Mr Ross Pollitt v Blackwattle Bay Marine Operatives Pty Ltd
[2012] FWA 8758
•19 OCTOBER 2012
[2012] FWA 8758 |
|
DECISION |
Fair Work Act 2009
s 394 - Application for unfair dismissal remedy
Mr Ross Pollitt
v
Blackwattle Bay Marine Operatives Pty Ltd
(U2012/8605)
DEPUTY PRESIDENT SAMS | SYDNEY, 19 OCTOBER 2012 |
Unfair dismissal - jurisdictional objection - whether employee or independent contractor - relevant tests to be applied to the work performed - applicant an employee - jurisdictional objection dismissed.
[1] This decision will determine an employer’s objection to an unfair dismissal application, filed by Mr Ross Pollitt, (the ‘applicant’) following the termination of his services on 24 May 2012 by Blackwattle Bay Marine Operatives Pty Ltd (the ‘respondent’). In short, the respondent claims that the applicant was an independent contractor and not an employee and was therefore not a person protected from unfair dismissal under Ch 3 Part 3-2 of the Fair Work Act 2009 (‘the Act’). While the reasons why the applicant’s services were terminated are not materially relevant for the purposes of this decision, it would seem from the material filed with Fair Work Australia (‘FWA’) that the applicant was dismissed without notice or warning for misconduct, in rather unpleasant circumstances.
THE EVIDENCE
For the respondent
[2] Three witness statements were tendered in the proceedings. These were from:
● Mr John Giddens, owner and Operations Director;
● Mrs Marilyn Giddens, wife of Mr Giddens; and
● Mr Anesan Naidoo, Director.
Mr Giddens was unavailable for cross examination.
Mrs Marilyn Giddens
[3] Mrs Giddens is the wife of the respondent’s Operations Director, Mr John Giddens. Mrs Giddens works on an irregular basis as a day to day administrator of the respondent’s accounts. She deposed that when the applicant was engaged in the first week of October 2009, he provided an ABN and was paid $25.00 per hour, plus $2.50 GST, to work various duties on the wharf. These included general duties, minor maintenance, rubbish removal and other odd jobs. His retainer was increased to $1,000.00 per week, plus $100.00 GST, when he assumed responsibility for managing the wharf in December 2010. Mrs Giddens referred to an example of the applicant’s time sheet, which was filled in by him and disclosed that he worked every weekday, between 7-8 ½ hours a day, averaging 38 hours a week.
[4] In cross examination, Mrs Giddens said that she had requested that the applicant provide her with invoices on many occasions, but he did not do so. She believed this was necessary because he was a contractor. Mrs Giddens claimed she had no knowledge of whether the respondent had claimed the applicant’s GST as a tax offset. She could not recall if payments had continued to be made to the applicant when he went overseas. She noted that the applicant had lived on the Marina for a period of time.
Mr Anesan Naidoo
[5] Mr Naidoo said it was his understanding that the applicant was contracted to the respondent and paid as a sole trader. The hours he spent at the Marina varied according to how busy the commercial vessels were. Mr Naidoo said the applicant later provided ongoing management and supervision at the Marina. He believed the applicant’s retainer payment was increased to $1,100.00 ($1,000 + GST) ). Mr Naidoo said the applicant’s services were terminated in 24 May 2012 ‘as he had put BBMO into an untenable situation’.
[6] In oral evidence, Mr Naidoo said that he only irregularly attended the Marina. However, it was his recollection that when the applicant first started, he had handwritten his ABN on his timesheet. Mr Naidoo automatically assumed he was a contractor providing maintenance and management services to the wharf. He was paid a weekly retainer, inclusive of GST. Mr Naidoo agreed the applicant was given a workshirt emblazoned with the Company logo, so as to differentiate him from the users of the boats on the Marina. He believed it was ‘the right thing to do’.
Mr Michael Drysdale
[7] Mr Drysdale is a director of Mandrake Consulting and has been the respondent’s bookkeeper for the past 6 years. He said he had been informed by the respondent’s directors that the applicant was engaged as a contractor and his retainer payments were treated as contractor payments. Mr Drysdale said that, on numerous occasions, he had asked the applicant for invoices, but none had been provided. As a result, the invoices were generated by the respondent and given to the applicant.
[8] Mr Drysdale had conducted an ABN search and was satisfied that the applicant was registered for GST which was why a 10% payment was added to his retainer. Mr Drysdale said the applicant had not asked for a group certificate for either of the 2010 or 2011 financial years.
[9] In cross examination, Mr Drysdale said he did not know if the applicant had actually received the invoices generated by the respondent. However, the respondent had claimed the 10% GST component. Mr Drysdale understood the applicant had not worked for anyone else. He described his work as that of a general handyman, not a caretaker.
Mr John Giddens
[10] Mr Giddens has been the respondent’s Operations Director for seventeen years. He had engaged the applicant on a retainer/contractor basis. He believed the applicant had other sources of income, such as selling items from his utility at the weekend markets and escorting females to functions, such as fashion shows. Attached to Mr Giddens’ statement was a business card for the applicant describing him as a ‘personal chaperon’ for Acclaimed Personnel Services.
[11] Mr Giddens said the applicant’s hours depended on how busy the commercial vessels were and, in his supervisory capacity, he had seldom worked manually. When the applicant did so, it was usually to assist him in organising rubbish removal or emergency moorings.
[12] Mr Giddens said that the respondent had included the applicant’s gross contract payment in its workers’ compensation declarations and returns, as he had received advice that it was prudent to do so. Mr Giddens believed the applicant went overseas five times between October 2009 and March 2012. This was done at the applicant’s own discretion and timing.
Applicant’s evidence
[13] The applicant said he was introduced to Mr Giddens through an employer who had previously given him some casual work for a few weeks. The applicant phoned Mr Giddens, who told him he was looking for someone, 1-2 days a week, to tidy up the place and help him maintain the Marina. The hours were to be 8am to 3pm for which he would receive $200.00 in cash for each day worked.
[14] The applicant said he enjoyed the work and that, day to day, he would be instructed by Mr Giddens to complete odd labouring jobs, such as moving materials and cleaning the rubbish. He would report to Mr Giddens when he finished one job to be told what to do next. The applicant said Mr Giddens later offered him full time work assisting another employee (Dion), who was a welder and fabricator. Mr Giddens had said he could not continue paying him cash and asked for his bank details.
[15] The applicant had enjoyed the work so much, he even came in on weekends. His jobs included painting, putting in safety rails, checking and repairing moorings, moving steel around, removing rubbish and assisting Dion. The employer provided the tools and raw materials and gave him a Blackwattle Bay Marine credit card for purchasing necessary work items. He was also supplied with shirts emblazoned with the employer’s logo to wear at work. The applicant said that, after a few months, Mr Giddens and he agreed that he would be paid $1,100.00 a week. The applicant said tax was not discussed and he believed Mr Giddens was ‘responsible for PAYG’.
[16] In January 2011, Mr Giddens offered him the Manager’s role. This involved collecting mooring fees, taking care of the berths and car park, liaising with the Marina’s customers and arranging deliveries and security on site. This required him to be available at all hours as boat owners came in at various times. He was to be contactable after hours for any customer inquiries.
[17] After a few months, the applicant asked Mr Giddens if he could live on site so as to be available 24/7. Mr Giddens agreed and offered him a barge on the Marina for accommodation purposes. The applicant said Mr Giddens still attended the site each day to give him various instructions. However, he was now becoming familiar with what was required and did not need to be told about everything which was necessary to be done.
[18] The applicant responded to three other matters raised in Mr Giddens’ statement:
● in 2009, he had, on about three occasions, assisted his then girlfriend to sell clothing from her shop at the markets.
● in 2009, he had an idea to set up a hire driver company for upmarket fashion shows. While he did have a business card made up, nothing ever came of the idea.
● he had always asked Mr Giddens, two to three months beforehand, if he could take holidays. Mr Giddens had always agreed.
[19] The applicant said that when he worked for Mr Giddens, at no time had he worked for anyone else. While he had an ABN it was for another company which had never got going. He did not remember giving his ABN to Mr Giddens or his wife. They had never asked him to invoice them and had never discussed tax, superannuation or workers’ compensation. The applicant attached his bank records to his statement, showing the weekly payments paid to him by the respondent. This was his only account.
[20] In cross examination, the applicant acknowledged that he had not asked Mr Giddens for a group certificate or anything else to submit in respect to personal tax. He agreed that when he became the Manager, he would use his initiative to do work related tasks of his own accord. He again denied ever being asked by the respondent for invoices.
[21] The applicant relied on two short statements from Mr Danny Hickson, a shipwright who had worked with the applicant and Mr Brandon Alcorn, a tenant on the Marina. Neither was available for cross examination.
[22] Mr Hickson said he believed the applicant was not only the Marina Manager, but also the major labourer who liaised with customers and kept the Marina clean and operational. Mr Alcorn said he was advised to take any issues, requests or maintenance matters to the applicant. He believed the applicant was the manager and therefore had the authority to address such matters.
Mr James Dupree
[23] Mr James Dupree, a Barrister, was the respondent’s previous legal advisor, although it was plainly apparent there has been a bitter falling out between them. He provided a witness statement and gave evidence on the applicant’s behalf. He said he would attend the Marina frequently prior to October 2011 and had observed the following:
‘6. In the course of his duties it appeared to me that Ross attended to every need of the marina in as much as he moved barges, drove boats, organised and supervised the fixing of plumbing, attended to emergencies such as the collapse of the main gang plank bridge, saving drifting barges and attending to fixing client vessels that, through weather and other reasons broke free of the mooring lines.
7. I have observed Ross working at all times of the day and night as and when the demands of the Marina and weather required. It appeared to me that Ross in any one day would continue to work from early morning until late at night as and when the work was required.
8. I recall at times there were dangerous westerly winds that threatened the Marina such that it was thorough [sic] Ross’ attendances the Marina was protected.
9. I observed Ross on days such as Christmas and New Year supervising the car park operated by Mr Giddens so as to ensure order and the availability of car parking to tenants who secured their vessels at the Marina.’
In oral evidence, Mr Dupree agreed that he was not involved in the respondent’s day to day transactions or the invoicing which occurred at the Marina.
SUBMISSIONS
For the respondent
[24] Mr Naidoo submitted that while the respondent had several employees, the applicant had asked to be paid as a contractor, inclusive of GST, and he gave the respondent his ABN. This was how the relationship started and how it continued. The respondent had never forced him to do anything. After the relationship was terminated, the respondent had been taken aback when he claimed to be an employee. Mr Naidoo added that all persons engaged on the Marina, be they employee or contractor, were provided with safety clothing.
For the applicant
[25] Mr B Pierce of Counsel submitted as follows:
1. Whether a person is an employee or an independent contractor is a matter of substance.
2. In many if not all cases it would be to the benefit of an Employer to classify a person as an “independent contractor” as opposed to an employee. Potentially the benefits to an Employer include
i. They may avoid paying superannuation
ii. They avoid having to pay PAYG.
iii. They could claim 10% of payments made to the “independent contractor” as an offset against GST liability on their BAS return.
iv. They avoid paying having to pay holiday entitlements.
v. They avoid having to pay sick leave.
3. In this case it will be submitted that the evidence for the Applicant will demonstrate during the time he worked at the marina he was in substance an employee in that:
i. He had never worked at a marina before.
ii. He had no tools of trade or other places of business.
iii. He did not advertise his services for the world.
iv. He essentially worked full---time exclusively for the Respondent for over two and a half years.
v. His role was firstly manual labouring (for over a year) and later, his role was upgraded to include managing the marina on behalf of the Respondent.
vi. He took instructions from the Respondent; albeit he displayed initiative.
vii. He was given a card in the name of the Respondent to make purchases as required by the Respondent.
viii. He did no work other than for the Respondent.
ix. Any money he ever received as manager from clients he gave to the Respondent.
x. He moved on site to live at the marina to better perform his duties for the Respondent.
xi. He was paid weekly by the Respondent, into a bank account, and in similar amounts.
xii. There was [sic] no tasks that the Respondent required him to complete other than tasks which would be expected from a person working as a servant for the Respondent.
xiii. He was asked by the Respondent and did in fact wear a work short provided by the Respondent with the symbol of the Respondent.
xiv. He was never asked to and did not in fact ever invoice the Respondent.
CONSIDERATION
[26] This case involves a relatively straightforward jurisdictional question - was the applicant an employee or an independent contractor? In answering this question, FWA must apply the conventional tests for determining whether the person was protected from unfair dismissal, within the meaning of Ch 3 Pt 3-2 of the Act. I will come to the relevant authorities shortly.
[27] Perhaps unsurprisingly, coming to an answer to the above question is not assisted by any document; being either a contract of employment, letter of offer, letter of appointment, or even a file note. It seems the relationship commenced and continued as a result of a series of verbal agreements between Mr Giddens and the applicant.
[28] What is abundantly clear, however, is that the applicant was performing various care and maintenance jobs at the Marina and later, in addition to these tasks, he became a live in Manager/Caretaker of the Marina. He was paid a regular and consistent amount for irregular hours and was under the direction of Mr Giddens. For Mr Naidoo to rely on the applicant using his own initiative or experience learnt on the job, as a basis for claiming the applicant was a contractor, misunderstands the nature of the ordinary employment relationship between an employee and an employer. Indeed, one might say that a failure to use initiative is precisely the opposite of what an employer looks for in a good employee. Mr Naidoo’s submission in this respect takes the respondent’s case nowhere.
[29] It is relevant to observe that the applicant, through the entire period of engagement with the respondent, did not work or provide any service to any other entity or person. The untested assertions of Mr Giddens that the applicant was working at the markets or operating a hire-a-chaperon service were explained by the applicant, without challenge, by the respondent. Mr Giddens’ assertions do not assist the respondent’s case.
[30] The central focus - indeed the only possibly relevant focus of the respondent’s case - was that the applicant had an ABN and that he had frequently been asked and refused to provide invoices for his services. The applicant denied ever being asked for invoices, although there is no doubt he provided the respondent with time sheets for the hours he claimed to have worked. It seems a very strange reaction for the respondent to generate its own invoices of the applicant’s work (which he says he never saw). It could be asked why, if the respondent was really serious about the matter, it did not simply insist on him invoicing his work as a condition of payment.
[31] In any event, the mere facts that the applicant had an ABN and that he was paid an amount of money said to be inclusive of GST, are not necessarily decisive factors in the respondent’s favour. This brings me to the relevant authorities on the question of whether a person is really an employee or a contractor.
[32] In Jiang Shen Cai t/a French Accent v Do Rozario [2011] FWAFB 8307, the Full Bench of FWA said at para [18]-[20]:
‘[18] We endorse the proposition in sub-paragraph (1) of the Abdalla summary, based on the High Court authorities, that:
“... the ultimate question will always be whether the worker is the servant of another in that other’s business, or whether the worker carries on a trade or business of his or her own behalf: that is, whether, viewed as a practical matter, the putative worker could be said to be conducting a business of his or her own. This question is answered by considering the terms of the contract and the totality of the relationship.” (the ultimate question)
[19] Sub-paragraph (5) of the summary in Abdalla should be read as nothing more than a restatement of the ultimate question, designed to bring the focus of consideration back to the ultimate question.
[20] A consideration of the nature of the work performed, the terms of the contract, and the so-called indicia must always be directed to the ultimate question. The leading case in this area is the decision of the High Court in Hollis v Vabu Pty Ltd.The most significant case since Hollis v Vabu is the decision of the Full Court of the Federal Court in Roy Morgan Research Pty Ltd v Commissioner of Taxation (Roy Morgan). That case concerned an appeal against a decision of the Administrative Appeals Tribunal that interviewers engaged by Roy Morgan were “employees” either within the ordinary meaning of that word in s.12(1) of the Superannuation Guarantee Charge Act 1992 (SGC Act) or because they worked under a contract that was wholly or principally for their labour as specified in s.12(3) of that Act. The Full Court endorsed a passage from the leading judgment in the decision of the Victorian Court of Appeal in Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue11, which in turn had endorsed a passage from the judgment of Mummery J in Hall (Inspector of Taxes) v Lorimer which makes it clear that a consideration of the indicia:
“...is not a mechanical exercise of running through items on a check list to see whether they are present in, or absent from, a given situation. The object of the exercise is to paint a picture from the accumulation of detail. The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another.”’
The Full Bench then summarised the general law approach to distinguishing between employees and independent contractors. It said at para [20]:
‘[30] The general law approach to distinguishing between employees and independent contractors may be summarised as follows:
(1) In determining whether a worker is an employee or an independent contractor the ultimate question is whether the worker is the servant of another in that other’s business, or whether the worker carries on a trade or business of his or her own behalf: that is, whether, viewed as a practical matter, the putative worker could be said to be conducting a business of his or her own of which the work in question forms part? This question is concerned with the objective character of the relationship. It is answered by considering the terms of the contract and the totality of the relationship.
(2) The nature of the work performed and the manner in which it is performed must always be considered. This will always be relevant to the identification of relevant indicia and the relative weight to be assigned to various indicia and may often be relevant to the construction of ambiguous terms in the contract.
(3) The terms and terminology of the contract are always important . However, the parties cannot alter the true nature of their relationship by putting a different label on it. In particular, an express term that the worker is an independent contractor cannot take effect according to its terms if it contradicts the effect of the terms of the contract as a whole: the parties cannot deem the relationship between themselves to be something it is not. Similarly, subsequent conduct of the parties may demonstrate that relationship has a character contrary to the terms of the contract.
(4) Consideration should then be given to the various indicia identified in Stevens v Brodribb Sawmilling Co Pty Ltd and the other authorities as are relevant in the particular context. For ease of reference the following is a list of indicia identified in the authorities:
● Whether the putative employer exercises, or has the right to exercise, control over the manner in which work is performed, place or work, hours of work and the like.
Control of this sort is indicative of a relationship of employment. The absence of such control or the right to exercise control is indicative of an independent contract. While control of this sort is a significant factor it is not by itself determinative. In particular, the absence of control over the way in which work is performed is not a strong indicator that a worker is an independent contractor where the work involves a high degree of skill and expertise. On the other hand, where there is a high level of control over the way in which work is performed and the worker is presented to the world at large as a representative of the business then this weighs significantly in favour of the worker being an employee.
“The question is not whether in practice the work was in fact done subject to a direction and control exercised by an actual supervision or whether an actual supervision was possible but whether ultimate authority over the man in the performance of his work resided in the employer so that he was subject to the latter’s order and directions.” “[B]ut in some circumstances it may even be a mistake to treat as decisive a reservation of control over the manner in which work is performed for another. That was made clear in Queensland Stations Pty. Ltd v Federal Commissioner of Taxation, a case involving a droving contract in which Dixon J observed that the reservation of a right to direct or superintend the performance of the task cannot transform into a contract of service what in essence is an independent contract.”
● Whether the worker performs work for others (or has a genuine and practical entitlement to do so).
The right to the exclusive services of the person engaged is characteristic of the employment relationship. On the other hand, working for others (or the genuine and practical entitlement to do so) suggests an independent contract.
● Whether the worker has a separate place of work and or advertises his or her services to the world at large.
● Whether the worker provides and maintains significant tools or equipment.
Where the worker’s investment in capital equipment is substantial and a substantial degree of skill or training is required to use or operate that equipment the worker will be an independent contractor in the absence of overwhelming indications to the contrary.
● Whether the work can be delegated or subcontracted.
If the worker is contractually entitled to delegate the work to others (without reference to the putative employer) then this is a strong indicator that the worker is an independent contractor 37. This is because a contract of service (as distinct from a contract for services) is personal in nature: it is a contract for the supply of the services of the worker personally.
● Whether the putative employer has the right to suspend or dismiss the person engaged.
● Whether the putative employer presents the worker to the world at large as an emanation of the business.
Typically, this will arise because the worker is required to wear the livery of the putative employer.
● Whether income tax is deducted from remuneration paid to the worker.
● Whether the worker is remunerated by periodic wage or salary or by reference to completion of tasks.
Employees tend to be paid a periodic wage or salary. Independent contractors tend to be paid by reference to completion of tasks. Obviously, in the modern economy this distinction has reduced relevance.
● Whether the worker is provided with paid holidays or sick leave.
● Whether the work involves a profession, trade or distinct calling on the part of the person engaged.
Such persons tend to be engaged as independent contractors rather than as employees.
● Whether the worker creates goodwill or saleable assets in the course of his or her work.
● Whether the worker spends a significant portion of his remuneration on business expenses.
It should be borne in mind that no list of indicia is to be regarded as comprehensive or exhaustive and the weight to be given to particular indicia will vary according to the circumstances. Features of the relationship in a particular case which do not appear in this list may nevertheless be relevant to a determination of the ultimate question.
(5) Where a consideration of the indicia (in the context of the nature of the work performed and the terms of the contract) points one way or overwhelmingly one way so as to yield a clear result, the determination should be in accordance with that result. However, a consideration of the indicia is not a mechanical exercise of running through items on a check list to see whether they are present in, or absent from, a given situation. The object of the exercise is to paint a picture of the relationship from the accumulation of detail. The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another. The ultimate question remains as stated in (1) above. If, having approached the matter in that way, the relationship remains ambiguous, such that the ultimate question cannot be answered with satisfaction one way or the other, then the parties can remove that ambiguity a term that declares the relationship to have one character or the other.
(6) If the result is still uncertain then the determination should be guided by “matters which are expressive of the fundamental concerns underlying the doctrine of vicarious liability” including the “notions” referred to in paragraphs [41] and [42] of Hollis v Vabu.’
[33] In my view, consideration of the various indicia identified in Stevens v Brodribb Sawmilling (supra above), is overwhelmingly in favour of a finding that the applicant was an employee and not an independent contractor. The evidence in this case makes clear that:
a) Mr Giddens had the right to control, and did control, the work the applicant performed and where and when he expected it to be performed. He was personally in attendance at the Marina on most days and would give instructions to the applicant of what he wanted done;
b) the applicant worked exclusively for Mr Giddens at the Marina and for no other entity or person at any other site;
c) the applicant did not have a separate workplace; nor did he advertise his services ‘to the world at large’. The evidence was that he loved the job and was so committed to it that he sought, and was granted, approval to live on site;
d) the respondent provided all the tools and materials ncessary for the applicant to perform the work. Moreover, the applicant had never worked at a Marina in this type of job before;
e) there was no suggestion the applicant could delegate or subcontract his work to anyone else, or that he ever did so;
f) Mr Giddens had the right to terminate the applicant’s employment, as shown by his exercise of that right on 24 May 2012;
g) the applicant was required to wear work clothing advertising his services as being those of the respondent;
h) no income tax was deducted from the applicant’s remuneration;
i) the applicant was paid the same amount for varying hours on a regular and systematic basis;
j) when the applicant did go on holidays he sought permission from Mr Giddens well in advance. I have no evidence as to whether he was paid for annual leave or sick leave. However, Mr Giddens said the applicant was included in the respondent’s workers’ compensation returns to WorkCover;
k) the applicant performed a variety of functions, and was not exclusively involved in any profession, trade or distinct calling;
l) the applicant did not create goodwill or saleable assets on his own behalf, but always acted on behalf of the Marina’s operators; and
m) there was no evidence of the applicant spending any, let alone a significant portion, of his remuneration on business expenses.
[34] In addition, to use the words in para [5] supra above, an assessment of the matters in the preceding paragraph ‘paints a picture’ of a relationship which is entirely consistent with an employer/employee relationship. There is no basis for any conclusion that the relationship is unclear, uncertain or ambiguous. I am satisfied that the answer to the ‘ultimate question’ is that the applicant was the servant of Mr Giddens in his business and did not carry on any trade or business on his own behalf. He was an employee and not an independent contractor.
[35] Accordingly, I dismiss the respondent’s objection to this application and direct the matter be remitted to the FWA Unfair Dismissals Team for reallocation in accordance with the Tribunal’s usual protocols. An order to that effect is issued contemporaneously with this decision.
DEPUTY PRESIDENT
Appearances:
B Pierce of Counsel for the applicant
A Naidoo from the respondent.
Hearing details:
2012.
Sydney:
September 25
Final written submissions:
Applicant: 10 August 2012
Respondent: 27 July 2012
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