maintained a home office and also installed a security camera for the purpose of safeguarding his truck when it was parked at his property. Secondly, he acknowledged in his evidence that the Respondent’s Clayton site was not a depot at which drivers were able to leave their vehicles and that the Respondent only had parking available at its site for direct employees of the Respondent. Thirdly, as previously stated above, the Applicant was not precluded from undertaking work for other clients and/or placing his own branding on his truck as other drivers engaged by the Respondent had done.
[114] The existence of the above combination of factors indicates that the Applicant was not integrated into the Respondents business and points towards an independent contracting relationship.
Provision and maintenance of tools and equipment
[115] The evidence revealed that the Respondent provided the Applicant with a PDA and a two way radio which were both required to be returned to the Respondent when the Applicant’s contract was terminated. The Applicant was also provided with Capital Transport branded uniforms up to 2019. All other equipment necessary for provision of the services were required to be provided by the Applicant and included his six tonne taut liner truck which he purchased in 2005 for $95,000. He was also required to provide straps, pallet jacks and personal protective equipment. The Applicant was responsible for all associated maintenance, running costs and insurances for his truck and equipment. Those maintenance and running costs were consistently claimed as business expenses by the Applicant in his annual business tax returns.
[116] The Applicant’s six tonne taut liner truck is a specialised vehicle that was purchased for the specific purpose of providing transport services. While the vehicle has lost value over time and has been depreciated as an asset by the Applicant, it constituted a significant capital outlay when it was purchased, such a feature having been found in key authorities as pointing towards a relationship of independent contractor 152. The Full Court of the Federal Court in Jamsek placed limited weight on this indicium when considering the status of two truck drivers who had also made significant capital outlays in relation to their trucks. However, this reduced weight was due to a number of factors present in that matter, those being the limited degree of control that the applicants had in acquiring their trucks, the livery on their trucks was that of the company to which they were contracted, and the truck driving skills required were not exceptionally significant153.
[117] The facts of the present case can be distinguished from the those in Jamsek in two key respects. Firstly, the Applicant chose to purchase his truck in 2005 for the purpose of improving his business prospects, not because he was required to do so by the Respondent as occurred in Jamsek. Secondly, while contractually reserving the right to put its brand livery on the Applicant’s truck, the Respondent did not do so at any time. In these circumstances I regard the provision and maintenance of tools and equipment by the Applicant as a factor that points to the Applicant being an independent contractor.
The right to suspend or dismiss
[118] Clause 29 of the 2020 Agreement deals with termination of the contract. It (the 2020 Agreement) was able to be terminated without notice for serious and wilful misconduct, material breach of contract by either party and/or where the sub-contractor had been engaged for less than 3 months. Clause 29 also allows for termination of the contract for any reason without notice by either party, subject to the provision of a period of specified notice. There was no right under the 2020 Agreement for suspension of the Applicant. Evidence led by the Respondent indicated that performance and disciplinary matters involving drivers was addressed through training and reinduction.
[119] The contractual right to terminate the Applicant’s services without notice for reasons of wilful misconduct and for any reason with notice are features that are routinely present in a contract of employment. It is also the case that contracts for services normally contain termination of contract provisions based on contractual breach, misconduct of the service provider and with notice for other reasons (i.e. without cause). The right to terminate the contract in the 2020 Agreement is in my view not determinative of either an employment or independent contractor relationship. I regard it as a neutral factor.
Tax and financial arrangements
[120] The Applicant variously submits that the Respondent’s emphasis on the expense deductions made by the Applicant in his business tax returns overstates their significance, that the Applicant was entirely reliant on professional advice in respect of his financial and tax affairs, the claimed expenses are dominated by motor vehicle expenses and are what one would expect given the Applicant owned the vehicle.
[121] While clause 23 of the 2020 Agreement allowed for deduction of any amounts due under the Income Tax Act (Cth) from freight charges payable to the Applicant, it was not contended by the Applicant that such deductions were ever made. The evidence was clear that no PAYG tax deductions were made by the Respondent, the Applicant was responsible for payment of his own tax and that no superannuation deductions and/or contributions were made by the Respondent.
[122] It appears on some authorities that the arrangements that the parties put in place regarding taxation arrangements are not to be treated as decisive. See for example the comments of Buchanan J in Ace Insurance Ltd v Trufinovski 154 (Ace) where he gave little weight to the taxation and superannuation arrangements as they were in his view a function of one party or both viewing the relationship as not one of employment and while the arrangements may be taken into account they are not decisive.
[123] The Full Bench in Gupta took a similar approach where in the circumstances of that case it was found by the majority that the per-delivery basis of payment, the absence of leave or superannuation benefits and Ms Gupta’s responsibility for her own tax obligations did not point to her necessarily being an independent contractor. 155
[124] By contrast to the above, Jessup J dealt with this issue in Tattsbet Limited v Morrow 156(Tattsbet) and restated the historical emphasis that was placed on the absence of PAYG arrangements. To that he added that it was no longer “just the absence of PAYG deductions that may make it more difficult to characterise the relationship as one of employment, it is the presence of GST collections by the putative contractor……that point quite strongly against the relationship being characterised in this way.”157
[125] What I draw from the above authorities is that while the taxation arrangements put in place by the parties remains relevant to determination of employment or contractor status it may not be decisive, and it may also be necessary to consider the presence of GST obligations on the part of the “putative contractor”. To these factors I would also add the need to consider the degree of sophistication that is adopted by the putative contractor in structuring their business, financial and tax affairs.
[126] Turning to the circumstances of the Applicant in the present case, it is apparent from the evidence, and conceded by the Applicant during cross-examination, that he structured his financial and tax affairs in a manner that was most lawfully effective from a tax perspective. He had established a company Powell Transport Pty Ltd, which until 2018, was the corporate vehicle through which revenue was received from the Respondent (and from HWT up until 2013), expenses were incurred (and deducted for tax purposes), disbursements including dividends were made from, and it was the entity from which Mr Powell drew a wage. It was only following the winding up of Powell Transport Pty Ltd in 2018 when payments were made directly to the Applicant by the Respondent.
[127] The fact that the Applicant sought and relied on professional taxation advice as contended by the Applicant is of little relevance in my view. Individuals on PAYG arrangements and independent contractors alike rely on professional tax advice. The Applicant’s claimed reliance on tax advice provides limited assistance to my consideration of what weight if any should be placed on the taxation arrangements. If anything, the establishment and maintenance of a corporate structure for financial and tax purposes that necessitated professional advice would seem to me to point more towards a contracting relationship being in place than that of an employment relationship.
[128] As to the emphasis placed by the Respondent on the scale of expense deductions and the domination of motor vehicle expenses I would make the following observations. I agree that the Applicant’s taxation expense deductions are skewed towards costs associated with the truck. That would seem inevitable where the truck is the primary asset used for generating income and is in my view not indicative of an employment relationship. It is also the case that there were a range of other expense deductions claimed by the Applicant over the years including, wages, dividends, professional services, sub-contractors and home office costs (including depreciation of home office assets).
[129] There are a number of factors associated with the Applicant’s taxation arrangements that point towards an independent contracting relationship. They are the absence of PAYG deductions and superannuation contributions by the Respondent, the fact that the Applicant was paid a wage by Powell Transport Pty Ltd, the conscious decision made, and degree of sophistication adopted by the Applicant in structuring his financial and tax arrangements through Powell Transport Pty (up until 2018). While there was no evidence that indicated the collection and remittal of GST by the Applicant, the matters that I have identified point towards an independent contractor relationship.
Provision of invoices or payment of periodic wage/salary
[130] The evidence established that the Respondent prepared invoices based on PDA records and provided them to the Applicant on a fortnightly basis for his review prior to payment. The Applicant was able to check the invoices against his manually recorded run sheets and provide corrections before the Respondent made weekly payment. The invoices were prepared on the basis of completed jobs and were paid in accordance with the Rate Sheet which provided for an hourly payment for particular jobs with minimum hourly payments. The rates were set by the Respondent and remained static although there was a limited capacity for some contractors to negotiate higher rates due to the nature of their vehicle and/or the particular time of year.
[131] The Applicant contends that the regularity of the Applicant’s hours gave his remuneration the character of a salary for practical purposes and that further, the rates were set by the Respondent and that the Applicant was effectively unable to negotiate on those rates. As already stated above, there were significant fluctuations in both the hours worked per day and the weekly remuneration received by the Applicant. I consequently do not regard the remuneration received by the Applicant as akin to a salary despite his claims of limited bargaining power to negotiate.
[132] The payment of the Applicant according to completed jobs on an hourly basis seems a logical way of remunerating drivers where the service being provided is that of pickup and delivery of goods and materials. By contrast, were the payment made to the drivers on the basis of a flat rate based on the Job Booking distance only for example, that in my view might point more strongly towards independent contractor status. There is, however, a time bound element in the structure of the payments provided by the rate sheets which in my view is more indicative of an employment relationship. However, this feature of the remuneration received by the Applicant, along with the fact that the rates are set by the Respondent, needs to be balanced against the preparation of invoices and the apparent fluctuations in hours/remuneration per week.
[133] The above leads me to conclude that the nature of payment to the Applicant leans towards an employment relationship, although not strongly.
Paid holidays and other leave
[134] The Applicant was not entitled to be paid annual leave or any other form of paid leave. Nor was he required to seek approval in advance for any periods of unpaid time off that he took. To assist the Respondent in its planning for busy periods the Applicant was however expected to notify of any period of planned absence, which he routinely provided. Contrary to the Applicant’s submission, the Applicant’s leave did not need to be “arranged with advanced notice” 158. The term “arranged” appears to connote some form of approval process which was not in fact required. In any case, periods of leave that the Applicant took were unpaid.
[135] The fact that the Applicant was not entitled to paid leave of any form and could take unpaid leave when he saw fit without the requirement to obtain approval from the Respondent is supportive of his status being that of an independent contractor.
Nature of the work (profession, trade or special calling)
[136] The Applicant took some pride in his skill and experience as a truck driver, built up over many years and concedes that safely operating a six tonne truck “could perhaps be considered a trade”. While I am satisfied that the Applicant’s skill and experience may be equated to that of trade I don’t regard that as weighing either for or against a finding that the Applicant is an independent contractor. I agree with the observation of the Full Court of the Federal Court in Jamsek where it said that the possession of such skills (i.e. truck driving) was not “exceptionally significant” 159. In the circumstances I regard this as a neutral factor.
Creation of goodwill and other or saleable assets
[137] There are some matters that tell in favour of a capacity of the Applicant to generate goodwill or saleable assets, these being factors that have been held to point to a person operating an independent business. For example, there was no prohibition on the Applicant advertising, applying his own business livery to his truck or contracting to other clients. Against these factors the Applicant’s submits that in a practical sense he was unable to work for others because of the hours he spent working for the Respondent, a claim that conveniently overlooks his contract with HWT up until 2013.
[138] It is not insignificant however that there were specific clauses in the 2020 Agreement and predecessor agreements discussed above that restrained the Applicant’s ability to work for competitors or approach and/or work for clients of the Respondent. The fact the Respondent now states these clauses were not enforced is not evidence that the Applicant actually understood those clauses to have no effect.
[139] While there was a clear capacity for the Applicant to generate goodwill beyond the mere sale of his truck, in the circumstances of this case I don’t regard it as a significant matter in resolving the status of the Applicant and accord it little weight.
Proportion of remuneration spent on business expenses
[140] The Applicant’s claimed business expenses expressed as a percentage of revenue/income received fell below 50% in only two years for which financial statements and tax returns were produced by the Applicant between 2010 and 2020. For the most part, business expenses ranged between 90% and 155% of revenue/income received in the 10 year period.
[141] Wages paid by Powell Transport Pty Ltd to the Applicant featured as a deduction in most years in the 10 year period, with wages paid to the Applicant ranging between $45,000 in the year ending 30 June 2013 and $18,497 in the year ending 30 June 2014. As previously noted, Powell Transport Pty Ltd was wound up in 2018. If the wages paid to the Applicant by Powell Transport Pty Ltd were excluded from the calculation of expenses as a proportion of revenue/income, expenses incurred still ranged between approximately 60% and 73% of revenue/income in the financial years ending 30 June 2011, 2012, 2013, 2014, 2015 and 2016. In the remaining years expenses ranged between 45% and 60% of revenue/income.
[142] It is certainly the case that a large proportion of the expenses claimed by the Applicant through Powell Transport Pty Ltd between 2010-2018 reflected costs associated with the purchase, running costs, maintenance and insurance of the Applicant’s truck. As previously observed, this is unsurprising given the truck was the Applicant’s sole source of income generation.
[143] True it is that the Applicant’s wages and costs associated with his truck comprised the bulk of expenses claimed in the 10 year period between 2010 and 2020. It is unclear to me however why that should in the circumstances tell against the general proposition that the greater the percentage of revenue incurred in expenses the more strongly it points to an independent contractor relationship. Take for example a larger trucking contractor with several vehicles owned and a number of drivers employed directly. There would be no argument as to the contractor status of such an employer. While some additional infrastructure might be expected in supporting the business including administration and maintenance, one could imagine that wages and vehicle expenses would still represent a large proportion of the overall expenses of the business.
[144] While there are clearly a number of other distinguishing features between a trucking contractor and the Applicant as an owner driver, the capacity to manage their respective business structure, finances and tax arrangements (including expenses) in the most legally tax effective manner is common to both. I am of the view that incurred expenses being a high proportion of revenue/income is a relevant factor in the present matter and points towards the Applicant being an independent contractor.
Claudio Moya Case
[145] The Applicant contends that it is significant that another driver who worked for the Respondent was recently determined in a decision 160 of Hinchey J in the County Court of Victoria to be a ‘worker’ for the purposes of s 134AB(1) of the Accident Compensation Act 1985, which by s 7A required consideration of whether the driver was carrying on an independent trade or business. In that case the court considered whether the relationship was one of employer or employee and commenced its consideration by reference to Hollis v Vabu.
[146] The Applicant concedes there are some differences between the two cases including that Mr Moya did the unloading of his truck (which was the cause of his injury) and that he was on the minimum incentive payment arrangements more often than the Applicant, but not always.
[147] I am not bound to follow the decision in Moya, and I accord it little weight as the circumstances of that case and the conclusions reached by the Judge can be distinguished from those in the present matter in the following respects;
(1) Mr Moya commenced with the Respondent in 2012 and “almost always” 161 worked under a minimum incentive payment arrangement. The Applicant in the matter before me only worked under a minimum incentive payment for at most 26% of the time that such payments were potentially available to him from 2016 to 2021. Expressed as a percentage of his total period of engagement by the Respondent, the Applicant only received minimum incentive payments for 8% of that time period.
(2) As a consequence of being on minimum incentive payments for most of the time Mr Moya was subject to a broad range of restrictions including that he was required to work set hours from 7.00am to 5.00pm, keep his PDA switched on, accept all allocated jobs and give the Respondent 2 weeks’ notice if he wanted a day off. The evidence in the present case indicates that the Applicant had significant flexibility as to when he worked and he did at times turn off his PDA, go home early or not make himself available for work on some days.
(3) The Court concluded that Mr Moya was practically restricted from offering his services to other clients 162. The Applicant was not so restricted as evidenced by his work for HWT up until 2013 when he lost that contract.
(4) The Court found that Mr Moya did not know that he was able to delegate work to others and that he was practically restricted from doing so 163. The Applicant in the present matter conceded that he could have delegated work although he chose not to. Further, I have also found that there was no significant impediment to the Applicant delegating work.
(5) The Court found that the Respondent considered Mr Moya an employee whereas there is no evidence in the matter before me that the Respondent ever considered the Applicant to be an employee.
[148] To the extent the court considered matters in Moya that are similar to the factual matrix in the present matter before me and reached a different conclusion to myself I respectfully decline to follow those conclusions for the reasons set out in this decision.
Conclusion
[149] Having considered the various indicia it is evident that a number of matters are neutral considerations. Some matters point towards an employment relationship existing such as the requirement that the Applicant wear the supplied uniform, the manner of payment made by the Respondent to the Applicant for work performed and the restraint provisions at clause 28 of the 2020 Agreement (and predecessor agreements).
[150] Balanced against those matters I have referred to immediately above, there are a significant range of matters that point compellingly to the Applicant being an independent contractor. Most telling of those matters are;
(1) The capacity of the Applicant to accept or reject work was within his control, not the Respondent. He was able to determine when he logged on to accept work, when he logged off and what jobs he accepted. The 2020 Agreement permitted him to do so, and the Applicant’s conduct was consistent with the rights permitted by that agreement.
(2) The Applicant had the practical capacity to delegate work and/or work for others as shown by his contract with HWT which overlapped with his engagement with the Respondent over a period of eight years.
(3) The Applicant was required to provide, insure and maintain a specialised vehicle and associated equipment necessary to provide the required services.
(4) The manner in which the Applicant arranged his business and taxation affairs.
[151] Other matters that also point to the Applicant being an independent contractor include the high proportion of the Applicant’s revenue/income that business expenses comprised, the absence of any form of paid leave entitlements, the fact that the Applicant had a separate place of business and was not integrated into the Respondent’s operations and the degree of control that the Applicant was able to practically exercise over his performance of work.
[152] I do not consider that when looked at in its totality that the relationship between the Applicant and the Respondent contains the essential features that would ordinarily characterise an employment relationship, that being the right of the Respondent to exclusively control when and how work was to be performed by the Applicant. The weight of the matters considered lead me to conclude that the Applicant was not an employee of the Respondent and was in fact carrying on a business of his own.
[153] It necessarily follows from the foregoing that the Applicant was not an employee for the purposes of s.382 of the Act at the time of the termination of his contract with the Respondent. He is therefore not a person protected from unfair dismissal. The application must be dismissed. An order giving effect to this decision will be separately issued.
DEPUTY PRESIDENT
Appearances:
O Wolahan of Counsel for the Applicant.
M Felman of Counsel for the Respondent.
Hearing details:
2021.
Melbourne (by Microsoft Teams):
July 22, 23.
September 17.
Final written submissions:
Applicant, 10 September 2021.
Respondent, 20 August2021.
Printed by authority of the Commonwealth Government Printer
<PR734485>
1 Exhibit R2, Witness Statement of Martin Flaherty dated 26 March 2021 at [2].
2 Ibid at [6].
3 Ibid at [7].
4 Exhibit R2, Annexure MF3.
5 Transcript at PN387-PN396.
6 Ibid at [14].
7 Ibid at [22].
8 Transcript at PN358-PN360.
9 Exhibit R2 at [15].
10 Ibid at [16].
11 Ibid at [19], Annexure MF1.
12 Exhibit R2 at [20], Exhibit R6 Witness Statement of Mr Kevin Duong dated 19 April 2021 at [9], Transcript at PN249-PN252.
13 Transcript at PN891.
14 Transcript at PN256-PN257.
15 Ibid at PN913-PN919.
16 Exhibit R2 at [23].
17 Ibid at [24].
18 Ibid at [25]-[26].
19 Ibid at [31].
20 Ibid at [32].
21 Transcript at PN489-PN490.
22 Exhibit R2 at [33].
23 Ibid at [34].
24 Transcript at PN558.
25 Exhibit R2 at [35].
26 Ibid, Annexure MF5.
27 Transcript at PN469-PN476.
28 Ibid at PN458.
29 Exhibit R2 at [36].
30 Ibid.
31 Ibid.
32 Transcript at PN570-PN574.
33 Exhibit R2 at [36]-[38].
34 Exhibit A1 at [17].
35 Exhibit A2, Witness Statement of Mr Brett Powell dated 21 May 2021 at [2].
36 Exhibit R1, Witness Statement of Kellie-Anne McDade, dated 2 July 2021 at [3] and Annexure KM15.
37 Transcript at PN1666.
38 Ibid at PN1574-PN1577.
39 Ibid at PN1699-PN1715.
40 Exhibit R2 at [46] & [59].
41 Ibid at [47], Annexure MF7.
42 Exhibit R2, Annexures MF8, MF9, MF10, MF11 & MF12.
43 Exhibit R2 at [48].
44 Ibid at [50].
45 Exhibit A1 at [28].
46 Exhibit R2, Annexure MF13.
47 Exhibit A1 at [22].
48 Ibid at [6].
49 Exhibit R2 at [55].
50 Transcript at PN1387-PN1391.
51 Exhibit A1 at [8].
52 Exhibit R2 at [69]-[70].
53 Ibid at [71].
54 Transcript at PN1872-PN1876.
55 Ibid at PN1872-PN1876.
56 Ibid at PN1919.
57 Ibid at PN1954-PN1955.
58 Exhibit R2, Annexure MF7.
59 Transcript at PN102.
60 Exhibit R2 at [57].
61 Transcript at PN1750-PN1757.
62 Ibid at PN661-PN669.
63 Ibid at PN1673-1677.
64 Ibid at PN1735-PN1742.
65 Ibid at PN1843-PN1853, PN1857-PN1860.
66 Ibid at PN1505-PN1519, PN1721-PN1736.
67 Exhibit A1 at [18].
68 Transcript at PN1275-PN1279.
69 Ibid at PN1272.
70 Exhibit R2 at [60].
71 Ibid at [63].
72 Ibid at [62], Annexure MF17.
73 Exhibit R2 at [61].
74 Transcript at PN1322-PN1326.
75 Ibid at PN1119-PN1125.
76 Exhibit A1 at [20].
77 Exhibit R4, Witness Statement of Mr Martin Flaherty dated 20 April 2021 at [13].
78 Transcript at PN472-PN1478.
79 Exhibit R4 at [13](c), Annexure MF24.
80 Exhibit R2 at [78] – [79].
81 Exhibit R2 at [76]-[77].
82 Exhibit A1 at [19].
83 Exhibit R2, Annexure MF7, clause 11.29(aa).
84 Transcript at PN111.
85 Exhibit A1 at [19].
86 Exhibit R6 at [11].
87 Exhibit A1 at [9].
88 Ibid at [13].
89 Transcript at PN1054-PN1060.
90 Exhibit A1 at [21].
91 Ibid at [12].
92 Ibid at [15].
93 Exhibit R4 at [9]
94 Ibid at [7(a)].
95 Ibid at [7(b)].
96 Ibid at [7(d)].
97 Ibid at [8(b)].
98 Transcript at PN502-PN503, PN546-PN547.
99 Ibid at [9(d)].
100 Ibid at [14(a)-(b)], Annexure MF7 at clause 16.
101 Exhibit R4 at [14(c)].
102 Exhibit R2 at [68].
103 Transcript at PN1147-PN1149.
104 Exhibit R2 at [43], Transcript at PN1201-PN1207.
105 Transcript at PN284.
106 Ibid at PN876-PN885.
107 Ibid at PN792-PN794.
108 Ibid at PN1131-PN1132.
109 Exhibit R4 at [21]-[27], Annexure MF25, Transcript at PN1211-PN1218.
110 Exhibit R2 at [81].
111 Exhibit A1 at [32].
112 Ibid at [35].
113 Exhibit R4 at [30].
114 Exhibit R1, Witness Statement of Ms Kellie-Ann McDade dated 2 July 2021, Annexure KM4.
115 Ibid.
116 Ibid at p. 37.
117 Exhibit R1, Annexure KM5.
118 Ibid at p.66.
119 Exhibit R1, Annexure KM6.
120 Ibid at p. 108.
121 Exhibit R1, Annexure KM7.
122 Ibid at p. 135.
123 Exhibit R1, Annexure KM8.
124 Exhibit R1, Annexure KM9.
125 Exhibit R5, Witness Statement of Mr Martin Flaherty dated 28 May 2021, Annexure MF28 at pg. 3.
126 Exhibit R1, Annexure KM10.
127 Exhibit R5, Annexure MF28 at pg. 14
128 Ibid at pp. 14-23.
129 Exhibit R1, Annexure KM11.
130 Exhibit R5 at pp. 26-31.
131 Exhibit R1, Annexure KM12.
132 Ibid at p.243.
133 Exhibit R5 at pp. 34-46.
134 Exhibit R1, Annexure KM13.
135 Exhibit R1, Annexure KM14.
136 Mr Michail Kaseris v Rasier Pacific V.O.F[2017] FWC 6610 at [45].
137 [2011] FWAFB 8307.
138 [2020] FWCFB 1698.
139 Ibid at [36].
140 [2021] HCA 23.
141 [2021] FWCFB 4840.
142 Ibid at [8].
143 [2020] FCGAC 119.
144 [2020] FCFAC 122.
145 Stevens v Brodribb Sawmilling Co Pty Ltd (1986) CLR 16 at [19].
146 Hollis v Vabu Pty Ltd (Hollis v Vabu) (2001) 207 CLR 21 at [49], Jamsek at [228].
147 [202] FCA 358 at [64].
148 Gupta at [69].
149 Ace at [33].
150 Ibid at [131]-[133].
151 Gupta at [66].
152 See Jamsek at [205].
153 Ibid at [205]-[206].
154 (2013) 209 FCR 146 at [37].
155 Gupta at [66].
156 (2015) 233 FCR 146.
157 Ibid at [70].
158 Applicant Closing Submissions dated 10 September 2021 at [93].
159 Jamsek at [207].
160 Claudio Moya v Group Messengers Pty Ltd and Victorian Workcover Authority (Moya) [2019] VCC 2155.
161 Ibid at [25(u)].
162 Ibid at [81(a)(x)].
163 Ibid at [81(a)(xi)].
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