Fair Work Ombudsman v Metro Northern Enterprises Pty Ltd
[2013] FCCA 216
•7 May 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v METRO NORTHERN ENTERPRISES PTY LTD | [2013] FCCA 216 |
| Catchwords: INDUSTRIAL LAW – Whether representation that contracts of employment were contracts for services – employment relationship test – totality of relationship – defences under s.357 of the Fair Work Act 2009 (Cth) – whether contraventions of ss.44 and 45 of the Fair Work Act. |
| Legislation: Crimes Act 1900 (NSW) Criminal Code Act 1995 (Cth) Door-to-Door Sales Act 1967 (NSW) Evidence Act 1995 (Cth), s.140 Fair Work Act 2009 (Cth), ss.13, 44, 45, 87, 90, 357, 539, 545, 547 Workplace Relations Act 1996 (Cth), ss.208, 901 |
| Cases cited: Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Australian Competition and Consumer Commission (2007) 162 FCR 466; [2007] FCAFC 132 Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 |
| Applicant: | FAIR WORK OMBUDSMAN |
| Respondent: | METRO NORTHERN ENTERPRISES PTY LTD ABN 75 106 277 383 |
| File Number: | SYG 1361 of 2011 |
| Judgment of: | Judge Barnes |
| Hearing dates: | 8, 9, 10 February 2012, 1, 2 and 29 August 2012 |
| Last date of submissions: | 14 February 2013 |
| Delivered at: | Sydney |
| Delivered on: | 7 May 2013 |
REPRESENTATION
| Counsel for the Applicant: | Ms E Raper |
| Solicitors for the Applicant: | Bartier Perry |
| Counsel for the Respondent: | Mr M Easton |
| Solicitors for the Respondent: | Maguire and McInerney Lawyers |
DECLARATIONS:
The Respondent contravened s.357 of the Fair Work Act 2009 by representing to Dion Carroll, Kathleen Coulton, Leah Swan and Stephanie Morgan (the Employees) that the contracts of employment under which they were or would be employed by the Respondent were contracts for services under which they would perform work as independent contractors.
The Respondent contravened s.45 of the Fair Work Act by failing to pay an hourly rate to the Employees in accordance with subcl.A.3.3 of Schedule A to the Commercial Sales Award 2010 (the Modern Award).
The Respondent contravened s.45 of the Fair Work Act by failing to pay overtime to the Employees in accordance with subcl.A.3.3 of Schedule A to the Modern Award.
The Respondent contravened s.45 of the Fair Work Act by failing to pay a vehicle allowance to Leah Swan in accordance with subcl.16.8(a) of the Modern Award.
The Respondent contravened s.44 of the Fair Work Act by failing to pay the Employees accrued annual leave on termination in accordance with s.90(2) of the Fair Work Act.
ORDERS:
The parties are to bring in short minutes of orders within 21 days of today’s date quantifying the amounts to be paid by Metro to the Employees as a result of the contraventions and interest thereon.
In default of agreement the parties are to notify chambers within 21 days of today’s date and address the quantification of entitlements in submissions to be filed prior to the hearing on penalty.
The matter be listed for a hearing on penalty on a date to be fixed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 1361 of 2011
| FAIR WORK OMBUDSMAN |
Applicant
And
| METRO NORTHERN ENTERPRISES PTY LTD ABN 75 106 277 383 |
Respondent
REASONS FOR JUDGMENT
These proceedings
The Fair Work Ombudsman (the FWO) commenced proceedings on 29 June 2011 alleging that the Respondent, Metro Northern Enterprises Pty Ltd (Metro), contravened s.357 of the Fair Work Act 2009 (Cth) (the FW Act) by representing to four persons, Dion Carroll, Kathleen Coulton, Stephanie Morgan and Leah Swan (the complainants) that the contracts of employment under which they were employed were contracts for services under which they performed work as independent contractors (the sham contracting allegation). Section 357 is a civil remedy provision.
In addition, the FWO alleged that, whether or not s.357 was contravened, as the complainants were employees the Respondent had contravened s.45 of the FW Act in its failure to pay the complainants an hourly rate pursuant to subcl.A.3.3 of Schedule A to the Commercial Sales Award 2010 (the Modern Award); its failure to pay the complainants in respect of overtime pursuant to subcl.23.1 of the Modern Award; and its failure to pay Ms Swan a vehicle allowance pursuant to subcl.16.8(a) of the Modern Award. In addition the Respondent was said to have contravened s.44 of the FW Act in its failure to pay accrued annual leave on termination pursuant to s.90(2) of the Act.
The capacity of the FWO to bring these proceedings is not in dispute. The Applicant seeks declarations and, if liability is established, payment of moneys to the complainants and the imposition of penalties as set out in the Statement of Claim filed on 29 June 2011.
At the heart of these proceedings is the issue of whether the complainants were employees of Metro or independent contractors.
Background
The Respondent is a corporation that trades under the business name “Nutrimax International” from a registered office and head office located in Albion Park, New South Wales. Metro was incorporated in 2003. It is in the business of selling kitchenware products. At all relevant times it was managed by Mr Danny Bizimovski (Mr Bizimovski), who was its director and secretary. He had previous experience operating a similar business. He and his wife were the shareholders in Metro.
As discussed further below, each of the complainants gave evidence of seeing a job advertisement in early 2010 to which they responded. The details of the various advertisements are discussed further below. Each complainant completed a period of initial training before engaging in the sale of the Respondent’s products. Some matters are not in dispute. The complainants each signed documents bearing the heading “Nutrimax International” described as a Deed of Acknowledgement, an Agent Status Report, a Payment Method Authority and an Independent Agent Agreement. They were each shown a Pay Structures Form. They each elected to be paid under Plan A which provided for payment per sale rather than Plan B which provided for payment per demonstration. According to the Respondent, those on Plan A were independent contractors whilst those on Plan B were employees.
In its Response, the Respondent admitted that each of the complainants was required to attend a period of training before selling Metro’s products and that thereafter they attended the Respondent’s premises regularly for the purpose of participating in group activities. While there is some measure of agreement about activities undertaken by the complainants, the Respondent does not admit that the complainants were required to perform these functions or that it controlled and directed their activities.
The complainants generated sales of Metro products by approaching members of the public at public venues such as shopping malls and plazas and by door-knocking, inviting them to enter a competition to win $1,000 worth of the Respondent’s products and handing out the Respondent’s promotional cards. Members of the public were requested to fill out an entry form which required certain personal details. The complainants telephoned or otherwise contacted individuals who had entered such a competition and informed them that they had each won a prize. They made arrangements with individuals who had entered the competition to receive a demonstration of the Respondent’s product range. The complainants conducted such demonstrations in the homes of potential customers. They also obtained referrals to other potential customers during the demonstrations and later contacted such persons with a view to conducting further demonstrations.
The complainants followed the Respondent’s sales approach as set out in scripts provided during training. They created new clients, serviced existing clients and administered goodwill to the general public at all times on behalf of the Respondent as set out in the Agent Status Report they had each signed. The complainants were provided with recommendations and advice as to where they might be able to obtain sales leads. As discussed below, they recorded details for Metro of all appointments for sales demonstrations and contacted Mr Bizimovski during each demonstration to “phone close” the transaction. Metro provided the complainants with promotional material they used when selling its products. They were required to return the promotional material upon request from the Respondent. The complainants did not invoice Metro for work they performed. None of them engaged other persons to carry out work for Metro.
After they ceased doing work for Metro, the complainants each lodged a workplace complaint with the FWO claiming, in essence, that they had not been paid as they ought to have been. They each attended an interview with FWO officers in April 2010.
In the Statement of Claim the FWO claimed, consistent with information in the complainants’ initial complaint forms, that Mr Carroll performed work for Metro between 18 January 2010 and 8 March 2010, Ms Coulton performed such work between 8 February 2010 and 8 March 2010 and that Ms Swan and Ms Morgan each performed work for Metro from 8 February 2010 to 15 March 2010. As discussed below, these dates are not in complete accord with those attested to by the complainants in their affidavits. The Respondent admitted that Mr Carroll was paid $1,000, Ms Coulton was paid $100, Ms Swan was paid $883.22 and Ms Morgan was paid $340.
For the reasons that follow, I have determined that the four complainants were employees and that the Respondent contravened certain provisions in the FW Act. The complainants have an entitlement to payments in accordance with the FW Act. While I have made findings relevant to quantification of such entitlements, the parties agree that quantification (as well as the imposition of civil penalties) should be dealt with after delivery of this judgment.
The issues
The main areas of legal dispute between the parties are whether the complainants were employees or independent contractors at law, whether the Respondent misrepresented any such employment as an independent contracting arrangement within the meaning of s.357(1) of the FW Act and, if so, whether the Respondent has established the defence to a s.357 contravention in subs.357(2) of the FW Act.
The Respondent did not dispute that if the Court found that the contracts with the complainants were employment contracts, then Metro would bear some liability for the entitlements claimed, given that it is a national system employer and the complainants would be national system employees to whom the Modern Award applied. It was conceded that, subject to it being established on the balance of probabilities that the hours claimed were in fact worked by the complainants, ordinary rates, overtime loadings and annual leave entitlements would follow with the quantification of such entitlements to be determined after findings on liability.
In ACE Insurance Ltd v Trifunovski and Others (2011) 200 FCR 532; [2011] FCA 1204 (which is referred to as ACE Insurance [2011] to distinguish it from the decision of the Full Court of the Federal Court on appeal in ACE Insurance Ltd v Trifunovski [2013] FCAFC 3 referred to as ACE Insurance [2013]) Perram J pointed out that the FW Act imports the common law understanding of employment (at [24] and [26]).
There is, however, no single test to determine whether an employment relationship exists. Recent judicial consideration of this issue has emphasised the need to have regard to the totality of the relationship. While in Stevens v Brodribb Sawmilling Company Proprietary Limited (1986) 160 CLR 16; [1986] HCA 1 the High Court accepted that the “control” test was an important indicator in determining the existence of an employment relationship, it was emphasised that the totality of the relationship is to be considered and that control is but one of a number of indicia (see Mason J at [23] – [24]). Mason J pointed out (at [9]) that the importance of control lay “not so much in its actual exercise…as in the right of the employer to exercise it” (also see Wilson and Dawson JJ at [10] – [12]).
As stated in Hollis v Vabu Pty Limited (2001) 207 CLR 21; [2001] HCA 44 (at [40]), the distinction between an employee and an independent contractor is “rooted fundamentally in the difference between a person who serves his employer in his, the employer’s, business, and a person who carries on a trade or business of his own” (and see [22], [39] and [47] – [48] and ACE Insurance [2011] at [29]).
More recently, in On Call Interpreters & Translators Agency Pty Ltd (ACN 006 272 760) v Commissioner of Taxation (No 3) (2011) 279 ALR 341; [2011] FCA 366 Bromberg J analysed various authorities, including Hollis v Vabu, and suggested (at [208]) that in determining whether a person was an independent contractor in relation to the performance of particular work it could, as the central question in the application of the totality test, be asked whether:
Viewed as a “practical matter”:
(i) is the person performing the work an entrepreneur who owns and operates the business; and,
(ii) in performing the work, is that person working in and for that person’s business as a representative of that business and not of the business receiving the work?
If the answer to that question is yes, in the performance of that particular work, the person is likely to be an independent contractor. If no, then the person is likely to be an employee.
In ACE Insurance [2011] Perram J stated the following (at [29]):
…first, the distinction between an employee and an independent contractor is ‘rooted fundamentally in the difference between a person who serves his employer in his, the employer’s, business, and a person who carries on a trade or business of his own’ (Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at 39 [40] per Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ citing Marshall v Whittaker’s Building Supply Co (1963) 109 CLR 210 at 217 per Windeyer J); secondly, the answers to that question are to be determined by reference to the ‘totality’ of the relationship (Hollis at 33 [24]); thirdly, a number of indicia have accreted over time in the authorities which are thought to throw light to varying degrees on the outcome without being determinative: the terms of the contract; the intention of the parties; whether tax is deducted; whether sub-contracting is permitted; whether uniforms are worn; whether tools are supplied; whether holidays are permitted; the extent of control of, or the right to control, the putative employee whether actual or de jure; whether wages are paid or instead whether there exists a commission structure; what is disclosed in the tax returns; whether one party ‘represents’ the other; for the benefit of whom does the goodwill in the business inure; how ‘business-like’ is the alleged business of the putative employee – are there systems, manuals and invoices; and so on – the list is neither exhaustive nor short: see Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16 at 24 per Mason J and 36-37 per Wilson and Dawson JJ, for application see Hollis at 42-45 [48]-[57] per Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ; Sweeney at 172-173 [30]-[33] per Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ…
The parties accepted that this non-exhaustive list of factors was illustrative of the range of factors the Court could consider. They are in general agreement that the existence of an employment relationship is to be determined by examining the totality of the relationship and the various indicia pointing one way or the other and in coming to a conclusion, standing back and examining the overall effect of the detailed facts found (see Roy Morgan Research Pty Ltd v Federal Commissioner of Taxation (2010) 184 FCR 448; [2010] FCAFC 52 at [35]). However, as discussed below, they disagree in relation to the significance of various factors, in particular the intention of the parties to the contracts as evidenced in the documents executed by them.
After the hearing, the Full Court of the Federal Court in ACE Insurance [2013] dismissed an appeal from the decision of Perram J in ACE Insurance [2011]. The solicitors for the Applicant drew the attention of the Court to this decision. It was said to be relevant. I agree. The parties were given, but did not take, the opportunity to make further submissions in relation to the Full Court decision.
Relevantly, in ACE Insurance [2013] Buchanan J (with whom Robertson J agreed) engaged in a detailed examination (at [23] – [106]) of the reasoning in cases dealing with issues arising where there is a contest as to whether work is carried out as an employee or in some other capacity. His Honour acknowledged that the findings of Perram J at first instance were in accordance with such authority.
As Buchanan J stated (at [31]), it is “necessary to examine the various facets and circumstances of the relationship to discern its true character”. His Honour made the point (at [102]) that the cases did not yield a “single or unifying test to determine whether an employment relationship exists”. Similarly, Lander J observed (at [9]) that “[t]here is no one single criterion that will necessarily be determinative of the issue. The issue will be decided by weighing all the relevant factors”.
Importantly in light of the submissions of the parties in this case, the Full Court in ACE Insurance [2013] was of the view that the terms of the contract or statements by the parties to the contract about the character of their relationship were not decisive (at [32] and [36]). Perram J had proceeded at first instance on the basis that post-contract conduct is not irrelevant. The Full Court found no error in this approach and held that “the nature of the relationship may be legitimately examined by reference to the actual way in which the work is carried out” (at [91]). Buchanan J pointed out that in Hollis v Vabu “a real emphasis was authoritatively placed on the notion of working in the business of another, rather than in the business of the individual” (ACE Insurance [2013] at [92] – [93]). His Honour suggested that while “the fundamental tests [had] remain[ed] more or less constant”, the emphasis on various matters had “shifted in response to the changing way work, and society in general, is organised” (at [38]). However the basic premise underlying the cases considered was said to be to the effect that “a contract of service requires discharge of duties by the personal service of the employee, whereas in a contract for services that is only one of the possibilities” (at [38]).
It is necessary to examine the whole of the relationship between Metro and the complainants in light of these principles.
The evidence
In support of the Application, the Applicant relied on a Statement of Claim filed on 29 June 2011 and affidavits of David Price (an FWO Inspector) affirmed on 7 November 2011 (together with exhibit DP1), 12 January 2012 and 7 February 2012; affidavits of Dion Carroll affirmed on 26 October 2011 and 10 January 2012; affidavits of Kathleen Coulton affirmed on 26 October 2011 and 9 January 2012; affidavits of Stephanie Margaret Morgan sworn on 27 October 2011 and 11 January 2012; and affidavits of Leah Swan affirmed on 25 November 2011 and 9 January 2012.
The Respondent filed a Response on 16 August 2011 and relied on an affidavit of Danny Bizimovski sworn on 23 December 2011; an affidavit of Clinton Bizimovski sworn on 23 December 2011; affidavits of Aaron Binstadt affirmed on 18 January 2012 and 3 February 2012; an affidavit of Maria Oldman affirmed on 22 December 2011; and an affidavit of Kevin Hay affirmed on 18 January 2012. Each of the deponents was cross-examined.
These are civil proceedings. The civil standard of proof applies. Section 140 of the Evidence Act1995 (Cth) addresses considerations to be taken into account (and see Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd and Others (1992) 67 ALJR 170 at 170 – 171; [1992] HCA 66, Qantas Airways Ltd v Gama (2008) 167 FCR 537; [2008] FCAFC 69 at [139] and Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Australian Competition and Consumer Commission (2007) 162 FCR 466; [2007] FCAFC 132 at [31]). I have borne in mind the factors in s.140(2), including the fact that there are allegations of significant contraventions of the FW Act which, if established, may lead to the imposition of potentially substantial pecuniary penalties.
As Dixon J stated in Briginshaw v Briginshaw and Another (1938) 60 CLR 336 at 362; [1938] HCA 34:
…reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters ‘reasonable satisfaction’ should not be produced by inexact proofs, indefinite testimony or indirect inferences.
Credit
Issues have been raised about the credit of most of the witnesses or the reliability of the evidence. I have had regard to the principles outlined above in making findings as to which version or account of disputed events I should accept. It is however necessary to make some general observations about the evidence and the credit of the witnesses.
Apart from David Price, a Fair Work Inspector whose credit was not challenged, the Applicant relied on the evidence of the four complainants who performed work for Metro in early 2010 and subsequently made complaints to the FWO in March 2010 about claimed underpayment of entitlements. They were each interviewed separately by officers of the FWO in April 2010. They swore affidavit evidence in these proceedings in 2011 and 2012 and were cross-examined in 2012.
The complainants have some direct interest in the result of these proceedings. The Applicant seeks orders that they be compensated in respect of amounts Metro was said to be required to pay them under the Modern Award and the FW Act in relation to minimum rates of pay, overtime, annual leave and a vehicle allowance. The amounts of compensation sought are modest. In the Statement of Claim the net amounts underpaid to the complainants were said to range from about $1,588 to $2,615. Lesser amounts are now sought.
The Respondent relies on the evidence of Mr Bizimovski (the director and active mind of Metro), his son Clinton Bizimovski who is admitted to be an employee of Metro, and Aaron Binstadt and Kevin Hay who are said to be independent contractors who conducted training for Metro and who are said to have had a long association with Mr Bizimovski.
In addition Metro relies on the evidence of Maria Oldman. Ms Oldman was (briefly) a sales consultant for Metro and undertook training at the same time as Ms Swan, Ms Coulton and, to some extent, Ms Morgan. Her credit is not in dispute (albeit issues were raised about the utility of her evidence).
These witnesses gave affidavit evidence about events in early 2010 in late 2011 and early 2012 and were cross-examined in 2012.
I have borne in mind the lapse of time between events (in particular, conversations), the accounts given in affidavit or oral evidence and the fallibility of memory with the passage of time. The remarks of McLelland CJ in Eq. in Watson v Foxman and Others (2000) 49 NSWLR 315 at 319 are in point. As his Honour stated:
…human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.
There were internal differences in the accounts of the witnesses at various times in particular in relation to what, if anything, was said by the Metro trainers about the concept of independent contracting. There were some differences within the overall evidence for each party and more significant differences between the evidence of various witnesses for the Applicant and that of the witnesses for the Respondent in relation to certain conversations, whether they occurred and, if so, what was and was not said.
Counsel for each party raised general and specific issues about credit, discussed further below. As a general principle however, where there are issues about the evidence of the witnesses such concerns do not simply lead to a preference for one witness over another. Rather, as discussed further below, it is appropriate to reason, as far as possible, by reference to “contemporary materials, objectively established facts and the apparent logic of events” (as considered in Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [31] per Gleeson CJ, Gummow and Kirby JJ).
The complainants and the witnesses for Metro, other than Ms Oldman, may be seen as having a direct or indirect interest in the proceedings, such that they may, whether intentionally or not, have given a partisan account of past events. The accounts of events have changed over time. I have borne this in mind as well as the passage of time and the fact that human memory is fallible.
While I do not accept all the evidence of all the witnesses, as discussed further below, apart from Mr Bizimovski, I did not form the view that the witnesses were lying or that they deliberately set out to mislead the Court such that the whole of their evidence was unreliable. Notwithstanding that, in some respects the evidence involves reconstruction rather than recollection and I found aspects of the evidence of certain witnesses to be demonstrably inconsistent with contemporaneous material, not dependent on individual recollection, inherently unlikely and also inconsistent with corroborated evidence of other witnesses. These contests are discussed further below.
There were significant inconsistencies in Mr Bizimovski’s evidence in support of the proposition that the complainants were not employees in his affidavits and in cross-examination about his practices and the practices of Metro. In important respects his affidavit evidence was inconsistent with or not supported by documentary evidence, including Metro’s own documents. The shifts and evasiveness in his evidence in this respect are not explicable on the basis of the fallibility of human memory about conversations and events. As elaborated on below, I found important aspects of his evidence to be demonstrably wrong, unreliable or not credible. These concerns are such that where there is a conflict between his evidence and that of other witnesses about past events or Metro practices, I prefer the evidence of these others witnesses. However there are respects in which his evidence was not inconsistent with that of the complainants and other witnesses or is supported by contemporaneous materials, objectively established facts and the apparent logic of events. I am satisfied that evidence of this nature should be accepted, notwithstanding my general concern about Mr Bizimovski’s apparent readiness to change or remould his affidavit evidence.
In addition to those general issues, I have had regard to particular issues raised in relation to the credit of the witnesses.
Mr Price
David Price, a Fair Work Inspector and an employee of the office of the FWO, affirmed affidavits on 7 November 2011, 12 January 2012 and 7 February 2012. For the most part Mr Price described and attached copies of relevant documentation and responded to the affidavit of Mr Bizimovski.
Mr Price was of the view that on and from 1 January 2010 Metro employees were covered by the Modern Award and that the Commercial Travellers, & C. (State) Award (the Transitional Award) applied to employees engaged as sales consultants in Australia during the time in question. This is not disputed. He calculated the complainants’ entitlement to pay on the basis that they were employees based on their diary entries and evidence in relation to cash payments received from Metro.
Mr Price took issue with some aspects of Mr Bizimovski’s evidence. In particular, he stated that on 28 April 2010 Mr Bizimovski did not say words to him to the effect that “After the training, the people are given a choice of whether to be contractors or employees of the company”. Mr Price gave clear, consistent evidence. No issue was taken with his credibility. In contrast there are significant issues about inconsistencies in Mr Bizimovski’s evidence. I prefer the evidence of Mr Price where it is in conflict with that of Mr Bizimovski.
The complainants
There are four complainants. The Applicant submitted they were witnesses of truth who gave largely consistent accounts of the circumstances of their engagement, the content of their training and instruction and the circumstances in which they worked, in particular, the level of direction and control exercised over them by Metro. As submitted, it is relevant that the complainants were not highly skilled, well-educated persons with a history of negotiating contractual arrangements. They responded to what counsel for the Applicant described as “lower level” advertisements, being advertisements for customer service, sales or personal assistant roles. I accept that to the extent that there was anything to be gained by the complainants by giving evidence (in terms of compensation), it was modest.
The Respondent submitted that the Court must be concerned that the complainants had colluded in relation to their evidence and that such evidence should not be accepted unless corroborated (other than by material from other complainants). In support of this proposition reliance was placed on the fact that the four complainants attended the office of the FWO on 3 March 2010, went into the same room with someone, started filling out their Workplace Complaint forms and saw each other’s “paperwork”. Mr Price’s evidence in cross-examination was that the systems in place at the time did not provide for such an attendance by the complainants to be recorded. It was submitted that, inescapably, the complainants had contaminated each other’s recollections. The Respondent also submitted that the complainants’ supposedly contemporaneous diaries and Ms Swan’s vehicle travel log were obviously constructed retrospectively and by reference to other complainants’ records. It was claimed that the complainants each made radically different and contradictory claims in 2010 (in their FWO Workplace Complaint forms and interviews) compared to their 2011 and 2012 evidence in these proceedings.
I am not persuaded that the fact that the complainants attended the Wollongong office of the FWO on 3 March 2010 to enquire about making a complaint, were seen together on that occasion and could (and in Ms Swan’s case did) see the “paperwork” of others (in particular a copy of the contract documents with Metro signed by Ms Coulton which Ms Swan recognised as the same forms she had signed) establishes contamination of their individual recollections. The complainants did attend the initial meeting together. There was no formal interview, although they all saw a FWO officer together. They subsequently completed separate complaint forms. In April 2010 each complainant was separately interviewed by FWO officers. Their “paperwork” consisted of common form documents each had signed with Metro. I accept that their recollections were more likely to be accurate at the time of their FWO interviews in April 2010 than thereafter and have borne this in mind in relation to inconsistencies in their evidence.
Ms Coulton and Mr Carroll each signed Workplace Complaint forms on 8 March 2010. I accept that by that stage they had received some advice from the FWO office (as Mr Carroll acknowledged) as to the potentially applicable Award (to which their complaint forms referred) and as to the possibility that (as each wrote on their forms) they were employed as a “contractor” under a “sham contracting arrangement”. Their forms are not otherwise completed in a manner that supports the drawing of any inference of collaboration such as to contaminate their evidence in its entirety. Their complaints are expressed in different terms (albeit they both relate to a claim of non-payment). Relevantly, they described their duties in different (albeit consistent) terms. Mr Carroll referred to the role as involving “Generating your own leads. Canvassing all your leads over the telephone, making appointments, going door to door and selling the product. Training on a day to day basis”. Ms Coulton described her job duties/role as “cold canvas (sic) in shopping centres & referrals from clients to make more clients. Sales”.
Ms Swan and Ms Morgan were still working for Metro at this time. Ms Swan and Ms Morgan each signed Workplace Complaint forms on 16 March 2010. Unlike Ms Coulton and Mr Carroll, who described their job titles as “Commercial Traveller/Advertising Sales Rep”, they each described themselves as “Kitchen nutrition consultant”. Both responded “unsure” in relation to whether they were employed under specified categories (including “contractor”). They made no mention of any “sham contracting arrangement”. However, beyond this, their complaints were not identical in all respects. Thus, Ms Swan described her job duties/role as “door to door sales, marketing, phone canvassing, telemarketing, door to door promotions, public promotions”. She was detailed and specific in relation to asserted categories of non-payment or reimbursement she sought from Metro for items for which she had kept receipts (including, relevantly, her diary). In contrast, Ms Morgan’s description of her job duties/role was “door to door knocking, shop carding, phone canvassing, marketing, door to door promotions”. She claimed categories of non-payment in similar terms to Ms Swan, but not in as extensive a manner.
Given that the complainants each had the same position at Metro, these similarities are not such as to establish collusion or such as to lead to a rejection of the credibility of their evidence.
In their Workplace Complaint forms each complainant referred to the existence of supporting documents. In evidence are copies of diaries each complainant provided to the FWO and Ms Swan’s vehicle travel log. Ms Swan was the only complainant to keep a vehicle travel log. Contrary to the Respondent’s submission, I do not accept that it was constructed by reference to the other complainants’ records. I accept that Ms Swan kept the log book during her time with Metro although, as she conceded in cross-examination, while the first entry was for the first day of training, she completed it after the fact for that day. There were also other times where she did not record each trip contemporaneously. I accept that the log book is not a perfect record. For example, the log book does not accord with Ms Swan’s account in cross-examination of her movements on 20 February 2010 (based on her diary rather than recollection). Each round trip from her home to the Metro office is said to be 22 km. However I am not persuaded that the degree of estimation this suggests and the single demonstrated inconsistency is such that Ms Swan’s evidence about the content of training and the nature of her work for Metro should be rejected.
As to the diaries kept by each complainant, contrary to the Respondent’s submission that none of the complainants provided satisfactory explanations for why they started keeping diaries in the first place, Ms Morgan stated quite clearly in cross-examination that Mr Bizimovski told them to get diaries for their appointments. Ms Swan gave similar evidence about why she started a diary. This was not inconsistent with her evidence to the FWO in April 2010 about the different issue of why she started recording her hours worked in her diary. I accept that the complainants were advised to record Nutrimax appointments in diaries and that, to varying extents, they did so. Contrary to any suggestion to this effect I do not accept that the records of hours worked in the diaries were completed contemporaneously. The complainants did not give clear and consistent evidence about why and when they recorded hours worked. There was no reason for them to keep a contemporaneous record of hours worked as they were not paid by the hour. This does not affect the accuracy of the recording of appointments. Nor do I regard it as such as to render the complainants completely unreliable witnesses in all respects.
Insofar as the Respondent asserted that the diaries were obviously constructed retrospectively by reference to the other complainants’ records, that is clearly not the case in relation to Mr Carroll who started training with Metro on 18 January 2010 (before the other complainants) and whose recorded appointments, meetings and hours worked bear little resemblance to those of the other three complainants, except insofar as in the last week recorded in his diary he records meetings and carding also recorded by others. As the complainants attended the same meetings and often “carded” together, no adverse inference is to be drawn from such similarities.
Mr Carroll has, over time, made varying claims about whether he worked on Australia Day 2010. However, apart from the fact that he recorded hours worked on 26 January 2010 contrary to his evidence (including to the FWO in April 2010) that he did not work Australia Day 2010, no other specific inaccuracy was established in his diary. I accept Mr Carroll’s evidence that his diary was “not 100 per cent”, that it was “sloppy”, that he did not record everything and that sometimes he made entries retrospectively. By the time of his cross-examination he acknowledged he had no recollection of his activities on particular dates. I have borne this in mind. I note that he readily volunteered that he could not remember matters and that the entries of total hours worked on each day were not inserted contemporaneously.
There are a number of specific concerns about his evidence that relate to what Mr Carroll was told by Metro about the nature of his relationship with Metro. He was unable to explain why in his Workplace Complaint form completed in March 2010 he stated that the work with Metro was commission-based only and that they were contractors, yet in his affidavit he claimed that as far as he understood, whatever plan they chose, everyone was an employee. His Workplace Complaint form included an unreliable and apparently exaggerated estimate of having worked 70 hours per week. In cross-examination he reiterated that he was never told by the Respondent that he was a contractor, but later conceded that it was possible that he had been told. He was unable to explain why, if he had never been told he was a contractor while at Metro, he described himself as a contractor and wrote “sham contracting arrangement” on his Workplace Complaint form. However he did recall being taken through the form by the office of the FWO which may have accounted for the reference to “sham contracting arrangement”. It is clear that at least by 8 March 2010 he understood that Metro regarded him as an independent contractor. For the most part Mr Carroll was frank in disclosing his inability to recall exactly what was said in his training, although he was consistent in his explanation of his understanding of what his actual duties for Metro were and of what activities he did. I have had regard to these factors in considering his evidence. I do not however find that he was an entirely unreliable witness, albeit his recollection of conversations was imperfect.
Ms Swan recorded a meeting on the morning of 4 March 2010 in her diary, but gave evidence in cross-examination that the meeting was to discuss making a complaint to the FWO. This concession does not raise a wider doubt about the validity of her diary as a record of activities such as to cast general doubt on her credibility. She gave evidence that she started keeping a diary specifically in connection with her work at Nutrimax on the advice of Mr Bizimovski. She started to record hours worked in a notebook and subsequently transferred entries to a diary. Although her evidence as to why she recorded “hours” lacked clarity, her evidence about keeping a vehicle log book for tax purposes and her claims that, after her time at Nutrimax, she had entered total hours worked each day in her diary does not establish collusion with the other complainants. She specifically denied looking at the diary entries of the others. Unsurprisingly, her diary entries are largely consistent, but not identical, with those of Ms Coulton and Ms Morgan in relation to common activities.
It is the case that Ms Swan’s claims (in her Workplace Complaint form of March 2010, her FWO interview of April 2010 and in her later affidavit and oral evidence in these proceedings) about her understanding of what the contractual arrangement with Metro entailed have not been entirely consistent. I accept her evidence that, in effect, she did not fully appreciate the nature of the arrangement as represented in the Independent Agent Agreement at the time she signed that document, but that after later consideration of the copy of the agreement signed by Ms Coulton she had a greater understanding.
Ms Swan kept contemporaneous notes of the training she attended. Despite some issues in relation to particular records in her vehicle log book and diary, on balance I accept that Ms Swan gave generally consistent evidence about the nature of the training and activities undertaken at Metro. As discussed below, her evidence in this respect was generally consistent with and supported by Nutrimax documentation. However, as with the other witnesses, her recollection of what was said has to be seen in light of the time that has passed and the fallibility of human memory. Her recollection in April 2010 (as evidenced in her FWO interview) as to what Mr Bizimovski told her in training was, as she conceded, stronger than at the time of her later cross-examination. I have borne this in mind in relation to inconsistencies in her evidence.
Ms Morgan claimed that she generally wrote appointment and meeting times in her diary in advance and wrote finishing times the same day, but that she did not add up her hours until after she finished working for Nutrimax. Unlike the other complainants, she had a naïve and mistaken understanding that there would be a component of salary in her remuneration as a result of conversations with Mr Bizimovski about potential earnings.
Ms Morgan conceded that the complainants spoke to each other about the overall hours they worked with Nutrimax and in that sense compared diaries. She acknowledged she sometimes changed her initial diary entries, for example when there were changes in appointments, so that there could be apparently conflicting entries on the one day. However her diary was maintained as a working diary, rather than as a complete record. She conceded that it was incomplete. She denied seeing the diaries of others or having spoken to Ms Swan about the hours they worked, but also explained that they attended the same training and carded and canvassed at the same time in accordance with Mr Bizimovski’s instructions.
Ms Morgan made clearly incorrect double entries for an appointment and a meeting at the same time on one date in her diary, 16 February 2010. She admitted to possible diary inaccuracies, but otherwise gave generally clear and consistent evidence as to her recollection of her duties for Metro, the extent of her recollection and her understanding of the training. She did explain that when she referred in her affidavit to a conversation with Mr Bizimovski in which he said she would be “on $75,000” she assumed this was a salary. A high degree of naivety (given her then salary of $35,000 and lack of experience) may explain this misapprehension.
While Ms Morgan claimed the concept of independent contractor was not mentioned during initial Metro training, she also said she did not know what an independent contractor was at that time. She explained in cross-examination that by the time of her April 2010 FWO interview she was aware that the Independent Agent Agreement she had signed stated they were contractors because after the Windsor trip Mr Bizimovski had told them they had signed as contractors. This was the basis for her evidence to the FWO that they signed paperwork after training that said they were “contractors”. I accept this evidence, although I do not accept that Mr Bizimovski promised Mr Morgan a wage or salary of $75,000 (and subsequently $100,000) per annum. I do accept he talked about the possibility that she could earn such an amount. Her evidence to the FWO in April 2010 is consistent with a Metro trainer having explained the pay structure in terms of commission as stated in the Metro Pay Structures document. I accept that this occurred. The concerns raised about her evidence are not such as to satisfy me that she was an entirely unreliable witness.
Ms Coulton recorded in her diary the time on 3 March 2010 she attended the FWO office and, like Ms Swan, the time on 4 March 2010 she went to a meeting with the other complainants to discuss making a complaint to the FWO. While these times cannot be (and now are not), claimed as hours worked for Metro, this does not render her diary completely unreliable or indicate collusion with the other complainants. It was established that (as Ms Coulton ultimately admitted) she had made mistakes in dates and times, that the diary was not completely reliable and that she had incorrectly included an entry for hours worked on Saturday 13 February 2010 (based on an incorrect entry for childcare on that date). She acknowledged that she may have written things in advance and sometimes forgotten to correct them. Ms Coulton’s evidence that she wrote finishing times in her diary to keep a record of what pay she was supposed to be getting is not consistent with her understanding of the payment structure for the payment plan she chose (Plan A). However it does accord with providing such information to the FWO and with Ms Morgan’s evidence about adding up the hours she worked after she finished working for Nutrimax. I am not satisfied that Ms Coulton calculated all hours worked contemporaneously. On balance I accept that the complainants calculated hours worked in their diaries after the event.
In her affidavit evidence Ms Coulton claimed that she understood that she was signing the Metro documents to get the sales kit to start working as a sales manager of Nutrimax. She stated she was not given a copy of the documents she signed on 12 February 2010, but did explain in cross-examination she meant they were not offered a copy at that time. She later asked for and received a copy from Metro.
Ms Coulton denied she was told by Metro that she could work as an independent contractor or employee, that the issue was raised during training or that the difference between the two pay structures available was explained on that basis. In cross-examination Ms Coulton reiterated that during training the concept of independent contractor was never raised. However she also claimed the trainees were not given a chance to read the Independent Agent Agreement (which states that independent agents are not employees) before signing it, that she did not read it and when asked if she glanced at it, replied “No, not particularly”. She maintained this claim notwithstanding that she had crossed out all the male gender references in the Agreement. I do not accept that she did not read the Independent Agent Agreement.
Later in cross-examination Ms Coulton claimed that the contractual documents were given to her and signed by her on the first night of training (8 February 2010). When it was put to her they were dated 12 February 2010 she retreated from this claim. She then claimed the forms were brought out again on another day and they filled in their Plan A or Plan B payment structures election. She claimed she did not read the documents on the second occasion and did not recall whether anyone raised a question about what any of the documents meant. Other complainants recalled trainees raising issues or there being discussion of some aspects of their relationship with Metro. Ms Coulton did however make it clear that she had a very limited recollection of the discussion and explanation in relation to the Independent Agent Agreement. Her evidence as to what was not said (as well as what was said) has to be seen in this light. However, interestingly, her evidence about seeing and signing documents on two different occasions is not inconsistent with Mr Bizimovski’s evidence in this respect or with the confusing format of the Agent Status Report as discussed below.
Ms Coulton’s oral evidence was at times inconsistent and partisan. She appeared to be particularly aggrieved by her experience with Metro. She was unable to recall with any certainty what was and was not said, in particular during initial training. She was unable to explain why in her March 2010 Workplace Complaint form she indicated she was employed as a contractor. Her evidence about whether she read the Independent Agent Agreement before signing it changed over time and was not credible. In April 2010 she told the FWO she had read the “information” when signing the Independent Agent Agreement (which, as discussed below, states that independent agents are not employees), although she was told it was not necessary to do so. I accept that she did so. However Ms Coulton’s evidence about the work she did for Metro and the training in Metro sales practices was largely consistent, both internally and with that of the other complainants and with the Metro documentation.
In significant respects, in relation to the sales methods and procedures the complainants were introduced to in the Metro training and the actual work they did for Metro, the complainants generally gave (and maintained in cross-examination) broadly consistent evidence. Where there are specific relevant disputes in the evidence they are considered below, but overall I did not find Ms Swan, Ms Morgan and Mr Carroll to be unreliable witnesses in this respect. Ms Coulton’s oral evidence was less convincing, insofar as she appeared defensive and at times sought to present Metro (and Mr Bizimovski) in the worst possible light. It was clear she felt that advantage had been taken of her. However to the extent her evidence is consistent with other evidence I do not reject it.
As indicated, in relation to the evidence of the complainants about conversations and what they were told during Metro training, I have borne in mind generally the passage of time and fallibility of human memory and the possibility of reconstruction of specific events or conversations. I do not consider, however, that the complainants consciously recreated or reinvented past conversations with Metro representatives or that their evidence about the nature and manner of the work they did for Metro is unreliable.
The complainants’ diaries were shown to contain some inaccuracies in cross-examination. However the inaccuracies in actual hours worked as recorded in each of the complainant’s diaries does not go so far as to evidence a propensity by each complainant to affirm matters that were clearly incorrect to improve the Applicant’s case such as to raise issues about collusion relevant to their general credibility. Each complainant admitted there were some errors in diary entries. I accept that the diaries are not accurate as to hours worked in all respects, that not all the entries were made contemporaneously and that there was a degree of reconstruction in relation to actual hours worked. However, the limited demonstrated approximations and inaccuracies (in respect of which the Applicant does not now press any claim in relation to hours worked) are not such as to establish that all the evidence of each complainant is fundamentally unreliable in the manner contended for by the Respondent.
The Respondent’s witnesses
The Applicant submitted generally that the evidence of Mr Bizimovski, Mr Clinton Bizimovski and Mr Binstadt should not be accepted. It was contended that Mr Bizimovski was an unfavourable witness whose evidence was inconsistent and unbelievable and that in cross-examination he constantly shifted away from his affidavit evidence.
The applicant also raised issues about the credibility and the reliability of the memory of the Respondent’s other witnesses, in particular in relation to what was said and not said to the complainants. Again, insofar as this concern relates to conversations the remarks of McLelland CJ in Eq in Watson v Foxman are in point.
Mr Bizimovski
As indicated, significant shifts in Mr Bizimovski’s evidence are apparent, particularly where his affidavit evidence proved not to be consistent with Metro’s own documentation or documents that had been produced in answer to notices to produce or subpoenas. Where such inconsistencies relate to Metro practices they cannot be said to reflect simply an inaccurate recollection of what was said or not said which may be explicable on the basis of the passage of time and/or the fallibility of human memory. Rather, Mr Bizimovski’s evidence was inconsistent, evasive and confusing in matters of significance to the central issue in this case.
Given that Mr Bizimovski is the director of Metro, responsible for its operations, with extensive experience in selling homewares and with, on his own evidence, knowledge of the distinction between employees and independent contractors, such shifts in his evidence raise concern about his credibility generally. That is particularly so given that he claimed that Metro sales consultants could be either independent consultants (as the complainants were said to be) or employees and that there was a clear distinction drawn between such categories of consultants and what they did for Metro.
Several examples illustrate the basis for these concerns. In his affidavit of 23 December 2011 Mr Bizimovski claimed he regularly advertised for positions (with Metro). He annexed not only a copy of advertisements in the Illawarra Mercury relating to employees (which, as discussed below, were the advertisements recognised by the complainants as the advertisements to which they responded) but also an undated copy of an advertisement said to have been inserted in the Illawarra Mercury relating to independent contractors which referred specifically to independent contracting consultants (the “independent contractor advertisement”).
However in May 2010 the FWO had sought production of copies of all newspaper job advertisements placed by Metro in January and February 2010. In response Mr Bizimovski provided all the advertisements he claimed Metro used throughout 2010 up to the time of his response of 25 May 2010. He did not include the independent contractor advertisement annexed to his affidavit which specifically referred to independent contractors.
In cross-examination Mr Bizimovski first suggested they “must have missed that one” when they (Metro) responded to the FWO. He then claimed that the independent contractor advertisement could have been placed in a newspaper prior to May 2010, although he conceded that, as he had advised the FWO, he had provided all the Metro advertisements used in the relevant period. Despite this concession Mr Bizimovski sought to maintain the possibility that Metro “could have” placed the independent contractor advertisement in the Illawarra Mercury prior to 25 May 2010 on the basis that he did not know whether this occurred and that he had provided the FWO with “all the advertisements that I could find at the time”.
Insofar as Mr Bizimovski may be seen as suggesting that the complainants may have responded to the independent contractor advertisement annexed to his affidavit, I do not accept that this was the case. It is not only contrary to the evidence of the complainants (and their recognition of the advertisement is shown to them by the FWO in April 2010), but moreover Mr Bizimovski’s evidence in cross-examination in relation to Metro job advertisements was not on all fours with his affidavit evidence. In his affidavit he stated that in general the positions available at Metro could be categorised as sales positions and office administration positions. In cross-examination he claimed that there were also positions for independent contractors (in justification of the reference in one advertisement provided to the FWO to independent contractors servicing existing clients). However he then conceded that one advertisement of that nature produced to the FWO was for persons to perform the tasks of a chef.
Of more direct relevance to the central issue in this case, in cross-examination Mr Bizimovski first indicated that one distinction between independent contractors and employees of Metro was that employees were not required to create new clients (which independent contractors were said to do by using golden draw cards). However in the face of the Metro employee job description provided to Ms Swan (discussed further below) he changed his evidence and accepted that he did require employees to create new clients and that they may use golden draw cards.
Further, in his evidence about the procedure in relation to telephone conversations to arrange appointments to demonstrate Nutrimax products and the use of “referral scripts”, Mr Bizimovski first indicated that employees did not use a script as they had telemarketers to make calls who would use the script. He claimed employees would not have been telephoning new clients in February 2010. After he accepted that employees had an obligation to create new clients through referrals, he claimed that someone else telephoned and made their appointments with such clients. However, with some apparent reluctance, in the face of the employee job description (which refers to arranging appointments with clients) Mr Bizimovski conceded that employees would make such calls.
Significantly, in his affidavit Mr Bizimovski claimed employees were paid by the hour. However in cross-examination he conceded that they were paid per presentation (as the Metro Pay Structures document states). He tried to suggest that this amounted to payment by the hour on the basis of the usual time a presentation would take. That is contrary to the varying rates paid depending on the number of demonstrations. He then stated that some employees also worked in the office for which they were paid an hourly rate. He claimed Clinton Bizimovski was an employee and that he was paid $20 per hour for hours worked in the office. However in the face of pay records for the years ending 30 June 2010 and 30 June 2011 which show only payments to Clinton Bizimovski per presentation, Mr Bizimovski claimed “[Clinton] must have been out in the field more at that time”.
Mr Bizimovksi’s evidence about how sales consultants were described by Metro also shifted. In his affidavit Mr Bizimovski stressed that Metro offered prospective sales agents the choice between working as an independent contractor or an employee. He described independent contractors as “agents”. For example, he claimed that during Ms Coulton’s training he had said that there were two different ways of getting involved with the company “firstly as an independent contractor which we call an agent. The second way is to be employed by the company where you get told what to do. When you are an independent contractor or agent you are already the manager of your own business”. In his cross-examination, the Metro contractual documents which referred to “agents” were raised. Mr Bizimovski then claimed that the references to “agents” were to employees and that other independent contractors were described therein as “independent agents”. This is not only a shift in his evidence, but is also contrary to the Metro contractual documents which refer generally to sales consultants as agents. Mr Bizimovski conceded that all sales consultants, whether employees or independent contractors, signed the Metro contractual documents (other than the Independent Agent Agreement).
Mr Bizimovski’s evidence about when and the circumstances in which he obtained legal advice in relation to what he described as the Metro “Contractor Agreements and arrangements” was also inconsistent. In his affidavit he stated that he was recommended to see Mr Tony Davis (a solicitor) to review Metro contracts in 2004 and that Mr Davis gave verbal advice and redrafted Metro’s documentation in relation to the Independent Contractor Agreements. However in cross-examination he first claimed he obtained advice in 1999 or 2000, then that Mr Davis redrafted the contractual documents in 2001 or 2002 (which, I note was before Metro was incorporated) and then that Mr Davis “checked” the Independent Agent Agreement in 2004. It would not have been necessary for Mr Bizimovski to have someone recommend Mr Davis to him to review Metro contracts in 2004 if he or Metro had already obtained such advice from Mr Davis at an earlier time. Metro did not produce any written legal advice in response to a Notice to Produce.
Mr Bizimovski’s evidence in this respect in cross-examination was given after it became apparent that the Metro contractual documents were not redrafted in 2004. Documents produced in answer to subpoena revealed that in 2003 Mr Hay signed documents in the same form as those signed by the complainants in 2010 (except for a change in address details).
Mr Bizimovski’s evidence about when he obtained legal advice about the distinction between an independent contractor and an employee and had the contractual documents signed by the complainants redrafted is not reliable.
Another area of concern about Mr Bizimovski’s evidence is relevant to the extent of control exercised by Metro over the complainants. One issue was whether they were required to engage in certain activities. In relation to a particular sales trip to Windsor, Mr Bizimovski’s affidavit evidence was that the trip was for employees, that “some of the employees” had told Ms Swan of the trip and that she asked if she could participate. In that context he gave evidence that a Ms Minnet was one of three employees who went on the Windsor trip.
However, after production of Metro records in relation to employees, Mr Bizimovski conceded that Ms Minnet was an independent contractor at the time of the Windsor trip (that is, on Plan A). He claimed she later left Metro and then returned to work for the company as an employee. His explanation that in his affidavit he had described the present status of those who went on a trip for employees in 2010 is disingenuous.
Mr Bizimovski demonstrated a clear propensity to depart from his affidavit evidence (in particular in relation to matters that emphasised a distinction between those sales consultants on Plan A and those on Plan B) in the face of documentary material that was in conflict with his earlier claims. His evidence was evasive and self-serving. It became clear in cross-examination that his affidavit evidence lacked credibility, particularly when considered in light of Metro’s documentation. Except where consistent with and corroborated by other evidence I do not find his evidence reliable. Particular conflicts between his evidence and other evidence are discussed further below.
Mr Clinton Bizimovski
Mr Clinton Bizimovski’s evidence was of very limited utility. He is Mr Bizimovski’s son and an employee of Metro. He was not involved in training or managing the complainants. He was away from work on his honeymoon from 8 February 2010. He did not return to work until 8 March 2010. He was not present when the complainants signed their contractual documents and elected to be on Plan A. He had not had any specific conversation with his father in relation to the complainants. His affidavit evidence about a conversation with Ms Morgan and Ms Swan on 6 or 7 March 2010 in the Metro office (which he said was about paying for accommodation for the Windsor trip and in which he claimed he offered to lend Ms Morgan $500) is unreliable. He was not working that weekend. I accept that, as stated in their affidavits, Ms Morgan and Ms Swan did not work that weekend so the conversation could not have taken place as he claimed.
In cross-examination Mr Clinton Bizimovski acknowledged the conversation could not have occurred at that time. It was inconsistent not only with the evidence of Ms Morgan and Ms Swan but also with his father’s concession in cross-examination that Metro paid for the accommodation of Ms Swan and Ms Morgan. It was also inconsistent with both Ms Morgan’s and his father’s affidavit evidence of their conversation about Mr Bizimovski advancing Ms Morgan $500.
Mr Hay and Mr Binstadt
Mr Hay and Mr Binstadt conducted the initial training attended by Mr Carroll. Both claim to have been independent contractors for Metro.
Mr Binstadt claimed he had been an independent contractor to Metro from 2004 but, clearly, his role was not comparable to that of the complainants. He organised and ran initial and ongoing training, attended to deliveries and did cooking demonstrations as well as sales. While he denied he was a “manager” of Metro, he conducted Metro training using the Training Manual that presented the presenter as a manager and also conducted ongoing training on behalf of Metro.
Mr Bindstadt suggested Mr Hay did most of the training and that he (Mr Bindstadt) was there for the cooking and to show the trainees how to use the products. Mr Binstadt conceded he had no contemporaneous record of the January 2010 training which Mr Carroll attended. He initially claimed he was not training, but merely “sharing his experience”, although he agreed that he would have gone through the Training Manual.
In cross-examination Mr Binstadt claimed, inconsistently, both that he was not “training” or that he was “training” the complainants. While he also suggested that the training materials were a “guide only”, he went on to concede that in training the trainers did go through the Training Manual. Mr Binstadt’s evidence also demonstrated that the Metro arrangement and contracts created confusion. In cross-examination he referred to his own “employment paperwork” despite the fact he claimed to be an independent contractor (although in re-examination he stated that this was a reference to his Independent Contractor Agreement). Mr Binstadt was unable to give an explanation for the fact that he wrote on a tax invoice he gave Metro that he did 12 demonstrations, contrary to his claim that it was not necessary to do 12 demonstrations to be paid under Plan A.
I accept that in training sales consultants Mr Binstadt and Mr Hay went through the Training Manual. I do not accept Mr Binstadt’s claim that in the January 2010 training the possibility of a person making a choice between being an independent contractor and an employee was talked about “constantly”. Mr Binstadt conceded Mr Hay conducted the majority of the initial training and gave no evidence of what Mr Hay did or said in such training. Nor do I accept his claim that independent contractors did not have to do the training if they wanted to sell Metro products. It is inconsistent with all the other evidence, including the Metro documents.
Mr Binstadt gave limited, albeit inconsistent, evidence about his involvement with the complainants and their work for Metro. He claimed he had a conversation with Ms Coulton “in or about late February 2010” when he was in the office to give Clinton Bizimovski a tax invoice. Clinton Bizimovski was overseas at that time. I do not accept such evidence.
Mr Binstadt’s evidence in cross-examination was confusing. He claimed he had operated as an independent contractor for Metro using an ABN, and was the director of a company that contracted with Metro in the name of ANM Nutritional Distributors Pty Limited during the period mid-2005 to mid-2006 and had been “operating” that company until mid-2012 (even though the business name records showed that business registration ceased on 24 April 2009).
Mr Binstadt changed his evidence in several respects, consistent with an apparent endeavour to assist Metro’s case. He worked with Mr Bizimovski for several years. At the time of his evidence he had not long ceased to do so. He explained that this was “because, due to this court case, contracting ceased and there was no more work, so I had to leave”.
Mr Binstadt claimed he never used the term “consultant” in initial training for Metro, despite the use of that term throughout the Metro Training Manual, in the test the trainees undertook and in the Agent Status Report they signed and Mr Hay’s evidence about his use of such term.
Where there is a factual conflict between Mr Binstadt’s evidence and that of the complainants about what occurred in training or the level of direction and control he exercised over them I do not accept his evidence, except insofar as there is corroboration from a source other than Mr Bizimovski or Clinton Bizimovski.
Mr Hay has been an independent contractor with Metro since 2003. He was previously a director of a company engaged in a similar business of which Mr Bizimovski was also a director. His role was not comparable to that of the complainants. While he organised and ran initial and ongoing training and trained Mr Carroll, Mr Hay gave no specific evidence of what occurred at that training. He agreed he would have gone through the Training Manual. He acknowledged in cross-examination that he referred to trainees as “consultants” or “agents”, but claimed his protocol was to identify the difference between independent contractors and employees. He acknowledged a lack of recollection of a conversation with Ms Morgan he had attested to in his affidavit which appeared to take issue with a part of Ms Morgan’s affidavit that did not refer to a conversation. His evidence is of limited assistance.
Ms Oldman
No issue was taken with Ms Oldman’s credibility. Ms Oldman is a disinterested witness. Her only connection with Metro was in undergoing training and working for a brief period on Plan A, the same basis as the complainants, in early 2010. Her contract with Metro thereafter was to purchase its products at her volition. She gave clear and consistent evidence which I accept. It is notable, however, that while Ms Oldman gave evidence in relation to Mr Bizimovski’s explanation of Plan A and Plan B in training and the fact that she understood trainees could chose Plan A as an independent contractor or Plan B as an employee, she gave no affidavit evidence about actual performance of duties for Metro. She canvassed for only a short period before deciding not to perform any work for Metro and gave little relevant evidence about how the post-training work occurred in practice.
I accept Ms Oldman’s acknowledgement that she could not remember the exact date of her initial training or the precise length of the Metro training. Her specific evidence about what she recalled of the training is considered below. While I accept this evidence, I note that it relates to what Ms Oldman recalled being told and what she saw. Also, as she conceded, her understanding that there was a distinction between choosing Plan A as an independent contractor or Plan B as an employee was based in part on her past experience as an independent contractor.
Credit generally
In essence, in relation to specific past conversations or events, rather than relying primarily on individual testimonies about who said what when, I find it preferable to have regard, as far as possible, to all the contemporaneous documents, the inferences which can be drawn from them and the extent to which they support or are not inconsistent with the evidence of individuals.
Apart from the particular concerns about Mr Bizimovski’s credibility, there are some credibility issues (or at least issues of fallible memory and possible reconstruction of events) in relation to many of the other witnesses. However these are not such as to lead me to reject all the evidence of any of those witnesses.
Particular relevant evidentiary conflicts are discussed further below.
The Metro business
As set out above, Metro trades as Nutrimax International, operating a business selling homeware products, in particular kitchenware. Mr Bizimovski managed Metro at all relevant times.
At the relevant time, Metro’s operations involved consultants obtaining “leads” (details of potential customers) in various ways, such as by persuading members of the public to enter what was described as a free Golden Card Draw (or raffle) to win $1,000 worth of homewares and to provide contact details (referred to as “carding”). Carding by consultants was done in public places, such as outside shopping centres, or at shows. Consultants then contacted such persons, advised them that they had qualified for a gift and arranged a time to deliver the gift and “get their opinion” on the Nutrimax products.
Consultants conducted detailed demonstrations in the homes of such persons. They were each given a Nutrimax presentation kit to take to presentations, a sales kit containing sample products and Tax Invoice/Purchase Order Agreement and finance application forms to be completed for each sale.
The Nutrimax Training Manual describes 16 steps in the demonstration. The second last of these steps is a requirement that the consultant “phone close” with a Manager at Metro. The last step is to obtain referrals from the “client” to family, friends and others. Consultants contacted those referrals by telephone, offering them a free gift and an opportunity to give their opinion on the range (that is, to have a demonstration). In early 2010 the price for a Nutrimax kitchenware set (described as a “Nutrimax System”) sold to such customers was $4,990.
Purchase orders for the purchase of such goods were made on Nutrimax tax invoice/purchase order agreement forms and were subject to acceptance by Nutrimax. Arrangements could be made, if approved through Mr Bizimovski, for the provision of finance to potential purchasers. Metro arranged for the delivery of orders.
According to Mr Bizimovski, consultants could elect to be either employees or independent contractors. This is discussed further below.
Job advertisements
Each of the complainants responded to a job advertisement. The complainants kept no copies of the advertisements to which they responded. However they each recognised the form of advertisements placed in the Illawarra Mercury in January 2010 for customer service, sales and personal assistant roles shown to them by the office of the FWO in April 2010 (the employment advertisements).
Mr Carroll’s evidence was that he responded to an advertisement on the Seek website for “a sales role”. Ms Morgan responded to an advertisement for a personal assistant on the Seek website. She recognised one of the employment advertisements as the advertisement in question. Ms Coulton’s evidence was that she responded to an advertisement for a “trainee manager”. However she recognised the employment advertisements in the Illawarra Mercury as including the advertisement to which she responded. Ms Swan had the most detailed recollection. She responded to an advertisement in the Illawarra Mercury for “a customer service or sales role”. She gave evidence that the “same company also advertised a position for a personal assistant”. She recognised the employment advertisements shown to her by the office of the FWO.
The advertiser was not identified in the two employment advertisements recognised by the complainants. The first was said to be for an “assistant” to the manager of a “new branch” of an unnamed “national Import & Distribution” company “to be trained in all areas of our day to day operation”. That advertisement stated that the position was not an office position and that a car and the ability to travel interstate and overseas “to do our trade shows” was required.
The employment advertisement headed “Customer Service/Sales” sought “Several bright, enthusiastic individuals … in our sales and promotion department”. It referred to dealing with “clients” face to face and over the phone, stated that experience was preferred but “not essential as company training will be provided”. It also referred to the ability to travel interstate and overseas and the need for a car.
These advertisements are expressed in the language of employment. There was no mention of independent contractors and the advertisements described work in terms that suggested that the positions were for employees. Indeed, Mr Bizimovski admitted in cross-examination that these advertisements related to positions for employees.
As discussed, Mr Bizimovski annexed to his affidavit of 23 December 2011 a copy of what was said to be an example of a Metro advertisement in the Illawarra Mercury relating to and specifying the need for “independent contracting consultants” (as well as advertisements for customer service/sales positions). However in cross-examination he acknowledged that he had not produced a copy of this advertisement referring to independent contractors in response to the May 2010 Notice to Produce from the FWO seeking all advertisements in the Illawarra Mercury or Fairfax press up to the date of the Notice to Produce. In his response of 25 May 2010 Mr Bizimovski had stated that the advertisements he had produced were “all the advertisements used this year by our company that we advertised in the Illawarra Mercury and the Fairfax newspapers in Sydney”. While one of the advertisements he produced did specifically refer to “Independent Contracting Consultants” for Nutrimax, Mr Bizimovski indicated in cross-examination that this was an advertisement for a chef. In any event, there is no evidence that advertisements for sales consultants referring to independent contractors were published in January (or February) 2010.
Despite Mr Bizimovski’s apparent attempt in cross-examination to suggest that Metro “could have” put an advertisement referring to sales positions for independent contractors in the Illawarra Mercury or Fairfax newspapers in 2010 prior to 25 May 2010, I am satisfied that the complainants responded to the employment advertisements.
While Mr Bizimovski accepted in cross-examination that the advertisements recognised by the complainants were for employment positions, he claimed that those positions had not been filled. He did not explain why the positions the complainants had inquired about were not filled.
There is no reference to the name of the Respondent (or to Nutrimax International) in the employment advertisements. Nor is there any reference to being an independent contractor, running one’s own business or anything comparable. Counsel for the Applicant submitted and I accept on all the evidence that the employment advertisements were evidence of Metro’s intention to lure the complainants into thinking they were employed, whilst at the end of training they were manoeuvred into signing agreements described as Independent Agent Agreements. It can be inferred from all the evidence (of which these advertisements are but the first part) that the Respondent wanted the complainants to act as employees, so as to derive a benefit from their commitment, obedience to direction and labour.
The critical question is, however, whether the contracts with the complainants were in fact contracts of employment. It is this, and whether Metro represented that contracts of employment were contracts for services, that are the central issues, not whether the Respondent engaged in misleading conduct in relation to the advertisements.
However, the employment advertisements to which the complainants responded indicate that from Metro’s perspective there were employee sales roles within the company of the same nature as those performed by the complainants and support the view that the roles ultimately taken up by the complainants could be categorised as employment positions.
This issue is more problematic. The Respondent again relied on the fact that Mr Bizimovski had obtained legal advice about the documentation, notwithstanding that his evidence about such advice was inconsistent. It was submitted that it did not matter whether he received legal advice in 2004 or 2001, as either way in 2010 Metro was operating under arrangements that had been the subject of legal advice and it had not been blind or reckless as to whether the contracts with the complainants were contracts of employment rather than contracts for services.
As indicated above, Mr Bizimovski had at some time prior to 2010 received advice about the need to make a clear distinction between employees and independent contractors and on what were some indicators of this distinction. He was, on his own evidence, aware that there was a distinction between an employee and an independent contractor (and in that sense between a contract of employment and a contract for services).
Mr Bizimovski was also aware of the importance of the distinction between employees and independent contractors. Mr Bizimovski conceded that, on the basis of Mr Davis’s advice, at a time prior to 2010 he understood that he needed to make a clear distinction between employees and independent contractors and that he could be the subject of sanction if he did not make clear to potential workers the terms on which they were going to be engaged. In other words, he was aware of the risk of incorrect categorisation. Metro, through Mr Bizimovski, knew that if Metro employed the complainants it would be obliged to afford them employee entitlements (such as annual and sick leave and superannuation contributions), whereas it would not owe them such entitlements if they were independent contractors.
Furthermore, a copy of the ACCC letter to the distributor dated 29 October 2009 was sent to Nutrimax. Mr Bizimovski admitted he was aware of this investigation prior to the complainants being engaged. While the ACCC found insufficient evidence to substantiate particular allegations that a Nutrimax distributer had misled consumers in relation to employment opportunities in the context of training conducted by Mr Binstadt and Mr Hay using the Nutrimax Training Manual, this investigation ought to have at least highlighted the risk of misclassification of consultants. Mr Bizimovski did not thereafter (by early 2010) alter Metro training or recruitment methods or provide documentation to job applicants or trainees clearly explaining the distinction between employment and independent contracting arrangements. He gave no evidence of discussing the ACCC matter with his trainers to ensure that he was confident they knew what was required of them.
On all the evidence it is apparent that, notwithstanding this advice and knowledge, Metro acted in a manner that was careless or incautious as to whether the contracts with the complainants were in fact contracts of employment. The job advertisements, job description, training materials and Pay Structures document were such that the complainants were enticed by Metro into thinking they would be employed. The test the complainants had to undertake before electing a payment plan described the election in the language of employment. The contractual documentation was (as Mr Bizimovski admitted) complicated. It lacked clarity and was confusing.
Moreover, as discussed above, it is significant that in practice there was no real relevant distinction made by Metro between the work practices of employees (those on Plan B) and alleged independent contractors (those on Plan A). In early 2010 Mr Bizimovski knew there was a need to make such a distinction. In practice he did not draw it. His affidavit evidence in that respect changed significantly in cross-examination.
Mr Bizimovski was or should have been aware that there was a real risk that the contracts with the complainants were contracts of employment, notwithstanding the statement in the Independent Agent Agreement that they were not employees. He was aware of the possibility of ramifications if a complainant was wrongly categorised.
In all the circumstances Metro has not established that at the relevant time it was not reckless as to whether the contracts with the complainants were contracts of employment rather than contracts for services. Mr Bizimovski disregarded the risk that the complainants were employees in reliance on the ‘label’ of independent agent applied in the Independent Agent Agreement. He treated the complainants as employees in practice, despite being aware of the need to make a clear distinction.
Given Metro’s awareness of the issue and the manner in which it proceeded in relation to the complainants, notwithstanding the fact that it (or Mr Bizimovski) had received some legal advice, Metro has not made out the element of the defence in s.357(2) of the FW Act.
Thus a contravention of s.357 has been established. The parties agree that issues as to penalty should be determined at a future date. The parties should have the opportunity to put on evidence in relation to penalty and to make submissions in that respect.
Other employee entitlements
In submissions, the Respondent conceded generally that the characterisation of the arrangements between Metro and the complainants as contracts of employment would have certain consequences as Metro is a national system employer and that as employees the complainants would be national system employees. It was acknowledged that in such circumstances the Modern Award would be applicable and that, subject to the Applicant establishing that the hours claimed were in fact worked, ordinary rates, overtime loadings and annual leave entitlements would follow.
The Court has power under s.545 of the FW Act to make an order awarding compensation for loss a person has suffered because of a contravention (including, under s.547, interest as sought in the statement of claim). The Applicant made detailed submissions on contraventions and findings relevant to quantification of the complainants’ entitlements. However, perhaps unsurprisingly in light of the issues raised about the reliability of the complainants’ evidence, including that relevant to quantification of entitlements, the Respondent did not address the calculation of entitlements. I have borne this in mind.
During or after their periods of employment Metro paid Mr Carroll $1,000, Ms Coulton $100, Ms Swan $883.22 and Ms Morgan $340. It is not in dispute that such payments should be subtracted from the total underpayments owing to the complainants.
I am satisfied that during the period of each complainant’s employment they were engaged as employees within the meaning of s.13 of the FW Act. It is not in dispute that as such they were commercial travellers within the meaning of cl.3 of the Modern Award as well as within subcll.6(i), 9(i) and 54(a) of the Travellers’ Award. Metro’s business was a business within the scope of the Travellers’ Award and the Modern Award. From 1 January 2010 Metro was bound by the Modern Award in respect of each complainant’s employment and by the FW Act.
Minimum rates of pay
The Respondent was required to pay each complainant a minimum rate of pay during their employment at the hourly rate of $16.47 as provided for by subcl.A.3.3 of Schedule A to the Modern Award, being no less than the minimum wage in the relevant award-based transitional instrument. The relevant transitional instrument that applied to the complainants was the Australian Pay and Classification Scale derived from the Travellers’ Award as it stood on 27 March 2006 (see s.208(1)(g) of the WR Act).
The complainants did not receive payment in respect of such minimum wages in breach of subcl.A.3.3 of Schedule A to the Modern Award. In failing to comply with the Modern Award, Metro contravened s.45 of the FW Act, which is a civil remedy provision under s.539(2) of the Act.
The Applicant submitted that calculations of entitlements should be made on the basis of the hours each complainant worked for Metro based on the times set out in the complainants’ affidavits, with five exceptions not pressed as specified in the Applicant’s written submissions.
The Respondent did not make specific submissions as to what hours were worked by each complainant, beyond submitting that their diaries were obviously constructed retrospectively. Ms Swan gave evidence that she initially recorded her work in a notepad and thereafter transferred the entries into her diary. Mr Carroll conceded that often he did not record all the hours that he worked. Ms Morgan admitted recording total hours worked after the event. As indicated, I accept that, as the complainants admitted in part, there was a degree of reconstruction in such diaries. In particular, the recording of the total hours worked was done after the event including, as Ms Morgan conceded, after the complainants stopped performing work for Metro. There was no reason for the complainants to keep a contemporaneous record of hours worked. None of the Metro sales consultants whether on Plan A or Plan B were paid on the basis of an hourly rate of pay.
I am satisfied that the diaries were maintained for the purpose of the complainants keeping track of their appointments with Metro’s clients and work meetings and training sessions, rather than as a record of their hours worked. However, except where inaccuracy was demonstrated, the diaries do provide a record of appointments from which a calculation can be made of minimum hours of work. While there is a degree of commonality in the diary entries, that is unsurprising insofar as the complainants had common meeting, training and carding commitments. Each complainant admitted to specific errors in diary entries. Ms Coulton recorded as work her visit to the FWO on 3 March 2010 to discuss making a complaint, incorrectly entered time worked from 10 am to 5 pm on 13 March 2010 and included time she met with the other complainants on the morning of 4 March 2010 to discuss making a complaint to the FWO. The FWO does not press inclusion of such times for the purpose of calculation of entitlements. Nor were the hours Ms Swan recorded for the 4 March 2010 meeting pressed.
In addition, in light of Mr Carroll’s conflicting evidence to the FWO and in his affidavit and his confusion in cross-examination as to whether he worked on 26 January 2010, the Applicant did not press for inclusion of such hours.
Ms Morgan recorded two different work commitments (training and a demonstration) at the same time on 16 February 2010. The Applicant did not press the overlapping hours recorded that day.
Apart from these issues and subject to any other relevant findings, I accept that the diary records of appointments maintained by each complainant provide a basis on which minimum hours worked can be calculated as set out in each complainant’s affidavit evidence.
Overtime
In addition, during the period of the complainants’ employment Metro was required to pay them overtime as provided for by subcl.23.1 of the Modern Award. Subclause 23.1 entitles an employee to be paid time and a half if the employee is directed to perform any duty after 6 pm Monday to Friday or in excess of the ordinary hours of work (not more than 10 hours on any day and an average of 38 hours per week). The Respondent conceded that if the complainants were employees overtime loadings would follow (including for evenings). It is not disputed that if characterised as employees the complainants had an entitlement to overtime payments or that they did not receive any such payments. By failing to make such payments Metro breached subcl.23.1 of the Modern Award and also s.45 of the FW Act.
As to calculation of such entitlements, the Applicant made detailed submissions in relation to the basis for the calculation of overtime. The Respondent did not address such issues in the context of quantification (except that it disputed that the complainants were required to work at particular times or to attend either initial training or further training). Metro admitted some training occurred after 6 pm on some days but claimed the timing of this “training” was co-ordinated by Metro to accommodate the availability of the complainants and others.
However, the complainants were employees. They were required by the Respondent to attend the initial training. The complainants were not able to undertake any sales work for Metro without first doing the training. It was a pre-condition of employment and they were told they had to attend at the times stipulated by Metro. The job description provided to Ms Swan stated she was required to “[c]omplete an initial, one week company training course” as well as “[a]ttend on-going training and staff meetings”. While the complainants did not sign contractual documents until the end of the training, I am satisfied that their employment commenced when they started the training.
Insofar as such training was conducted after 6 pm in the evening, the complainants were required to attend at that time. When Ms Morgan was unable to attend the last evening of training Metro re-scheduled it for the next day. The time of the training was set by Metro.
The complainants each had to sign an Agent Status Report that stated they would choose their pay structure after they had passed a test on completion of training. The training was an important aspect of the work they were to perform. They had to complete the training to a satisfactory level (to obtain a mark of 85% in the test) before they were given the sales kit and allowed to conduct presentations.
Mr Bizimovski conceded in cross-examination that the initial training was to show the trainees the presentation format and how to sell Nutrimax products and that they would not be given the sales kit (which was necessary to conduct presentations) until after they had completed such training. It was not optional and, except for re-scheduling of the last day of Ms Morgan’s training, there was no choice for the complainants to attend at any other time.
The question of whether the complainants were required to undertake demonstrations after 6 pm is not as clear. However, where possible, demonstrations were required to be conducted when all financial decision-makers were present. This necessarily meant that the work had to be undertaken over a span of hours, including in the evening. The golden draw card script and referral script stipulated asking potential clients about their availability in the evening. The training materials referred to demonstrations in the “evening” and to the requirement that both husband and wife be present. This meant that some demonstrations had to be scheduled after 6 pm as a matter of practical necessity.
Further, on the Windsor Trip Ms Morgan and Ms Swan were subject to close supervision by Metro and required to work as directed, including for a number of hours after 6 pm, Monday to Friday.
Again, in the absence of any demonstrated inaccuracies, I would accept the affidavit evidence of the complainants as to the extent of such overtime and (apart from any matters not pressed by the Applicant or not accepted in findings above) as to total hours worked each week.
Annual leave
The Respondent also conceded generally that annual leave entitlements would follow if the complainants were employees. Pursuant to s.87(2) of the FW Act an employee’s entitlement to paid annual leave accrues progressively during a year of service according to the employee’s ordinary hours of work. If the employment of an employee ends when the employee has a period of untaken annual leave, the employer must pay the employee the amount that would have been payable to the employee had he or she taken that period of leave.
None of the complainants took any annual leave during the period of their employment with Metro. Nor did they receive any payment in lieu of accrued but untaken leave at the termination of their employment.
By failing to pay the complainants their accrued annual leave Metro failed to comply with s.90(2) of the FW Act and in so doing contravened s.44 of the Act which is a civil remedy provision under s.539(2) of the Act.
As to the quantification of such entitlements, these should be calculated based on the hours worked, as discussed above in relation to minimum rates of pay.
Vehicle allowance
In addition, the Applicant submitted that Ms Swan was entitled to a vehicle allowance as provided for in subcl.16.8(a) of the Modern Award.
It is not in dispute that the Modern Award is applicable. An employee required to use his or her own vehicle in the performance of his or her duties is entitled to a vehicle allowance of $0.74 per kilometre under subcl.16.8(a) of the Modern Award.
Ms Swan, who kept a vehicle log and was the only complainant in respect of whom a vehicle allowance was sought, was required by Metro to attend the homes of potential clients at various locations to conduct demonstrations. No form of transport was made available to her by Metro. The Respondent admitted that as a matter of practical necessity she was required to use her own vehicle to attend such appointments. I am satisfied, based on all the evidence, including the job advertisements, the job descriptions and training and the manner in which the complainants performed their work, that during Ms Swan’s employment with Metro she was required to use her own vehicle for work purposes. I am also satisfied that, notwithstanding Mr Bizimovski’s suggestion that the Windsor Trip was for employees and that as an independent contractor Ms Swan was “invited” to attend, Ms Swan was required to attend this trip which she participated in for the purpose of generating sales of Nutrimax products for Metro. Metro did not provide Ms Swan with transport to attend the Windsor trip. As a matter of practical necessity she was required to use her own vehicle to undertake this business trip.
I am satisfied that in failing to pay a vehicle allowance to Ms Swan Metro failed to comply with subcl.16.8 of the Modern Award and contravened s.45 of the FW Act.
Ms Swan’s vehicle log book is in evidence before the Court. In it she recorded the use of her vehicle for work-related and private purposes. The Respondent submitted that the Court should be highly sceptical of the complete accuracy of Ms Swan’s log book based on the fact that it emerged in cross-examination that on one day, 20 February 2010, she mistakenly recorded two return trips to the Metro office when that was not the case. It was submitted that if the entries in her log book had been contemporaneously recorded this would not have occurred and that this inconsistency, and the fact that each round trip to and from Metro’s office from Ms Swan’s home was calculated as 22 kilometres, caused significant doubt as to whether the records were contemporaneous or a reconstruction.
I accept that Ms Swan’s log book was inaccurate in respect of one additional return trip to Metro’s office from her home on 20 February 2010. It is inconsistent with her diary entries. I also accept that insofar as she recorded business use of her car in relation to travel to and from a meeting with the other complainants at Ms Coulton’s residence on 4 March 2010 to discuss their complaint to the FWO, that was not a use of her car for work purposes. There was no specific challenge to any other entry.
Ms Swan conceded that she started keeping her log book after her first day of training and that while she tried to fill it in every day, there may have been occasions where she had not entered in each trip on the day and had done it the following day. I accept her evidence in that respect. Notwithstanding these admissions, apart from the two errors established, and the degree of estimation or rounding off after the event in relation to round trips to the Metro office, the log book is the best record of business use of her vehicle. It has not otherwise been shown to be inconsistent with Ms Swan’s diary entries. In the absence of other demonstrated inaccuracies I accept it as evidence of the extent to which she used her vehicle for work (except for the errors in relation to 20 February 2010 and 4 March 2010). I am satisfied that Ms Swan is entitled to a vehicle allowance payment calculated by reference to the log book excluding errors. The Applicant intends to submit the necessary calculation of this entitlement.
In the absence of any record of business vehicle use by the other complainants no claim is made as to any such entitlement for Mr Carroll, Ms Coulton or Ms Morgan.
Conclusion
At this stage it is appropriate to make declarations in relation to contraventions. Beyond this, the parties should have the opportunity to bring in proposed short minutes of orders as to the amounts of entitlements owing to each complainant and interest thereon (less amounts already paid to them by Metro) or to make submissions if they are unable to agree on the quantification or if I have failed to address all factual issues arising from the evidence which have to be determined to quantify the compensation payable to the complainants. Otherwise the matter is to be listed for a hearing in relation to penalty on a date to be fixed.
I certify that the preceding four hundred and forty-two (442) paragraphs are a true copy of the reasons for judgment of Barnes FM
Date: 7 May 2013
Key Legal Topics
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Employment Law
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Breach
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Penalty
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