McGrath v Venue Security (NSW) Pty Ltd
[1997] IRCA 270
•18 September 1997
DECISION NO:270/97
CATCHWORDS
INDUSTRIAL LAW - EMPLOYMENT LAW - TERMINATION OF EMPLOYMENT -Two related cases, involving terminations of employment, at different times - Whether applicant an EMPLOYEE or an INDEPENDENT CONTRACTOR - On balance, applicant was an EMPLOYEE.
INDUSTRIAL LAW - EMPLOYMENT LAW - TERMINATION OF EMPLOYMENT - No VALID REASON for the termination of the applicant’s employment - SUMMARY DISMISSAL - NO PROCEDURAL FAIRNESS - Two related cases. In the first case, REINSTATEMENT not APPROPRIATE, as the second case intervened. In the second case, REINSTATEMENT ordered.
INDUSTRIAL LAW - EMPLOYMENT LAW - AWARDS - Respondent not bound by the relevant Federal Award, as it did not fall into any of the categories of persons so bound, as set out in the Workplace Relations Act, 1996 - Respondent bound by state award.
INDUSTRIAL LAW - EMPLOYMENT LAW - ASSOCIATED JURISDICTION of the Court - Same sub-stratum of facts - Respondent ordered to pay the applicant the difference between what he was actually paid, and what he would have been paid if employed under the award.
Workplace Relations Act 1996 ss 149(1), 170DB, 170DC, 170DD, 170DE, 170EE, 179, 430
Security (Protection) Industry Act1985 (NSW), s 8
Security (Protection) Industry Regulation1995, Schedule 2
Industrial Relations Act1996 (NSW), s 12
Industrial Relations Act1991 (NSW), s 104
Building Worker’s Industrial Union of Australia and ors v Odco Pty Ltd (1991) 99 ALR 735
Commissioner of Taxation v Vabu Pty Ltd (1997) 4 Leg. Rep. SL 2.
Cox v Australian Meat Corporation Pty Ltd, von Doussa J, Industrial Relations Court of Australia, 14 June 1995, unreported
Humberstone v Northern Timber Mills (1949) 79 CLR 389
Johns v Gunns Ltd, [1995] 60 IR 258
Lenzoot Haulage Pty Ltd v Sinclair (1986) 42 SASR 506
Massey v Crown Life Insurance Company (1978) 1 WLR 676
Narich Proprietary Limited v Commissioner of Payroll Tax 50 ALR 417
Nicolson v Heaven and Earth Gallery Pty Ltd (1994) 1 IRCR 199
Paterson v The State of South Australia, Industrial Relations Court of Australia, von Doussa J, 13 June 1997, unreported
Patterson v Newcrest Mining Ltd, Industrial Relations Court of Australia, Marshall J, 21 December 1995, unreported
Patterson v Newcrest Mining Ltd, Industrial Relations Court of Australia, Full Court, 6 June 1996, unreported
Perkins v Grace Worldwide (Aust) Pty Ltd, Industrial Relations Court of Australia, Full Court, 7 February 1997, unreported.
Re Porter: Re Transport Workers Union of Australia (1989) 34 IR 179
Anthony Smith and Associates Pty Ltd v Sinclair (1996) 67 IR 240
Stevens v Brodribb Sawmilling Company Pty Ltd (1985-1986) 160 CLR 16
Vabu Pty Ltd, t/a Crisis Couriers v Commissioner of Taxation 96 ATC 4898
NI 2152 of 1996
NI 1025 of 1997
BEFORE: Judicial Registrar Patch
PLACE: Sydney
DATE: 18 September 1997
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NI 2152 of 1996
BETWEEN:
DARREN McGRATH
Applicant
AND
VENUE SECURITY (NSW) PTY LTD
(ACN 052 945 426)
Respondent
NI 1025 of 1997
BETWEEN:
DARREN McGRATH
Applicant
AND
VENUE SECURITY (NSW) PTY LTD
(ACN 052 945 426)
Respondent
BEFORE: Judicial Registrar Patch
PLACE: Sydney
DATE: 18 September, 1997
MINUTES OF ORDERS
THE COURT ORDERS AND DECLARES THAT:
Matter number NI 96/2152
The applicant was an employee of the respondent.
The termination of the applicant’s employment was unlawful.
The respondent is to pay the applicant compensation for the unlawful termination of his employment, in accordance with the principles set out in the reasons for judgement herein.
If agreement is reached between the parties within seven (7) days of the date of this judgement on the question of the gross amount of compensation to be paid, consent orders may be filed pursuant to Order 35 Rule 10.
Any monies paid by the respondent to the Commissioner of Taxation as taxation in respect of the monies ordered to be paid to the applicant as compensation for the unlawful termination of his employment shall be deemed to have been paid in pro tanto satisfaction of the judgement debt, if paid within 21 days of consent orders being filed pursuant to order 4 above.
The matter is to be listed for callover, before me, at 9.30 am on 26 September 1997. If consent orders are filed before that date, pursuant to order 4 above, the callover is to be vacated.
Matter number NI97/1025
The Court orders and declares that:
The applicant was an employee of the respondent.
The termination of the applicant’s employment was unlawful.
Within seven (7) days of today the respondent shall reinstate the applicant by appointing him to another position on terms and conditions no less favourable than those on which he was employed immediately before the termination of his employment.
The employment of the applicant is, for all purposes, deemed to have been continuous in the position in which he was employed immediately before the termination of his employment, up to the time of his reinstatement.
The respondent is to take such steps as may be necessary to maintain the continuity of the applicant’s employment for all purposes.
The respondent is to pay the applicant the amount of remuneration lost by the applicant as a result of the termination of his employment, in accordance with the principles set out in the reasons for judgement herein.
If an agreement is reached between the parties within seven (7) days of the date of this judgement on the question of the gross amount of remuneration lost, consent orders may be filed pursuant to Order 35 Rule 10.
Within seven (7) days of today, the applicant is to provide the respondent with copies of all documentation in his possession or control concerning any remuneration earned by him since the termination of his employment, together with the names, addresses and telephone numbers of all persons who have provided that remuneration.
Any monies paid by the respondent to the Commissioner of Taxation as taxation in respect of the monies ordered to be paid to the applicant for remuneration lost shall be deemed to have been paid in pro tanto satisfaction of the judgement debt, if paid within 21 days of consent orders being filed pursuant to order 7 above.
10.In respect of all times at which the applicant has been employed by the respondent (namely, at Toukley RSL Club, Ryde-Eastwood Leagues Club and Epping RSL Club) the respondent is to pay to the applicant the difference between what the applicant would have been paid by the respondent if he had been paid in accordance with the relevant state awards (as set out in these reasons for judgement) and what the applicant was actually paid by the respondent.
11.If agreement is reached between the parties within seven (7) days of today on the question of the gross amount to be paid to the applicant in accordance with order 10 above, consent orders may be filed pursuant to Order 35 Rule 10.
12.Any monies paid by the respondent to the Commissioner of Taxation, as taxation in respect of monies ordered to paid to the applicant in respect of order number 10 above, shall be deemed to have been paid in pro tanto satisfaction of the judgement debt, if paid within 21 days of consent orders being filed in accordance with order 11 above.
13.The matter is to be listed for callover, before me, at 9.30 am on 26 September 1997. If consent orders are filed before that date, pursuant to orders 7 and 11 above, the callover is to be vacated.
Note: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NI 2152 of 1996
BETWEEN:
DARREN McGRATH
Applicant
AND
VENUE SECURITY (NSW) PTY LTD
(ACN 052 945 426)
Respondent
NI 1025 of 1997
BETWEEN:
DARREN McGRATH
Applicant
AND
VENUE SECURITY (NSW) PTY LTD
(ACN 052 945 426)
Respondent
BEFORE: Judicial Registrar Patch
PLACE: Sydney
DATE: 18 September, 1997
REASONS FOR DECISION
In these two related matters, the applicant claims that he was an employee of the respondent, and that, on two separate occasions, his employment was terminated unlawfully.
The applicant also claims that, as an employee, he was entitled to be paid in accordance with the relevant award - and that he was not so paid. He claims the difference between what he was actually paid and what he would have been paid in accordance with the award.
There are two possible awards which might govern the terms and conditions of the applicant’s employment. One of them is a federal award, and the other is a New South Wales state award.
If the federal award applies, then the applicant’s claim for unpaid wages is a claim pursuant to section 179 of the Workplace Relations Act1996 (“the Act”).
If the relevant award is the State award, then the applicant’s claim for unpaid wages is a claim in the associated jurisdiction of the Court, under section 430 of the Act.
The respondent claims that the applicant was never an employee, but was a sub-contractor.
The respondent further submits that, even if the relationship between the respondent and the applicant was an employer/employee relationship, the respondent was not a party to an award, was not bound by it, and is not, therefore, obliged to pay the applicant in accordance with an award.
BACKGROUND FACTS
The applicant worked as a security guard. The respondent is a company which provided security guards to other organisations, particularly clubs. The applicant said that he first worked for the respondent at Toukley RSL Club, starting on about 27 October 1995. He said that he worked there for about two days per week.
He said that from November 1995 to 23 August 1996 he worked for the respondent at the Ryde-Eastwood Leagues Club. He said he usually worked six days per week, with the hours usually being between 6 pm and 4 am. He said that he was injured whilst at work at the Ryde-Eastwood Leagues Club on 23 August 1996, when he was assaulted by a patron. The applicant said that he asked the respondent for worker’s compensation forms, and for payment for time off necessitated by his injuries. The applicant said that it was during the time he was off work as a result of the injuries, whilst he was in fact receiving worker’s compensation, that his employment was terminated for the first time by the respondent.
On 11 September 1996, the applicant filed an application alleging unlawful termination of employment with the Australian Industrial Relations Commission.
During the course of the conduct of the proceedings following the filing of that first application, Mr Chris Baxter, one of the two principals of the respondent company, in an apparent attempt to settle the matter, offered to provide more work for the applicant (to speak neutrally) on condition that the applicant terminate the proceedings. As a result, on 14 November 1996 the applicant commenced working at the Epping RSL Club. Normally, he worked five days per week, between the hours of about 10 pm and about 7 am.
On 11 December 1996, Mr Baxter asked the applicant to sign a form which, in effect, was a statement by the applicant that he was not an employee, but an independent contractor.
Mr Baxter does not dispute that he did that.
The applicant said that he refused to sign the form, and that his employment was thereupon terminated by Mr Baxter.
There are two principal issues in the case:
Was the applicant an employee of the respondent?
If the applicant was an employee of the respondent, is the respondent bound by an award?
WAS THE APPLICANT AN EMPLOYEE OF THE RESPONDENT?
One traditional way of posing this question is this:
“Was the applicant an employee pursuant to a contract of service, or was he engaged as a contractor pursuant to a contract for services?” See Paterson v the State of South Australia, Industrial Relations Court of Australia, von Doussa J, unreported, 13 June 1997, at page 3.
In that case his Honour referred to the observation of King CJ in Lenzoot Haulage Pty Ltd v Sinclair (1986) 42 SASR 506, at 510, in which King CJ said:
“The question whether a person is an employee or an independent contractor has arisen in many contexts and under many statutes. The criteria by reference to which this question is to be determined are well settled although often difficult of application.”
As was the situation it Paterson, in this case there are aspects of the relationship between the parties which point in favour of the relationship being one of employer and employee, and there are other aspects which suggest the applicant was engaged as an independent contractor. It is necessary for the Court to balance these competing factors, and decide into which category the case should be put.
The leading authority in respect of this question is the decision of the High Court in Stevens v Brodribb Sawmilling Company Pty Ltd (1985-1986) 160 CLR 16. At page 24 of the judgement, Mason J, with whom Brennan and Deane JJ agreed, said:
“A prominent factor in determining the nature of the relationship between a person who engages another to perform work and the person so engaged is the degree of control which the former can exercise over the latter. It has been held, however, that the importance of control lies not so much in its actual exercise, although clearly that is relevant, as in the right of the employer to exercise it.”
His Honour cited the judgement of Dixon J in Humberstone v Northern Timber Mills (1949) 79 CLR 389, at page 404, as follows:
“The question is not whether in practice the work was in fact done subject to a direction and control exercised by an actual supervision or whether an actual supervision was possible but whether ultimate authority over the man in the performance of his work resided in the employer so that he was subject to the latter’s order and directions.”
Mason J then went on to say:
“But the existence of control, whilst significant, is not the sole criterion by which to gauge whether a relationship is one of employment. The approach of this Court has been to regard it merely as one of a number of indicia which must be considered in determination of that question..... Other relevant matters, include, but are not limited to, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and provision of holidays, the deduction of income tax and the delegation of work by the putative employee.”
In the same case, their Honours Wilson and Dawson JJ said, at page 35:
“The classic test for determining whether the relationship of master and servant exists has been one of control, the answer depending upon whether the engagement subjects the person engaged to the command of the person engaging him, not only as to what he shall do in the course of his employment but as to how he shall do it.”
Their Honours went on to say:
“The modern approach is, however, to have regard to a variety of criteria. This approach is not without its difficulties because not all of the accepted criteria provide a relevant test in all circumstances and none is conclusive. Moreover, the relationship itself remains largely undefined as a legal concept except in terms of the various criteria, the relevance of which may vary according to the circumstances.”
At page 36, their Honours said:
“In many, if not most, cases it is still appropriate to apply the control test in the first instance because it remains the surest guide to whether a person is contracting independently or serving as an employee. That is not now a sufficient or even an appropriate test in its traditional form in all cases because in modern conditions a person may exercise personal skills so as to prevent control over the manner of doing his work and yet nevertheless be a servant. This has led to the observation that it is the right to control rather than its actual exercise which is the important thing.”
Their Honours went on to say, at pages 36 and 37:
“The other indicia of the nature of the relationship have been variously stated and have been added to from time to time. Those suggesting a contract of service rather than a contract for services include the right to have a particular person do the work, the right to suspend or dismiss the person engaged, the right to the exclusive services of the person engaged and the right to dictate the place of work, hours of work and the like. Those which indicate a contract for services include work involving a profession, trade or distinct calling on the part of the person engaged, the provision by him of his own place of work or of his own equipment, the creation by him of goodwill or saleable assets in the course of his work, the payment by him from his remuneration of business expenses of any significant proportion and the payment to him of remuneration without deduction for income tax. Non of these leads to any necessary inference, however, and the actual terms and terminology of the contract will always be of considerable importance. Having said that, we should point out that any attempt to list the relevant matters, however incompletely, may mislead because they can be no more than a guide to the existence of the relationship of master and servant. The ultimate question will always be whether a person is acting as the servant of another or on his own behalf and the answer to that question may be indicated in ways which do not always have the same significance.”
In the case of Re Porter: Re Transport Workers Union of Australia (1989) 34 IR 179, his Honour, Gray J, said at page 184:
“A court determining whether a particular relationship is that of employment or of some other kind can therefore only resort to the process of balancing all of the factors, or as they are called in Stevens and other cases, the ‘indicia’.”
He went on to say:
“A Court will always look at all of the terms of the contract, to determine its true essence, and will not be bound by the express choice of the parties as to the label to be attached to it. As Mr Black put it in the present case, the parties cannot create something which has every feature of a rooster, but call it a duck and insist that everybody else recognise it as a duck.”
In this respect, in a judgement of the Privy Council in Narich Proprietary Limited v Commissioner of Payroll Tax 50 ALR 417, Lord Brandon of Oakbrook, at page 421, cited Lord Denning MR in Massey v Crown Life Insurance Company (1978) 1 WLR 676 as follows:
“The law, as I see it, is this: if the true relationship of the parties is that of master and servant under a contract of service, the parties cannot alter the truth of that relationship by putting a different label upon it....On the other hand, if their relationship is ambiguous and is capable of being one or the other (ie either service or agency), then the parties can remove that ambiguity, by the very agreement itself which they make with one another.”
In Vabu Pty Ltd, t/a Crisis Couriers v Commissioner of Taxation 96 ATC 4898, the New South Wales Court of Appeal considered the position of couriers engaged by the appellant company. The Court held that the couriers were not employees of the company. At page 4900 of the report, his Honour, Meagher JA said:
“Whilst it is almost never an easy task to decide whether a given person is an employee or an independent contractor, there is no doubt what the legal tests are. The old test “control” is now superseded by something more flexible. This is made clear by the judgement of Mason CJ (sic) Stevens v Brodribb Sawmilling Company Proprietary Limited.......”
If what his Honour meant was that (to quote Mason J, at page 24 of the judgement in Stevens), “a prominent factor in determining the nature of the relationship between a person who engages another to preform work and the person so engaged is the degree of control which the former can exercise over the latter” and that “the existence of control, whilst significant, is not the sole criterion by which to gauge whether a relationship is one of employment. The approach of this Court has been to regard it as merely one of a number of indicia which must be considered in the determination of that question”, I would, respectfully, be in full agreement with him.
I respectfully assume that that is what his Honour meant - and that the criticism of some commentators to the effect that his Honour wrongly diminished the still current importance of the old “control” test simply reveals a misunderstanding of his Honour’s words.
It seems that the High Court, in considering an application for special leave from the judgement of the New South Wales Court of Appeal, adopted the same analysis. In refusing special leave to appeal, Toohey J said, “This application raises little more than questions of fact and the application of settled principles to those facts. It does not warrant a grant of special leave to appeal.” See Commissioner of Taxation v Vabu Pty Ltd (1997) 4 Leg. Rep. SL 2.
What, then, are the circumstances of this case?
Who had control over the applicant’s work?
Counsel for the respondent submitted that the respondent had, in fact, very little control over the day to day work of the applicant. She submitted that, in fact, it was the managers of the clubs at which the applicant was working who had, generally speaking, actual control over the applicant’s work.
In my view, that is a superficial analysis, which does not stand close scrutiny. There are a number of reasons for this.
It was always the respondent company which told the applicant what places he was to work at. It is clear that the applicant had no choice but to work at the clubs he was directed to by the respondent - it was those places, or not at all.
The applicant was provided with rosters by the respondent - not by the clubs. At each place of work, his rosters were, generally speaking, settled and regular. In particular, at Ryde-Eastwood Leagues Club, where he worked for a considerable time, his roster did not vary much from week to week, if at all.
True it is that the number of hours worked (by all the guards in total) at any particular club were the number of hours that the clubs themselves required when they entered into the arrangement with Venue Security to provide security services, but it was Venue Security who determined the number of hours that each particular security guard was to work - not the club.
It is also true to say that each club provided a list of the tasks that were to be performed by the security personnel provided by the respondent. See for example Exhibit 27, the “security check list” provided by Ryde-Eastwood Leagues Club, and the document with the heading “security staff” provided by Toukley RSL (Exhibit 28). But, importantly, it was always either Mr Baxter or Ms Brennan from Venue Security who told the applicant that he should abide by the directions of the managers of the clubs, whether or not they were in written form (as was the case with Exhibits 27 and 28), or verbal.
Each club had separate dress requirements. However, as was the case with the tasks to carried out by the security personnel, it was always Mr Baxter or Ms Brennan who told the applicant that he had to abide by the dress requirements as stipulated by the club.
To put it another way, although the applicant had to, on a day-to-day basis, follow the directions of the management of whatever club he working at, that requirement was one that was imposed upon him by the management of Venue Security. It was Venue Security which, therefore, was the ultimate source of control in this respect.
In Building Worker’s Industrial Union of Australia and ors v Odco Pty Ltd (1991) 99 ALR 735, a decision of the Full Court of the Federal Court of Australia, the Court regarded it as important that, “Troubleshooters Available” (the trading name of Odco) “had no power to direct or require one of its workers to rectify allegedly defective work. Rather, it was indicated, Troubleshooters confined itself to role of mediating between the builder and the worker when allegations of that kind were made.”
In this case, whenever the clubs had a problem with the work performed by a security guard, including that performed by the applicant, they would complain directly to the respondent - through the medium of Mr Baxter. The clubs would expect the respondent to take whatever action was necessary to rectify the problem, or deal with the complaint.
For example, on 17 December 1996, Mr Greg Edwards, the Operations Manager of Ryde-Eastwood Leagues Club, sent a fax to the respondent. The fax said, omitting the formal parts:
“Just a few points we ask you to pass onto your security staff.
1)Rear door for garbage room to be closed by security staff if found open from 5.00pm back of club
2)Chain to level 4 of car park to be locked unless club is busy. Security to turn light’s on if they open level 4.
3)Security staff to escort females staff to their car’s if club has closed.
4)We had a noise complaint last Fri or Sat night at about 3.30am. Club had been closed for over 1 hour. Please make staff aware of the complaint and in general ask staff to keep noise level down.”
That fax became part of Exhibit 41.
On 4 May 1995, Mr Edwards sent a fax to the respondent (which also became part of Exhibit 41), complaining as follows:
“Still not 100% sure about some staff used at night in car park. ie: Wed 3rd he hung around inside a lot & what could he do if a car was being stolen or we had trouble in the car park.”
Likewise, on 24 April 1995, Mr Edwards sent a fax to the respondent complaining that the chain to the carpark had not been locked up on the previous Sunday night.
In a similar fashion, on 12 May 1995, Mr Edwards complained to the respondent that he had to speak to the Saturday day security person about walking around reading a magazine and smoking.
All of the above complaints were part of Exhibit 41.
On 28 December 1995, Mr Edwards, sent a letter to Venue Security Pty Ltd, marked to the attention of Mr Baxter. The letter was as follows:
“Re: Lock Up Procedure
Just a short note concerning a few problems we seem to be having at the Ryde-Eastwood Leagues club over the past few weeks. As you know, the correct procedure in locking up the premises is very important & must be followed at all times every night. To date over the past month we have had two occasions when patrons have been found left in the Club, the latest being on Friday 22nd December 1995.
I have included within a brief summary of the job description you were given when Venue Security was appointed to take over the security at the Ryde-Eastwood Leagues Club. Now that some of your staff are familiar with the premises and the locking up procedure, it may be a good time to review this operation to the fullest detail, noting all areas to be checked, location of lights and doors etc. In doing so, we can be all once ensured the job is being done correctly and that all Venue Security Staff are aware of what is required, and that all night Club Duty Managers are aware of what should be done.
May I suggest that you and I, along with perhaps one of your more frequent & knowledgable employees, sit down and go through the “Closing Procedure” from back to front, re-establishing & correcting what is presently being done today. Please contact me to arrange a date for early in the new year.”
(Emphasis added)
That letter became part of Exhibit 42.
The fact that the club chose to complain to Venue Security, and that the club expected Venue Security to deal with the problems of the way that the security personnel were working, strongly suggests that it was Venue Security who had actual control over the way the security personnel, including the applicant, worked.
The use of the words “your staff” and “employees” in the above letter demonstrates that the apparent nature of the relationship (at least in Mr Edward’s eyes) between the security guards and Venue Security was that of employer and employee.
Exhibit 39 is the covering letter and the quote provided by the respondent to Ryde-Eastwood Leagues Club, on 21 October 1994, which subsequently formed the basis of the arrangement between them. After noting the number of hours that security personnel were to be provided for, and quoting a certain rate per hour, (which was a flat rate), the quote went on to specify as follows:
“Venue Security to provide 2-way communication between the club and external Security Guards.
Venue Security to provide suitable uniforms to its staff for all weather conditions.
Venue Security to be responsible for the organisation of the roster and for the supervision and conduct of its guards.”
(Emphasis added)
In my opinion, the applicant did not have control over the way he worked. The managers of the clubs at which the applicant worked had control over the way he worked, but only because that is what he had been told by the respondent. It was the respondent who had actual right to control the way in which the applicant worked, where he worked, and number of hours that he worked. Furthermore, the respondent had control over the clothing that the applicant wore, and type of equipment which he was to use.
As Wilson and Dawson JJ said in Stevens v Brodribb (cited above) at page 36, “....it is the right to control rather than its actual exercise which is the important thing.”
(Emphasis added)
In my opinion, the degree of control exercised by the respondent over the applicant in the performance of his work , together with the fact that it was, ultimately, the respondent which had the right to control that work (i.e. not the applicant himself and not the clubs), is strongly suggestive of a relationship of employer and employee.
Was the applicant engaged in a risk-taking venture, with the hope of possible profit?
In Vabu (cited above) his Honour, Meagher JA, noted that the couriers provided their own vehicles. He noted also that they had to bear the expense of providing for and maintaining those vehicles, including running repair, petrol, insurance, and registration. He noted that, although the company provided telephones uniforms and signage (in the sense of the company’s logo was on the vehicles) “the courier’s expenses are very considerable”. He went on to note that, “the ownership of the assets, the chance of profit and the risk of loss in the business of carriage are his and not the company’s”, and pointed out that that was “a consideration which points to the couriers being independent contractors.”
Sheller JA and Beasley JA agreed with him.
In this case however, the applicant did not provide (except to a very limited extent) his equipment. At all sites at which he worked, radios and uniforms were provided by the respondent.
Furthermore, there was never any suggestion that the applicant was taking a risk, in order to make a profit from that risk. He was not an entrepreneur working on his own account - as the New South Wales Court of Appeal found the couriers to be in Vabu. He did not provide his own capital and face the loss of that capital if his venture did not work out, as was found to be the case in Vabu.
In terms of the dichotomy set out by their Honours Wilson and Dawson JJ in Stevens v Brodribb, on page 37 of that case, namely “whether a person is acting as a servant of another or on his own behalf” this strongly suggests that the applicant was not acting “on his own behalf” but, was rather, “the servant of” (ie the employee of) the respondent.
Taxation considerations
The payments of monies to the applicant were subject to taxation, not at the rate prescribed under the Pay As You Earn (PAYE) system but under the Prescribed Payment System. The applicant had a set rate of 20 per cent deducted from his wages. I am satisfied that he was aware of that before he commenced work at Ryde-Eastwood Leagues Club, and before he commenced work at Epping RSL.
The Prescribed Payment System is a system of deduction of taxation which is specifically designed for the deduction of tax from monies paid to contractors - and does not apply to employees.
I am satisfied that, at the time he entered into the relationship with the respondent, the applicant was aware of that.
Accordingly, this is a factor which suggests that the applicant was an independent contractor, and not an employee.
However, it should also be noted that the use of the Prescribed Payment System was something that was, in effect, imposed upon the applicant by the respondent, as a pre-condition of engagement. As was pointed out in Vabu, tax documents (of the applicant) can properly be disregarded because they are self-serving declarations by the taxpayer, and, as such, are hardly evidence of anything.
In Vabu, His Honour, Meagher JA, noted that, and went to say, at page 4900:
“This is true, but it misses the point. What is significant is not that the couriers tell the Commissioner that they are independent contractors not employees, but that the Commissioner, presumably after making whatever investigation he deems proper, acquiesces in their description of themselves and taxes them accordingly.”
I must confess that I, respectfully, do not understand the point his Honour was making. It seems to me that it is drawing a rather long bow to assume that, in any particular case, the Commissioner will make an investigation - or even be aware that an investigation might be warranted.
In the circumstances of this case, up until the time when the applicant himself raised objection, there was no apparent basis upon which the Commissioner of Taxation would have investigated the matter, and done anything other than accept at face value the assertions of both the respondent and the applicant that the Prescribed Payment System was appropriate.
Could the applicant delegate his tasks to other persons?
In my view, the applicant could not delegate his tasks to another person. For a start, to do so would have been contrary to the arrangement which existed between himself and the respondent. If, for some reason the applicant was unable to go to work on any particular day, it was his responsibility, as soon as possible, to contact the respondent so that respondent could make alternative arrangements. The applicant never arranged for someone else to work in his stead, without the approval of the respondent. In my opinion, this was because he did not have the right to do so.
I do not accept Mr Baxter’s and Ms Brennan’s evidence that he did have the right to delegate - the evidence of what actually went on supports the contrary view.
A further reason why the applicant could not delegate his duties to another person was that he was the holder of a Class 1A license only under the Security (Protection) Industry Act1985 (NSW). This entitled him “to control, protect, watch or guard any property”. See Schedule 2 to the Security (Protection) Industry Regulation1995.
See also section 8(2) of the Security (Protection) Industry Act, which provides that:
“A person (not being a person intending to carry on a business as referred to in ss (3)) intending to carry on the business of, or to be employed in:
(a)....
(b)....
(c) patrolling, protecting, watching or guarding any property: or
(d).....may apply for a Class 1 license”
Section 8(3) of the Security (Protection) Industry Act, provides as follows:
“A person intending to carry on the business of providing persons to carry on any activity referred to in ss (2) may apply for a Class 2 license.”
Counsel for the respondent argues that it was not necessary for the applicant to hold a Class 2 license in order for him to delegate his duties, as, if he did so, he would not be carrying on the business of providing persons to carry on any activity referred to in ss8(2) of the Security (Protection) Industry Act.
I do not accept that submission.
In my opinion, if the applicant had had the right to delegate his job, and had done so, that would have placed him in the position of being a person who was carrying on the business of providing persons to patrol, protect, watch or guard property, to use the combined terminology of ss (2) and (3) of section 8 of the Security (Protection) Industry Act. It would, therefore, have been necessary for him to have held a Class 2 license.
The fact that the applicant was unable to delegate his duties suggests that he was not in business for himself - ie: that he was not an independent contractor, but an employee.
Did the applicant and the respondent agree that the relationship between them was to be one of the applicant being an independent sub-contractor, rather than one of employer and employee?
In any particular case, depending on the circumstances, the fact that the parties had agreed that their relationship be of a particular nature, can be determinative. However, as Gray J observed in Re Porter (cited above) “the parties cannot create something which has every feature of a rooster, but call it a duck and insist that everybody else recognise it as a duck.”
The significance of the fact that the parties have agreed to call their relationship either that of employer/employee or, contractor and sub-contractor, is most important, and only really of significance, when the objective material makes the nature of their relationship ambiguous. In that case, the way the parties themselves have labelled the relationship can often remove the ambiguity. See Massey v Crown Life Insurance Co (cited above) and Narich Proprietary Limited (cited above).
Both Mr Baxter and Ms Brennan gave evidence that, at various times, they had detailed conversations with the applicant prior to the commencement of his work (Ms Brennan in the case of Toukley RSL, and Mr Baxter in the case of Ryde-Eastwood Leagues Club) concerning the details of the relationship between the applicant and the respondent. In particular, they said that, on each occasion, it was made clear to the applicant that the nature of the relationship between him and Venue Security was that of contractor and sub-contractor, and that, pursuant to that relationship, the PPS system of taxation deduction would be used.
Furthermore, prior to commencing work at Epping RSL, the applicant well knew (as a result of the respondent’s position in the “first” proceedings) that the respondent was asserting that the nature of the relationship between them was one of contractor and sub-contractor.
Even if the Court were to accept that the detailed conversations which Mr Baxter and Ms Brennan each say they had with the applicant did, in fact, occur, and if even the Court were to accept that the applicant agreed to the conditions as set out in those conversations, that would not, in my opinion, necessarily be determinative.
Nonetheless, I do regard the fact that, when he commenced work at Epping RSL, the applicant knew what the respondent’s position was, as a factor tending to suggest that, at least at that time, the relationship between the parties was one of contractor and sub-contractor, rather than one of employer/employee.
The fact that the applicant was paid a fixed hourly rate
At all three clubs at which the applicant worked, he was paid a fixed hourly rate, regardless of whether he worked on weekends, and regardless of the number of hours he worked on any particular day.
In Building Worker’s Industrial Union of Australia and ors v Odco Pty Ltd (cited above), a decision of the Full Court of the Federal Court of Australia, the Court said, at page 755:
“Standing alone, the mode of remuneration being payment at an agreed hourly rate is equally applicable, on the evidence, to persons who are concededly sub-contractors as to casual employees picked up for a day or part of a day.”
It is not only “casual employees picked up for the day or part of the day” who are paid at an agreed hourly rate. These days, many a person who is truly an employee is paid at an agreed hourly rate.
Taken on its own, therefore, a payment of an agreed hourly rate is, in my opinion, a neutral fact in respect of the question of whether the applicant was an employee of the respondent.
In Vabu (cited above) both his Honour Meagher JA and his Honour Sheller JA regarded it as significant that the couriers in that case were paid, not in the form of fixed salary or wages, but in amounts determined by the number of successful deliveries they would make each day.
Similarly, in Stevens v Brodribb Sawmilling (cited above) the High Court regarded it as significant that the timber-getters in that case were paid, not in the form of fixed salary or wages, but in the amounts determined by reference to the volume of timber which they had delivered.
In this case, the applicant was paid by the hour - there were no “results” which determined the amount of his remuneration.
Before leaving this aspect of the case, I note that, in addition to the applicant being paid an hourly rate, the respondent received an hourly rate from, at least, Ryde-Eastwood Leagues Club in return for providing the services of the applicant and other security guards. (See Exhibit 39). I do not wish to disturb the commercial confidentiality of the relationship between the respondent and it’s customers, but suffice it to say, the respondent makes a profit from providing the labour of the security guards, including the applicant. This is, of course, perfectly to be expected.
The point is, however, that it was only the respondent which was in the position to make a profit, not the applicant - which suggests the applicant was an employee.
Conclusion on the question of whether the applicant was an employee
In my view, although there are some indicia which suggest that the relationship between the parties was one of contractor and sub-contractor, the strong balance of the indicia requires the conclusion that, in fact, the relationship between the parties was, at all times, one of employer and employee. I come to this conclusion assuming, for the sake of the argument, that the detailed conversations as set out by Mr Baxter and Ms Brennan in their evidence did, in fact, occur.
There are three matters which I regard as more important than any others in the determination of this question. They are:
The degree of control exercised over the applicant by the respondent, and the fact that it was the respondent which had control - not the applicant himself, and not the clubs at which he worked.
The fact that the applicant was not, on analysis, engaged in a profit making business when he was working as a security guard. He took no risks, did not provide (except to a very limited extent) the equipment necessary for the job, and did not in any other way put any of his capital at risk. Related to this is the fact that it was only the respondent which was in a position to make a profit.
The applicant was unable to delegate his duties to any other person.
All the above three indicia strongly suggest that the applicant was not working in his own, independent, business - rather he was working for the respondent.
In my opinion, the respondent has attempted to set up a structure which at least uses the terminology of contractor and sub-contractor, and which, in some respects, has the appearance of such a relationship.
However, in maintaining control over the way the applicant worked, and in remaining the only entity which can make a profit out of the work done, at least, in the circumstances of these cases, by the applicant, the respondent ensured that, as a matter of law, it remained, at all times, the employer of the applicant.
Employers cannot simply impose an artificial structure upon their employees in the way in which the respondent has attempted to do in this case. They cannot tell their employees that they are really sub-contractors, and demand that their employees comply with that. Or, more accurately, if they do that, they cannot thereby change the real nature of the relationship of employer and employee between them. A court. or an industrial tribunal, will always look at the reality of the situation for itself.
This principle is important, for the simple reason that employees have rights under awards, and statutory rights, that sub-contractors do not have. By labelling persons who are truly employees as “sub-contractors”, the respondent has attempted, apparently, to evade the corresponding obligations that are imposed upon it by virtue of the fact that its employees have such rights. In this case the respondent has not succeeded.
As a matter of principle, one can see the policy behind the granting of rights to employees. True it is that, to some extent, the existence of such rights has are commercial implications for employers. However, it is clear that the parliaments of the states and Commonwealth have decided that, as a matter of policy, in order to ensure social, economic, and industrial stability, employees will, (as briefly noted above), enjoy certain rights, perhaps, to some extent, at the expense of the short term commercial interest of their employers.
The finding of the Court is that, in respect of each of the times the applicant was engaged to perform duties by the respondent, the relationship between them was one of employer and employee.
WAS THERE A VALID REASON FOR THE TERMINATION, IN RESPECT OF EACH OF THE CASES, OF THE APPLICANT’S EMPLOYMENT?
Matter number NI96/2152 - the first termination of employment
On Friday 23 August 1996, the applicant was injured whilst working at Ryde-Eastwood Leagues Club. He was assaulted by a drunken patron, who head-butted him - breaking his nose.
As a result he was unable to work for three days. He telephoned Mr Baxter and told him this.
Sometime shortly after that period of three days, the applicant met Mr Baxter in the carpark of the Ryde-Eastwood Leagues Club. Mr Baxter brought with him a replacement black jacket, with the Venue Security logo on the shoulders. The jacket that the applicant had been wearing when he was injured was too blood-stained to use.
The applicant asked Mr Baxter for worker’s compensation forms for his three day’s lost pay.
Mr Baxter said something to the applicant with the effect of “you are not entitled to worker’s compensation, you don’t get worker’s compensation”. The applicant gave evidence that he disputed that, saying something like, “that’s bullshit, you know that you have got to pay me worker’s compensation, and it is, you know I was injured at work”. (sic)
The applicant subsequently spoke to Mr McCarthy, the General Manager of Ryde-Eastwood Leagues Club about the matter, and it was after that that he was supplied with worker’s compensation forms by Ms Brennan, the other director of the respondent company.
The applicant filled out those forms, gave them to Ms Brennan, and was subsequently paid worker’s compensation from 30 August 1996 to 19 October 1996.
The next Tuesday night following that conversation with Mr Baxter, the applicant telephoned him and asked him what his shifts were for the next week. That was probably Tuesday 3 September 1996.
The applicant gave evidence (which was not really disputed) that, in that telephone conversation with Mr Baxter, Mr Baxter said something like, “there are no longer any shifts for you available - no longer any shifts at Ryde-Eastwood Leagues”.
When the applicant asked, “Why?”, Mr Baxter replied something like, “the club feels you are getting too friendly with the staff there and there are no more shifts for you.”
Although some evidence was called by the respondent from the managers from Ryde-Eastwood Leagues Club in support of this allegation, in my opinion the evidence as it stands is insufficient to warrant a finding that the conduct or performance of the applicant in this respect warranted the termination of his employment. Perhaps it is true, to some extent, that he was “getting too friendly with the staff” - but the reasonable way to rectify that problem would have been to speak to the applicant and ask him to change his ways.
The “penalty” of termination of the applicant’s employment for that reason was so far out of proportion to the gravity of the conduct or performance complained of, that it cannot amount to a valid reason for the termination of the applicant’s employment.
It follows that the “first” termination of the applicant’s employment was unlawful.
Matter Number NI97/1025 - the second termination of the applicant’s employment
As previously noted, following the termination of his employment by the respondent from the Ryde-Eastwood Leagues Club job, the applicant instituted proceedings in the Australian Industrial Relations Commission alleging that the termination of his employment had been unlawful. Those proceedings subsequently became the first matter which is currently before the Court.
As was also previously noted, in an apparent attempt to settle the matter, the applicant and the respondent agreed that the applicant would be given employment by the respondent at Epping RSL Club.
The applicant commenced work on 14 November 1996 at Epping RSL. The applicant never discontinued the proceedings which are now before the Court in respect of the “first” termination of employment. There was some correspondence between the respondent’s solicitors and the applicant’s solicitors concerning this.
On 11 December 1996, Mr Baxter approached the applicant and asked him to sign a letter addressed to the Deputy Commissioner of Taxation. Mr Baxter does not dispute that he did that.
Mr Baxter said that the letter which he asked the applicant to sign which is now Exhibit 20 in these proceedings. The applicant said that he was asked to sign a letter in similar terms, but with some more details, but which was not Exhibit 20.
In my opinion, the applicant is mistaken - and the document which Mr Baxter asked him to sign was indeed Exhibit 20, or at least a copy of that document. In any event, nothing turns on the difference.
Exhibit 20 is as follows:
DARREN L McGRATH
1454 Ravensdale Road
YARRAMALONG NSW 2259
December, 1996.
ATTENTION: BRUCE CARTER
The Deputy Commissioner of Taxation
Australian Taxation Office
PO Box 200
PENRITH NSW 2740
Dear Sir
Re: VENUE SECURITY (NSW) PTY LIMITED -and- SUPERANNUATION GUARANTEE
Your Ref: FSPR/98049615
I refer to prior contact with your office.
I confirm that my arrangement with Venue Security (NSW) Pty Limited is that of a contractor and acknowledge that in those circumstances the superannuation guarantee levy does not apply
Yours faithfully
D L McGRATH
The applicant refused to sign that letter - asserting that he was an employee. I accept the applicant’s evidence that Mr Baxter then and there terminated his employment.
In my view, there was a dispute at that time, between the applicant and Mr Baxter concerning whether or not the applicant was an employee or a sub-contractor. In my view, even if the applicant commenced work with the respondent after having been told that he was a sub-contractor, he never really accepted that. That is shown by the commencement of proceedings for unlawful termination of employment following the “first” termination of his employment and his refusal to sign Exhibit 20.
In refusing to sign Exhibit 20, the applicant was doing only that to which he was entitled. To terminate his employment for that reason was clearly not justifiable, and not for a valid reason.
It follows that the “second” termination of the applicant’s employment was unlawful.
WAS THE APPLICANT DENIED PROCEDURAL FAIRNESS?
Matter number NI96/2152 - the first termination of the applicant’s employment
Section 170DC of the Act is as follows:
“An employer must not terminate an employee’s employment for reasons related to the employee’s conduct or performance unless:
(a)the employee has been given the opportunity to defend himself or herself against the allegations made; or
(b)the employer could not reasonably be expected to give the employee that opportunity.”
It is clear on the facts of this case that Mr Baxter had decided to terminate the employment of the applicant before the telephone call between them on that particular Tuesday night.
The “opportunity to respond” required by section 170DC of the Act must be given to the employee before the decision is made to terminate his employment - otherwise there is, in reality, no “opportunity” at all.
In the circumstances, the “first” termination of the applicant’s employment did not meet the requirements of section 170DC of the Act, he was denied procedural fairness, and the termination of his employment was unlawful for that reason as well.
Matter number NI97/1025 - the second termination of the applicant’s employment
The “second” termination of the applicant’s employment was once again a summary termination of the applicant’s employment. The applicant was given no opportunity at all to respond to the reason for the termination of that employment - namely, his refusal to sign Exhibit 20.
It is perfectly clear that the “second” termination of the applicant’s employment involved a denial of procedural fairness, and did not meet the requirements of section 170DC of the Act. It was unlawful for that reason as well.
REMEDY
Reinstatement
Section 170EE(1) of the Act reads as follows:
In respect of a contravention of a provision of this Division (other than section 170DB or 170DD) constituted by the termination of employment of an employee, the Court may, if the Court considers it appropriate in all circumstances of the case, make the following orders:
(a)an order requiring the employer to reinstate the employee by:
(i) reappointing the employee to the position in which the employee was
employed immediately before the termination; or
(ii) appointing the employee to another position on terms and conditions no less favourable than those on which the employee was employed immediately before the termination; and
(b)if the Court makes an order under paragraph (a):
(i) any order that it thinks necessary to maintain the continuity of the employee’s employment; and
(ii) an order requiring the employer to pay to the employee the remuneration lost by the employee because of the termination.
Is the reinstatement of the applicant appropriate in all the circumstances of the case?
In Patterson v Newcrest Mining Ltd, Industrial Relations Court of Australia, Full Court, 6 June 1996, unreported, his Honour, Wilcox CJ said:
“.....the word ‘impracticable’ has caused difficulty in relation to unlawful termination claims. It appears in subs.(2) and has led Judges of the Court, including myself, to describe the scheme of s.170EE as one providing a primary remedy of reinstatement and secondary remedy of compensation where reinstatement is impracticable. These comments must be read in the light of the amendments, where they apply, requiring the Court to reach a determination that is ‘appropriate in all the circumstances of the case’ to order reinstatement. Contrary to the submission put by counsel for appellant, it is my opinion that the matter of appropriateness, where that concept applies, is not restricted to the form of a reinstatement but applies to the initial question whether reinstatement shall be ordered or not.”
In my opinion, reinstatement (putting aside for the moment the question of impracticability) would be an appropriate remedy in the circumstances of the “second” termination of the applicant’s employment.
Up until the last day of the hearing of this matter in May 1997, the applicant had remained unemployed. It is clear (see his jobseeker’s diary, Exhibit 12) that he has diligently tried to find employment.
The termination of the applicant’s employment was, in each case, a summary one. The respondent employer acted as if the applicant had no rights at all, asserting (incorrectly) that the applicant was not even an employee.
It seems to me that, in each case, the termination of the applicant’s employment was an injustice. That injustice ought to be put right.
However, it would not be appropriate to order reinstatement in respect to the “first” termination of the applicant’s employment, because of the intervention of the “second” period of employment, and the availability of reinstatement as a remedy for the termination of employment following that second period of employment.
However, the proper remedy, in order to give the applicant justice in the circumstances of the “second” termination of employment, is an order for reinstatement.
I consider, therefore, that in the circumstances of “second” termination of employment, reinstatement is an appropriate remedy.
Is it impracticable to order the reinstatement of the applicant?
Having determined that reinstatement is an appropriate remedy, for the “second” termination of employment, I then move to the question of the impracticability of the remedy. In Nicolson v Heaven and Earth Gallery Pty Ltd [1994] 1 IRCR 199, Wilcox CJ said at page 210:
“One of the amendments to Pt VIA made in June 1994 was the substitution of a new s.170EE. Under the substituted section, the first task of the Court, in considering relief, is to consider whether reinstatement is practicable. Compensation for loss of the job (as distinct from lost remuneration) may be awarded only if reinstatement is “impracticable”. It is important to note that Parliament stopped short of requiring that, for general compensation to be available, reinstatement be impossible. The word “impracticable” requires and permits the Court to take into account all the circumstances of the case, relating to both the employer and employee, and to evaluate the practicability of a reinstatement order in a commonsense way. If a reinstatement order is likely to impose unacceptable problems or embarrassments, or seriously affect productivity, or harmony within the employer’s business, it may be “impracticable” to order reinstatement, notwithstanding that the job remains available.”
His Honour’s approach to the question of the impracticability of reinstatement has been adopted by a number of Judges of the Court. See the decision of von Doussa J in Cox v Australian Meat Corporation Pty Ltd, Industrial Relations Court of Australia, 14 June 1995, unreported. See also Johns v Gunns Ltd, (1995) 60 IR 258; Patterson v Newcrest Mining Ltd, Industrial Relations Court of Australia, Marshall J, 21 December 1995, unreported; and Perkins v Grace Worldwide (Aust) Pty Ltd, Industrial Relations Court of Australia, Full Court, 7 February 1997, unreported.
In Anthony Smith and Associates Pty Ltd v Sinclair (1996) 67 IR 240, the Full Court of this Court considered the question of any disadvantage that might suffered by an employer as a result of an order for reinstatement.
The Court was speaking about an order under section 170EE(1)(a)(ii) of the Act (an order for reinstatement to a position other than the position from which the employee was dismissed). The Court said, at page 244:
“We appreciate that creation of a new position may occasion a cost, or other disadvantage, to the employer. Where there is evidence that this will be so, that evidence may be relevant on the issues of practicability and appropriateness. But it would be contrary to principal to treat such evidence as necessarily determinative. The occasion for the order arises because the employer has acted unlawfully in terminating the employee’s employment. A reinstatement order is akin to an injunction compelling a wrong-doer to restore the position of the innocent party. In considering whether to grant an injunction, a court will always take into account the consequences of an order to the wrong-doer but the existence of adverse consequences has never been regarded as excluding the possibility of an order being made.”
The principals I extract from the cases and the legislation are as follows:
The Court has a discretion as to the remedies it may grant.
That discretion is not absolute, and all the circumstances of the case must be taken into account.
In exercising that discretion, the Court has to first determine the question of whether, in all the circumstances of the case, an order for reinstatement is an appropriate order.
The Court then has to consider whether, in all the circumstances of the case, the reinstatement of the employee would be impracticable.
Reinstatement is the primary remedy under the Act. This follows from the necessity to consider the question of the impracticability of reinstatement before considering the question of whether compensation is appropriate.
Therefore, reinstatement should be ordered if the Court considers it an appropriate order, unless the Court finds it to be impracticable so to do.
“Impracticable” means something less than impossible, but reinstatement will not be impracticable if it is merely inconvenient, difficult, or disruptive, without causing an unacceptable problem, or unacceptable embarrassment, or seriously effecting productivity, or seriously effecting harmony within the employer’s business.
Any adverse consequences to the employer are relevant, but it must be remembered that an employee whose employment has been unlawfully terminated has suffered an injustice and that should be made right, if it can.
I am mindful of the fact that the institution of both of these proceedings has been the occasion of considerable annoyance for the principals of the respondent company. They have fought the case very hard. However, it will very often be the case that the institution of proceedings alleging unlawful termination of employment will be annoying, and even a source of a great deal of aggravation, for the employer. If the Court were to allow that factor to prevent the reinstatement of an employee whose employment has been unlawfully terminated, there would be very few reinstatement orders indeed.
Mr Baxter and Ms Brennan will have to put this episode behind them. They will have to work together in a professional relationship with the applicant.
It seems that the applicant’s position at Epping RSL may not be available. The order that the Court makes for reinstatement, therefore, will not be an order for reinstatement to his former position - but for reinstatement to another position on the same terms and conditions as those which the applicant enjoyed before the termination of his employment.
Orders for continuity of employment and remuneration lost
The Court will also order that the employment of the applicant is, for all purposes, deemed to have been continuous in the position in which he was employed before the “second” termination of his employment up to the time of his reinstatement. The Court will also order that the respondent take all such steps which may be necessary to maintain the continuity of the applicant’s employment for all purposes.
As to remuneration lost, the applicant is entitled to have his entire economic loss up to the date of these orders made good. This would involve a calculation of what, as a practical matter, the applicant would have earned if he had remained in his former position.
The applicant’s former working patterns would have to be used as the basis of the assessment of what he would have earned in the period between the “second” termination of his employment on 11 December 1996 and the making of these orders.
For reasons which I will set out below, the basis upon which the applicant should be paid for remuneration lost is the monies he would have earned if he was paid according to the provisions of the Security Industry (State) Award, and the provisions of the Miscellaneous Workers’ Security (State) Wages Adjustment, Family Leave and Allowances Award (as published in the New South Wales Industrial Gazette volume 294 on 6 September 1996.)
The applicant is also entitled to be paid for any lost holiday pay entitlement that he would have accrued since the termination of his employment, under the provisions of the relevant New South Wales state award and New South Wales state legislation. Such payment fits into both the payment for remuneration lost and an order deeming continuity of employment.
As the order for remuneration lost would cover an order for damages for failure to pay the applicant pay in lieu of notice, no such order will be made.
In order to comply with the order for continuity of employment, the respondent will have to make such payments in respect of the Superannuation Guarantee Act (Commonwealth), as it would have been obliged to make if the applicant was an employee (as the Court has declared him to be). Those payments do not, in my view, form part of the applicant’s remuneration, but, nonetheless, in order to comply with the order for continuity of employment, those payments will have to be made.
The Court is not, as the evidence now stands, in a position to calculate the amount of remuneration lost by the applicant.
The practical solution would involve the applicant and the respondent reaching amicable agreement in respect of an order for remuneration lost, and file consent orders. A timetable will be set for this process.
Compensation in respect of the “first” termination of employment - Matter NI96/2152
The applicant received worker’s compensation, following the “first” termination of his employment, up to 19 October 1996. He gave evidence that he received from worker’s compensation that which he would have received if he had continued in the employment of the respondent.
He is not, therefore, entitled to compensation under section 170EE of the Act in respect of that period of time.
However, in respect of the period from, and including, 20 October to 13 November 1996, when the applicant was unemployed, he is entitled to compensation. The applicant is entitled to compensation at the rate he would have been paid in accordance with the relevant state award (see below).
The Court is not in a position to determine the amount of compensation that the applicant is entitled to, as the evidence now stands.
The sensible way to proceed is for the parties to file consent orders. A timetable will be set for that process.
THE APPLICANT’S CLAIMS FOR UNPAID WAGES, AND OTHER MONETARY ENTITLEMENTS, UNDER AN AWARD
If the respondent is bound by a Federal award, then this claim is a claim under section 179 of the Act.
If, however, the respondent is not bound by a Federal award, but is bound by a State award, then the applicant’s claims are claims in associated jurisdiction of the Court under section 430 of the Act.
The Court would have jurisdiction to hear such a claim under section 430 of the Act, for the reasons that the way in which the applicant was paid, and the amount he was paid, were facts which were before the Court in order to assist the Court to determine the question of whether the applicant was an employee. It follows that the question of any underpayments in respect of a state award is part of the same sub-stratum of facts as is involved in the substantive issues to be determined by the Court.
Is the respondent to these proceedings bound by the Security Industry (NSW) Award 1994 - an award of the Australian Industrial Relations Commission?
Section 149(1) of the Act, as it was in force from 1 February 1996 to 31 December 1996, is as follows:
Persons bound
Subject to any order of the Commission, an award determining an industrial dispute is binding on:
(a)all parties to the industrial dispute who appeared or were represented before the Commission;
(b)all parties to the industrial dispute who were summoned or notified (either personally or as prescribed) to appear as parties to the industrial dispute (whether or not they appeared);
(c)all parties who, having been notified (either personally or as prescribed) of the industrial dispute and of the fact that they were alleged to be parties to the industrial dispute, did not, within the time prescribed, satisfy the Commission that they were not parties to the industrial dispute;
(d)any successor, assignee or transmittee (whether immediate or not) to or of the business or part of the business of an employer who was a party to the industrial dispute, including a corporation that has acquired or taken over the business or part of the business of the employer;
(e)all organisations and persons on whom the award is binding as a common rule; and
(f)all members of organisations bound by the award.
The schedule of respondents to the Security Industry (NSW) Award 1994 includes “State Manager Venue Security 272 Pacific Hwy, Crows Nest NSW 2065”.
I accept that that is, prima facie, evidence that the respondent to these proceedings is a respondent to the federal award, and thereby bound by its provisions. However, as is the case with any prima facie assumption, it can be displaced.
I accept the undisputed evidence of Mr Baxter and Ms Brennan that the respondent to these proceedings never appeared and was never represented before the Commission during the proceedings at which the award was made. It follows that the respondent does not fall with the ambit of section 149(1)(a) of the Act, and is not, therefore, bound by the federal award in that way.
I accept the undisputed evidence of Mr Baxter and Ms Brennan that they were never summoned or notified in any way of the existence of the industrial dispute leading to the making of the award.
The address given as the address of the Venue Security in the schedule to the federal award (272 Pacific Hwy, Crows Nest NSW 2065) is, in fact, not the address of Venue Security at all. As it turns out, that is the address of the company which provides the pagers for Venue Security. I accept the undisputed evidence of Mr Baxter and Ms Brennan to this effect.
It seems likely that the union, when it was serving potential respondents with the various documents, obtained the address from the White Pages. (See Exhibit 7 which was a photocopy of the relevant page of the 1996 White Pages).
It follows from the above that Venue Security does not fall within the ambit of section 149(1)(b) of the Act, and is not, therefore, bound by the federal award in that way.
For the same reason, Venue Security is not bound by the award by virtue of the operation of section 149(1)(c) of the Act.
It is clear that neither ss (d) nor (e) of section 149(1) have any relevance to the situation of Venue Security.
It follows that the respondent to these proceedings is not bound by the federal award.
Is the respondent bound by a New South Wales state award?
The New South Wales state legislation concerning the persons bound by an award is substantially different to the Commonwealth legislation. In particular, there is no requirement that the employer be a party to an industrial dispute, either by way of appearance or representation at a hearing of the Commission, or by way of notification of the dispute in some way.
Section 12 of the Industrial Relations Act1996 (NSW) is as follows:
Persons bound by award
(1) An award is binding on all employees and employers to which it relates, whether or not they were a party to the making of the award.
(2) An award that applies to a particular industry is, subject to its terms, taken to bind all employees and employers engaged in the industry.
(3) An award is, subject to its terms, binding on all industrial organisations that were a party to the making of the award.
That Act came into effect on 2 September 1996.
The predecessor to section 12, under the Industrial Relations Act1991 (NSW) was section 104. Section 104(1)(a) was as follows:
Parties bound
An award made under this Act by the commission:
(a) is binding on such of the employers and employees engaged in the industry or enterprise to which the award relates as the Commission directs, whether or not an industrial organisation representing them was a party to the making of the award;
It can readily be seen that, as is the case under the legislation currently in force, there was no requirement that an employer be a party to the proceedings, or be notified of them.
The relevant state award is the Security Industry (State) Award, which was published in the New South Wales Industrial Gazette, volume 269. (See Exhibit 32).
Clause 35 of that award, under the heading “Area, Incidence and Duration”, states that the award “shall apply to gatekeepers and all persons employed in or in connection with the industry or industries of security or watching excepting....” (there followed some exceptions which are not relevant here).
It is clear that the respondent to these proceedings is bound by the Security Industry (State) Award.
I note that the Miscellaneous Worker’s Security (State) Wages Adjustment, Family Leave and Allowances Award, an award made 24 May 1996, and published on 6 September 1996 in the New South Wales Industrial Gazette volume 294 now governs some conditions relating to overtime and award rates which were formerly governed by the Security Industry (State) Award. (See Exhibit 34)
It is not necessary for the Court to go into the detail of what rates the applicant would have received if he had been paid under the state award, and whether or not he has been actually underpaid.
This is because, at the beginning of the hearing of the matter, it was agreed between the parties, that at this stage at least, the Court should only rule on whether or not the respondent company was bound by an award, and that the parties would then attempt to settle the matter. I note here that the function of the Court will not be finalised until such time as orders are made to resolve this aspect of the dispute between the parties - whether they be consent orders or otherwise.
A timetable will be set for the filing of consent orders.
ORDERS
Matter number NI 96/2152
The Court orders and declares that:
The applicant was an employee of the respondent.
The termination of the applicant’s employment was unlawful.
The respondent is to pay the applicant compensation for the unlawful termination of his employment, in accordance with the principles set out in the reasons for judgement herein.
If agreement is reached between the parties within seven (7) days of the date of this judgement on the question of the gross amount of compensation to be paid, consent orders may be filed pursuant to Order 35 Rule 10.
Any monies paid by the respondent to the Commissioner of Taxation as taxation in respect of the monies ordered to be paid to the applicant as compensation for the unlawful termination of his employment shall be deemed to have been paid in pro tanto satisfaction of the judgement debt, if paid within 21 days of consent orders being filed pursuant to order 4 above.
The matter is to be listed for callover, before me, at 9.30 am on 26 September 1997. If consent orders are filed before that date, pursuant to order 4 above, the callover is to be vacated.
Matter number NI97/1025
The Court orders and declares that:
The applicant was an employee of the respondent.
The termination of the applicant’s employment was unlawful.
Within seven (7) days of today the respondent shall reinstate the applicant by appointing him to another position on terms and conditions no less favourable than those on which he was employed immediately before the termination of his employment.
The employment of the applicant is, for all purposes, deemed to have been continuous in the position in which he was employed immediately before the termination of his employment, up to the time of his reinstatement.
The respondent is to take such steps as may be necessary to maintain the continuity of the applicant’s employment for all purposes.
The respondent is to pay the applicant the amount of remuneration lost by the applicant as a result of the termination of his employment, in accordance with the principles set out in the reasons for judgement herein.
If an agreement is reached between the parties within seven (7) days of the date of this judgement on the question of the gross amount of remuneration lost, consent orders may be filed pursuant to Order 35 Rule 10.
Within seven (7) days of today, the applicant is to provide the respondent with copies of all documentation in his possession or control concerning any remuneration earned by him since the termination of his employment, together with the names, addresses and telephone numbers of all persons who have provided that remuneration.
Any monies paid by the respondent to the Commissioner of Taxation as taxation in respect of the monies ordered to be paid to the applicant for remuneration lost shall be deemed to have been paid in pro tanto satisfaction of the judgement debt, if paid within 21 days of consent orders being filed pursuant to order 7 above.
10.In respect of all times at which the applicant has been employed by the respondent (namely, at Toukley RSL Club, Ryde-Eastwood Leagues Club and Epping RSL Club) the respondent is to pay to the applicant the difference between what the applicant would have been paid by the respondent if he had been paid in accordance with the relevant state awards (as set out in these reasons for judgement) and what the applicant was actually paid by the respondent.
11.If agreement is reached between the parties within seven (7) days of today on the question of the gross amount to be paid to the applicant in accordance with order 10 above, consent orders may be filed pursuant to Order 35 Rule 10.
12.Any monies paid by the respondent to the Commissioner of Taxation, as taxation in respect of monies ordered to paid to the applicant in respect of order number 10 above, shall be deemed to have been paid in pro tanto satisfaction of the judgement debt, if paid within 21 days of consent orders being filed in accordance with order 11 above.
13.The matter is to be listed for callover, before me, at 9.30 am on 26 September 1997. If consent orders are filed before that date, pursuant to orders 7 and 11 above, the callover is to be vacated.
I certify that this and the preceding 39 pages are a true copy of the Reasons for Judgment of Judicial Registrar Patch.
John Liston
Associate
Dated: 18 September, 1997
APPEARANCES
Union representative appearing for the applicant: Keven Mapperson
Australian Liquor, Hospitality and Miscellaneous Workers’ UnionCounsel appearing for the respondent: T Anderson Solicitors for the respondent: Pike, Pike & Fenwick Dates of hearing: 27 March, 1-2 April, 9 April 1997
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