Divek Marya v Network Transport Services

[2015] FWC 6135

[2015] FWC 6135 [Note: An appeal pursuant to s.604 (C2015/6752) was lodged against this decision.]

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Divek Marya
v
Network Transport Services
(U2015/4789)

COMMISSIONER GREGORY MELBOURNE, 8 SEPTEMBER 2015

Application for relief from unfair dismissal; not an employee.

Introduction

[1] Network Transport Services (“NTS”) is part of the Civic Transport Group and provides transport services to its clients involving road transport of general freight in Melbourne and surrounding areas. Mr Divek Marya was engaged by NTS in July 2012 to provide freight courier and delivery services to clients of NTS. However, his engagement was terminated in April of this year because of what NTS claims were issues about his conduct and performance.

[2] Mr Marya subsequently lodged an unfair dismissal application on 13 April 2015. However, NTS submits he was engaged as an independent contractor, and not as an employee, and is therefore unable to make an unfair dismissal application. This decision deals with that jurisdictional objection.

[3] The matter proceeded on the basis that if the jurisdictional objection was dismissed the application would be relisted to deal with the merits of Mr Marya’s unfair dismissal claim. It was also agreed, given NTS raised the jurisdictional objection, that it was appropriate for it to first provide its submissions and evidence, and for Mr Marya to then respond.

[4] Mr Marya appeared on his own behalf. Mr S. Burke from Laycock Burke Castaldi was granted permission under s.596(2)(a) of the Fair Work Act 2009 (“the Act”) to appear on behalf of NTS.

The Issue to be Determined

[5] Section 382 of the Act deals with when a person is protected from unfair dismissal. It states in part:

“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” 1

[6] It follows if a person is not an employee they are not a person protected from unfair dismissal, and are unable to pursue an unfair dismissal application. Mr Marya submits when the totality of his relationship with NTS is considered he was an employee and not an independent contractor. NTS rejects this submission and submits that during the period from 10 July 2012 to 13 April 2015 Mr Marya was engaged by NTS as an owner driver providing freight courier and delivery services to its clients.

[7] Therefore, given the nature of the relationship was Mr Marya employed by NTS as an employee or was he engaged to provide services to NTS as an independent contractor?

The Evidence and Submissions

[8] Mr Brendan Forehan is the National Group Operations Manager with Transport Administrative Services Pty Ltd, “an entity” within the Civic Transport Group of Companies. In that role he oversees the operational matters of all entities in the Civic Transport Group, including NTS.

[9] Mr Forehan’s evidence is that at the time Mr Marya’s engagement with NTS ended in April this year NTS did not employee any employees. However, it did have 95 owner drivers engaged as independent contractors, each providing their own vehicle and each having entered into a formal written “Owner Driver Agreement” with NTS.

[10] Mr Forehan’s said in July 2012 Mr Marya entered into an Owner Driver Agreement with NTS to provide freight courier and delivery services. A copy of that Agreement was attached to his witness statement. He said Mr Marya subsequently provided services to NTS under the terms of that Agreement until his services were terminated on 13 April of this year.

[11] Mr Forehan’s witness statement then deals with what he describes as “Independent Contractor Indicia.” 2 He states in providing services to NTS Mr Marya was entitled to choose the time he started providing services each day, the time he finished each day, the number of days he provided services each week, and the route by which goods were delivered. He also said while NTS encourages its owner drivers to work what he described as “suitable hours” this was done to assist them to maximise their earnings.3

[12] Mr Forehan’s evidence also referred to various periods of time off requested by Mr Marya, which were granted. He also points to provisions in the Owner Driver Agreement that enable Mr Marya to perform similar services for any other person or business, provided this did not affect his compliance with the Agreement. However, he was not aware if Mr Marya had advertised or provided services to other persons or businesses in this way. He was also able to delegate the performance of delivery services under the Agreement to another person or persons, and this was done on occasions by other owner drivers engaged by NTS.

[13] Mr Forehan also said Mr Marya was the owner of the vehicle he used to provide services to NTS, and was responsible for its running costs. However, he was also paid a fuel levy surcharge calculated as a percentage of his gross weekly earnings at a rate recommended by the Victorian Transport Association. He was also required to maintain various insurance cover to do with the vehicle and the use of it as a delivery van.

[14] Mr Forehan also said the Agreement required Mr Marya to purchase and wear, at his own expense, various items of clothing. This was done in the interests of occupational health and safety, and the owner drivers were not required to wear Company logos on this clothing. NTS also provided decals which were affixed to the vehicles, subject to the approval of each owner driver.

[15] Mr Forehan said Mr Marya also had an Australian Business Number, which was provided to NTS at the commencement of his engagement. He also said Mr Marya was not paid a salary, and did not receive any leave entitlements or superannuation contributions during the term of his engagement with NTS. He was also responsible for his own taxation obligations. He also referred to clause 11 of the Agreement which provides for a “recipient created tax invoice.” 4 He continued to indicate:

“This is an invoice created by the Respondent based on the services provided in the relevant period by the Applicant. Under these provisions:

(a) the Applicant agreed not to issue the Respondent with tax invoices; and

(b) the Applicant acknowledged he was registered for GST and would immediately notify the Respondent in writing if he ceased to be registered.” 5

[16] Mr Forehan’s evidence also indicated Mr Marya participated in what is described by NTS as a “Work Today Paid Today,” program whereby 90% of the fees generated by Mr Marya on any one day were advanced to him, even though NTS had not necessarily received payment from the client at the time. 6 The balance of the fees generated were then provided under the recipient created tax invoice.

[17] Mr Forehan also provided an additional witness statement, prepared in response to statements by Mr Marya, indicating he did not have authority to take days off, and was paid an hourly rate for all work performed. The statement attached what Mr Forehan described as “driver Z notes,” which were maintained by NTS and confirmed Mr Marya not only had authority to take days off, but did so regularly. 7 Mr Forehan also said some services provided by Mr Marya to a client, DHL, were based on an hourly rate booking, rather than a piece rate.

[18] Mr Forehan also stated in cross-examination that each owner driver had grounds to refuse a job, but there was also an expectation they would pick up and deliver, to the best of their ability, work assigned to them. He also said WorkCover premiums were paid by NTS on behalf of its owner drivers, but he believed it did so because this was a legislative obligation. He also said NTS secured group public risk insurance cover to ensure appropriate coverage was in place for the goods being carried, in circumstances where it was not realistic for individual owner drivers to maintain that level of cover. However, it was expected each owner driver would have third party insurance cover in place as a minimum requirement.

[19] He also indicated in cross-examination he was aware of numerous owner drivers who use their vehicles for purposes outside of the services they provide to NTS, and drivers were free to promote their services to other businesses. However, this did not extend to existing customers of NTS and it was appropriate, in his view, for NTS to be able to protect its business in this way. He also said he believed it was reasonable for NTS to require owner drivers to indicate when they were not available to provide services on a given day, or for an extended period of time.

[20] NTS submits Mr Marya’s engagement was covered by the Owner Driver Agreement he signed on 10 July 2012, and therefore he is not an employee protected from unfair dismissal under s.382 of the Fair Work Act 2009. It referred to the decision in Abdalla v Viewdaze Pty Ltd t/a Malta Travel Service 8(“Abdalla”) in which it submits a Full Bench of the Australian Industrial Relations Commission considered the legal principles applicable to whether a person is engaged as an employee or an independent contractor. It also referred to the decision of a Full Bench of Fair Work Australia in Jiang Shen Cai trading as French Accent v Do Rozario9 (“French Accent”).

[21] It also submits various indicia were identified by the Full Bench in the French Accent decision, which are relevant to the determination of this matter.

• Right to exercise control – NTS submits Mr Marya was entitled to choose the hours and days he worked and the routes he took to deliver goods. However, it also acknowledges it exercised some degree of control in relation to the clothing he was required to wear, but submits this was done to comply with occupational health and safety requirements.



• Genuine and practical entitlement to work for others – NTS submits Mr Marya had a genuine and practical entitlement to work for others, however, it acknowledges it encouraged owner drivers to work what it described as “suitable hours” in order to enable them to maximise their potential earnings with NTS.



• Tools and equipment – NTS submits Mr Marya was responsible for holding a drivers licence and providing a suitable vehicle in order to provide services to NTS, and he complied with these requirements. It submits he was also responsible for paying all costs associated with running the vehicle, including maintaining appropriate insurances. It also acknowledges it provided radio equipment to him to assist with deliveries and the provision of services to NTS. It submits he did not pay for this radio equipment, but instead covered the costs of installation. In addition, it did not prohibit Mr Marya from preparing and distributing business cards or other material promoting his own business.



• Delegating or subcontracting work – NTS refers to sub clause 1.4 of the Owner Driver Agreement entered into by Mr Marya and submits it establishes he was entitled to delegate or subcontract work pursuant to that sub clause.



• Right to terminate services – NTS refers to sub clause 9.1 of the Owner Driver Agreement which states, “The Company or the Owner-Driver may terminate this agreement in writing without cause or prior notice at any time,” 10 and submits this is indicative of a principal and independent contractor relationship, rather than one of employer and employee, which would require a minimum period of notice.



• Remuneration and deduction for sick leave, annual leave, taxation etc – NTS submits Mr Marya was required to have, and had, an Australian Business Number during the period of his engagement. He was also paid on a piece rate basis for jobs performed pursuant to recipient created tax invoices. He also elected to participate in a program provided by NTS whereby 90% of fees earned from clients are paid to the owner driver despite whether they have been received from the client at that point in time. It submits this arrangement is also consistent with an independent contractor relationship. It also submits Mr Marya was responsible for managing his own income tax obligations, and no income tax was withheld by it from payments made to him. In addition, he was not paid annual leave or sick leave, and no superannuation contributions were made on his behalf.



• A profession or trade – NTS submits the nature of the profession of an owner driver transporting goods is consistent with an independent contractor relationship and, in case of any ambiguity, sub clause 1.2 of the Owner Driver Agreement provides, “The Owner Driver shall at all times be an independent contractor and no employment, agency, partnership or other relationship shall exist between the Owner-Driver and the Company…” 11

[22] NTS also refers to two recent decisions of the Fair Work Commission in Tull v Allied Express Transport Pty Ltd T/A Allied Express 12 (“Tull”) and Parker v Allied Express13(“Parker”). It submits when the approach taken by the Commission in both matters is applied to the indicia referred to in this matter the Commission can be satisfied the nature of the relationship between NTS and Mr Marya was one of independent contractor and principal, and not employer and employee.

[23] Mr Marya acknowledges he signed the Owner Driver Agreement with NTS at the time he commenced but submits the terms were never honoured by NTS, and he was effectively treated as an employee during the period of his engagement. He also submits NTS had complete control over how, where, and when he worked and he could not be considered to be operating his own business at the time.

[24] He also submits there was no real prospect of delegating or sub-contracting the work to anyone else, given the degree of control over the work and how it was performed. He also submits there was no possibility of negotiating differential rates, and he had no option but to accept the rates provided by NTS. In some cases these were less than the normal pay rate in circumstances where a special deal was provided to a client.

[25] He also submits the expectation in regard to working hours was normally between 10 and 12 hours each day, and days off were not permitted during the busiest times of the year. He submits a request he made to take six weeks off following his wife giving birth was refused, and instead he was only able to take a few days leave.

[26] Mr Marya also submits he did not provide NTS with tax invoices at any stage, but was paid what he described as a salary on a daily basis, which was paid into his bank account less a deduction of a weekly administrative fee. This fee was deducted regardless of whether he worked or not. Mr Marya also submits the Owner Driver Agreement required him to have various types of insurance in place, but he did not always comply with this requirement and was not asked at any time to provide proof of this coverage.

[27] Mr Marya also relies on the decision in Hollis v Vabu 14 in support of his submission he should be considered to be an employee, rather than an independent contractor. He submits the decision found the bicycle couriers involved in that matter did not have any control over the manner in which they performed the work, they were required to wear a uniform, and were presented to the public “as emanations of Vabu”15. He submits they also had no scope to bargain about remuneration and were ultimately found to not be running their own business.

[28] Mr Marya also submits he was not running his own business and NTS had “ultimate control over me,” 16 particularly given the provisions in sub clauses 3.3, 3.4 and 3.7 in the Owner Driver Agreement. He also makes reference to what he describes as the “organisation test,” where the individual is found to be an integral part of the business, rather than an accessory to the business operation.17 Mr Marya again submits he was in a similar position, and his work was part of NTS’s core business activities. He also submits he was economically dependent on NTS and had no realistic ability to negotiate his rate of remuneration, or to offer his services and provide work elsewhere.

[29] Mr Marya also makes reference to the decision in On-Call Interpreters and Translators Agency Pty Ltd v Commissioner of Taxation (No 3) (“On-Call Interpreters”) 18 which distinguished between individuals who could pick and choose which assignment was selected. He submits sub clause 3.10 of the Agreement with NTS removes any ability for him to advertise his services to other potential clients. Mr Marya also indicated in cross-examination he supplied the vehicle used to provide services to NTS, and had his own Australian Business Number. He also said he had read the Agreement provided to him when first engaged by NTS, prior to signing it. He also acknowledged that clause 1.2 states he would at all times be engaged as an independent contractor, and he had not sought to take issue with this status during the time he was engaged. However, he also said he accepted this at the time only because that is what he believed then, but now believes he should have been considered to be an employee.

[30] Mr Marya also said he had at various times requested to start at different times on certain days, however, this also impacted on him in that his earnings were reduced on those occasions. He also suggests some of the records relied on by NTS indicating he had refused jobs on certain days were incorrect. He also said he typically worked for NTS from 7.30 a.m. until 5.30 p.m. each day, and this left virtually no time to promote his services to clients elsewhere.

Consideration

[31] The submissions and evidence provided by Mr Marya in this matter make clear he does not believe he was treated fairly during the time he was engaged by NTS. He also takes issue with the grounds on which NTS decided to terminate his services. However, those matters are issues to be dealt with at a later point if Mr Marya is found to be a person protected from unfair dismissal under s.382.

[32] The parties have each made reference to various authorities in dealing with the initial threshold issue about whether Mr Marya was engaged by NTS as an employee, or whether he was engaged to prior provide services to the business as an independent contractor. Mr Marya has referred to the decision of the High Court in Hollis v Vabu, and the decision of the Federal Court in On-Call Interpreters. In the decision of Hollis v Vabu the High Court overturned an earlier New South Wales Court of Appeal decision when the majority found the bicycle courier involved was an employee. Their Honours approached the position of the bicycle couriers in the following way:

“In classifying the bicycle couriers as independent contractors, the Court of Appeal fell into error in making too much of the circumstances that the bicycle couriers owned their own bicycles, bore the expenses of running them and supplied many of their own accessories. Viewed as a practical matter, the bicycle couriers were not running their own business or enterprise, nor did they have independence in the conduct of their operations. A different conclusion might, for example, be appropriate where the investment in capital equipment was more significant, and greater skill and training were required to operate it. The case does not deal with situations of that character. The concern here is with the bicycle couriers engaged on Vabu's business. A consideration of the nature of their engagement, as evidenced by the documents to which reference has been made and by the work practices imposed by Vabu, indicates that they were employees.” 19

[33] The High Court then continued to identify six aspects of the facts in that matter in support of their conclusion that the bicycle couriers were, in fact, employees.

[34] In the decision in On-Call Interpreters the Federal Court applied what was described as the “entrepreneur test” in considering whether the individual involved was performing work as an entrepreneur, who owned and operated the relevant business, or whether they were instead working in the business of another.

[35] NTS refers, in response, to the decisions in Abdalla and French Accent. It has also made reference to the more recent decisions of this Commission in Parker and Tull which applied what has been described as the “multifactor” approach established by earlier decisions referred to in Abdalla and the Full Bench decision in French Accent. I also consider it appropriate to approach the determination of this matter in that way based on those authorities.

Control

[36] Mr Marya submits NTS effectively exercised complete control over the work and how it was performed. He also submits it was generally expected drivers would be available to work between 10-12 hours each day. However, NTS submits Mr Marya was entitled to choose the hours and days he worked and points to examples when he did not attend on certain days, or commenced at a later time in the day. It also submits it simply recommended to owner drivers that certain hours be worked in order to maximise their remuneration. It also required some certainty in understanding when drivers would be available to service clients. The flexibility in regard to availability and start times does appear to have more in common with a person conducting their own business, rather than a person engaged as an employee.

Work for others

[37] Mr Marya submits the demands associated with providing services for NTS, and what it required, meant there was little realistic possibility of drivers providing services to other businesses, despite what NTS submits or the Owner Driver Agreement provides for. Mr Marya also submits the “non-solicitation” term in sub clause 2.1 of the Agreement, which prohibits owner drivers from providing services to any businesses associated with NTS, means the option of rendering services elsewhere is unrealistic.

[38] NTS makes reference in response to sub clause 1.3 of the Agreement, which provides that owner drivers may provide services to other persons or businesses not associated with NTS. Mr Forehan’s evidence also made reference to owner drivers providing services to NTS, as well as providing services to businesses elsewhere. He also defended the non-solicitation provisions in sub clause 2.1 of the Agreement on the basis that it was entirely appropriate for NTS to seek to protect its business by restraining its owner drivers from providing services in their own right to existing customers of NTS.

[39] I accept that it might be difficult in practice for owner drivers, like Mr Marya, to actually provide services elsewhere, given the time commitment involved in providing services to NTS. However, I am also satisfied the Owner Driver Agreement does not preclude this from occurring and the evidence in the proceedings indicates some owner drivers, at least, provide services to other persons or businesses, who are not existing clients or customers of NTS.

[40] In addition, I do not share Mr Marya’s views about the operation of the non-solicitation provision in sub clause 2.1 of the Owner Driver Agreement, or the rationale for its inclusion in the Agreement. I am satisfied it is both appropriate and understandable for NTS to look to protect its business by seeking to prevent existing customers/clients being “poached” by its owner drivers. I am also satisfied it remains open to those owner drivers to seek to promote themselves to other persons or businesses, and to provide services to any of them, if they choose to do so.

Tools and Equipment

[41] There is no dispute that Mr Marya was required to provide a suitable vehicle in order to provide services to NTS and he generally complied with this requirement. He was also responsible for the running costs associated with the operation of vehicle, as well as maintaining appropriate insurance cover. These arrangements are generally consistent with a typical owner driver/independent contractor relationship. NTS did provide radio equipment and charged Mr Marya a fee for this installation. Again, I am satisfied this is not inconsistent with an owner driver arrangement in that it assists the owner driver in facilitating the provision of services.

[42] Mr Marya sought to take issue with the fact NTS also provided additional insurance cover, which it charged the owner drivers a fee for. This cover was taken out in respect of the goods being carried for the customers and clients of NTS. He submits this situation demonstrates the owner drivers were not required to obtain all relevant insurance cover. However, the provision of this insurance coverage for the goods being carried on behalf of the customers and clients of NTS was explained by NTS on the basis that it was able to obtain insurance cover, on behalf of all owner drivers, at a cost that each individual owner driver would not be able to afford. NTS then covered this cost by obtaining a proportionate payment from each owner driver.

Delegation or Sub-Contracting

[43] The parties provided limited submissions about this matter. Mr Marya again submits the demands placed on owner drivers by NTS made this option difficult. However, NTS submits it was possible, providing it was notified, and this occurred on occasions. Again, this ability has more in common with an independent contractor relationship, rather than one of employment.

Deductions from Remuneration/Paid Leave Entitlements

[44] Mr Marya submits he did not provide NTS with tax invoices, but was paid what he described as a salary on a daily basis, which was paid into his bank account less the deduction of a weekly administrative fee. He submits this amount was deducted regardless of whether he worked or not. NTS submits Mr Marya was required to have an Australian Business Number and was paid on a piece rate basis for jobs performed. It also submits he was responsible for payment of his own income tax obligations, and no income tax was withheld by it from any payments made to him. In addition, he was not provided with paid annual leave or paid sick leave entitlements. In addition, it did not make superannuation contributions on his behalf. These arrangements again seem consistent with a principal/independent contractor relationship.

A Profession or Trade

[45] There is no dispute that Mr Marya signed a document entitled “Owner Driver Agreement” on 10 July 2012. The Agreement indicated at the outset he was engaged to provide services as an owner driver, being a “Freight Courier and Deliverer,” who would be required to participate in the freight courier and delivery services of NTS. Mr Marya submits he signed the Agreement without actually understanding what the role involved, and now believes the relationship was one of employment rather than independent contracting. However, he does not dispute the fact he signed the Owner Driver Agreement and, at the time of doing so, had read the document and agreed to its terms.

Conclusion

[46] I am satisfied, in conclusion, based on consideration of the indicia referred to above, that the nature of the relationship between Mr Marya and NTS was one of principal and independent contractor, rather than employer and employee. I am also satisfied this conclusion is consistent with the established authorities, including the recent decisions of this Commission in Tull and Parker, referred to previously.

[47] Given that Mr Marya was not an employee of NTS it follows he is not a person protected from unfair dismissal under s.382 of the Act. The application is accordingly dismissed.

COMMISSIONER

Appearances:

Mr Marya appeared on his own behalf.

Mr S. Burke of Laycock Burke Castaldi appeared on behalf of the Respondent.

Hearing details:

2015.

Melbourne:

8 July.

 1   Fair Work Act 2009 (Cth) at s.382(a)

 2   Exhibit NTS1 at para 11

 3   Ibid at para 12

 4   Ibid at para 36

 5   Ibid

 6   Ibid at para 37-38

 7   Exhibit NTS2 at para 4

 8 (2003) 122 IR 215

 9   [2011] FWAFB 8307

 10   Exhibit NTS1 at annexure A, clause 9.1

 11   Ibid at clause 1.2

 12   [2015] FWC 3319

 13   [2015] FWC 757

 14 [2011] HCA 44

 15   Transcript at PN441

 16   Ibid

 17   Ibid at PN443

 18 [2011] FCA 366

 19   Above n.xiv at [47]

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