Mr Zdenko Bertok v Halsan Pty Ltd T/A Hughes Chauffeured Cars-Limousines-Coaches, CitiCar, SmartCar & Skylink

[2014] FWC 1252

[2014] FWC 1252

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Mr Zdenko Bertok
v
Halsan Pty Ltd T/A Hughes Chauffeured Cars-Limousines-Coaches, CitiCar, SmartCar & Skylink
(U2013/13382)

COMMISSIONER HAMPTON ADELAIDE, 11 MARCH 2014

Application for relief from unfair dismissal - whether employee or independent contractor - approach required discussed - some conflicting indicia - important elements more consistent with being in business not in employment - not an employee - application dismissed.

1. Background and case outline

[1] Mr Zdenko Bertok has applied to the Fair Work Commission seeking a remedy for an alleged unfair dismissal under s.394 of the Fair Work Act 2009. Mr Bertok owned and operated a chauffeur driven car for the chauffeured car operations of the respondent, Halsan Pty Ltd T/A Hughes Chauffeured Cars-Limousines-Coaches, CitiCar, SmartCar & Skylink (Halsan).

[2] It is common ground that in order to make the application, Mr Bertok must be an employee within the meaning of the Act. This arises from s.382 of the Act, which provides that an employee may be protected from unfair dismissal. The definition of “employee” for this purpose is the ordinary meaning of the term. 1

[3] Mr Bertok contends that his relationship with Halsan, at the time that it ended, was in practice one of employment; whereas the respondent contends that Mr Bertok was an independent contractor at all times and not an employee. Halsan has made a jurisdictional objection to that end which has been dealt with as a preliminary point.

[4] Halsan was represented by Mr Smith, with permission, 2 and led evidence from Mr Jarrad Kay, its Client Liaison and Marketing Manager. Relying upon the approach of the High Court in Hollis v Vabu Pty Ltd3 (Hollis) and Smith DP in Coulston v The Blind Factory,4 Halsan contends that the nature of the relationship was particularly evident from the following factors said to apply to Mr Bertok’s contract:

● Mr Bertok owned and operated the vehicle and paid for all expenses associated with the provision of the chauffeur service and this was, in relative terms, a significant investment;
● Mr Bertok was required by the relevant licensing authorities to obtain accreditation and to submit an approved operational plan;
● To the extent that there had to be signage identifying the vehicle as part of Halsan’s operations, this was a requirement of the licensing authorities and only applied when Mr Bertok’s vehicle was performing work under their contract;
● Mr Bertok could refuse work by not making his car available and in that way could determine his working days and hours; and
● Mr Bertok could sub-contract the work to other drivers and could use his vehicle to perform other work.

[5] In relation to the financial administration associated with the relationship, Halsan contended that:

● The invoice system, whereby the respondent generated recipient created tax invoices (RCTIs), was a matter of mutual convenience and in fact represented Mr Bertok paying Halsan for the services it provided in arranging for the work opportunities and related services; and
● Mr Bertok was responsible for and did his own taxation returns.

[6] Mr Bertok accepts that prior to a change in May 2011 regarding the allocation of work, he was in an independent contractual relationship with Halsan. However, he contends that after that change, the nature of his relationship with Halsan became one of employment. In that regard he contends that the following aspects in particular, support that conclusion:

● He had a single car and had to earn a living from his work, which meant that opportunities to delegate work or sub-contract did not exist in practice;
● After May 2011, Halsan exercised control over when he worked and this in effect turned him into an employee on standby;
● Halsan also exercised control over how much he would be paid and how he did that work - through the Chauffeurs Manual and its allocation of matters;
● The work was performed as part of Halsan’s operations and was marketed and delivered to the public on that basis;
● Mr Bertok did not have goodwill in the contract that could be on-sold; and
● Control was also evident from the fact that most jobs were performed in circumstances where the clients were invoiced directly by Halsan according to contract rates that were set by Halsan and any cash or credit card transactions were collected on behalf of Halsan.

[7] Mr Bertok referred to the circumstances of the bicycle couriers in Hollis and contended that his circumstances where akin to those found by the High Court in that matter to be employment. He also gave evidence in support of his case.

2. The conduct of the relationship between the parties

[8] There are some factual disputes arising from the evidence of Mr Bertok and Mr Kay. However, these are largely matters of perspective and I find that both witnesses have given an honest account of their understanding of events. I have resolved the conflicts based upon my impression of their evidence and the extent of direct knowledge of the matters concerned.

[9] I will leave some of the specific findings to the subsequent consideration of the indicia arising from these general facts.

[10] Mr Bertok provided chauffeur services within the SmartCar section of the Halsan operations. This commenced in early February 2011.

[11] Chauffeurs require specific accreditation by a regulator under South Australian law 5 and Mr Bertok applied for registration with the assistance of Halsan. This included the provision of a plan of operation that was wholly or largely developed by Halsan, as Mr Bertok was to be operating as part of its fleet.

[12] Mr Bertok purchased an appropriate vehicle to be used as a chauffeur driven car, and throughout the arrangement with Halsan, was responsible for the standing and running costs and all other costs associated with the provision of the service.

[13] Mr Bertok was required to have decals on his vehicle identifying it as being part of the SmartCar fleet. This could be covered up, with a magnetic sticker if Mr Bertok wanted to use the car for other purposes including as a Chauffer; however he did not do so and did not consider that this was a practical option given his circumstances.

[14] There was no written contract setting out the terms of the arrangements. Halsan provided a Chauffeurs Manual and this contained various requirements as to how Mr Bertok (and others) were to conduct themselves. This included dress (suit and “company” tie) and conduct expectations.

[15] The SmartCar business of Halsan included a number of major clients. Set rates were negotiated with those clients for the provision of Chauffer driven cars. The business also had casual and one-off bookings. The majority of clients paid through account arrangements directly with Halsan; however some clients provided Mr Bertok with cash or paid via a credit card linked to Halsan. Any cash received from bookings organised by Halsan was in effect collected on behalf of that company and if not forwarded to them, was accounted for in the invoices provided.

[16] The SmartCar business included a number of cars and some of these were operated by individuals who had multiple cars and/or engaged other drivers to conduct the work. The same administrative and practical relationships operated with these parties as applied to Mr Bertok.

[17] The arrangement was that Mr Bertok would receive the value of each job arranged by Halsan, less a commission of 27% and certain fees that were payable to Halsan. These fees included a base fee and costs associated with access to car cleaning facilities and a contribution to the mobile phone plan that all drivers used to link with the booking service.

[18] Halsan administered the relationships with the major clients and the booking service, and operated the invoicing system that gave effect to the arrangements set out above. This involved issuing the RCTIs and making the net payment to Mr Bertok based upon the jobs he performed each month.

[19] Prior to May 2011, the booking arrangements involved each driver using a diary system to confirm their availability. This permitted them to indicate that they would be available for certain times of the day and/or full days. The work that was available was advised to the drivers on the previous evening and they could elect to undertake the particular jobs concerned at that time.

[20] During that period, casual bookings would arise and these were also offered to the drivers.

[21] In May 2011, the booking arrangements were changed by Halsan. There was some discussion with an informal drivers committee however there is no suggestion that the change was subject to a formal consultation with Mr Bertok. The change meant that the only jobs that were confirmed on the previous evening were the first and last jobs for the day. These were the busiest periods when most jobs were available to be performed. The diary system to confirm availability was retained.

[22] Other work, including the casual bookings that would arise during the course of the day, would then be allocated to the drivers on a rotational basis but also having regard to their location. The drivers could elect to refuse or accept that work and this generally applied to all other jobs. However, when a driver rejected a job they would go to the end of the queue and if the reason for the rejection was that the nature of the job was not considered to be profitable (the quoted price was too low in the view of Mr Bertok) this was not considered appropriate by management and was the subject of discussions.

[23] Mr Bertok would generally attend at the depot at some stage early in a day when he was working however, after May 2011 he would often drive to his home when he had completed the assigned work. This was partly a matter of convenience and partly to position himself for further work given its proximity to one of the major clients.

[24] In August 2013, Halsan advised Mr Bertok that he would be offered no more jobs in the context of certain alleged complaints from a client of a major customer. I make no findings about the merit or otherwise of those circumstances given the preliminary nature of these proceedings.

3. The approach required of the Commission in determining the nature of this relationship

[25] The required approach is conveniently summarised by the Full Bench of the Commission in Abdalla v Viewdaze Pty Ltd t/as Malta Travel 6 (Abdalla) as follows (footnotes omitted):

“[34] Following Hollis v Vabu, the state of the law governing the determination of whether an individual is an employee or an independent contractor may be summarised as follows:

(1) Whether a worker is an employee or an independent contractor turns on whether the relationship to which the contract between the worker and the putative employer gives rise is a relationship where the contract between the parties is to be characterised as a contract of service or a contract for the provision of services. 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 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 and must be considered. However, in so doing, it should be borne in mind that 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: that is, 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. If, after considering all other matters, the relationship is ambiguous and is capable of being one or the other, then the parties can remove that ambiguity by the very agreement itself which they make with one another.

(4) Consideration should then be given to the various 'indicia' identified in Brodribb and the other authorities bearing in mind that no list of indicia is to be regarded as comprehensive and the weight to be given to particular indicia will vary according to the circumstances. Where a consideration of the `indicia' points one way or overwhelmingly one way so as to yield a clear result, the determination should be in accordance with that result. For ease of reference we have collected the following list of 'indicia':

• 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 independent contract. While control of this sort is a significant factor 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 their 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 weights 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, if the individual also works for others (or the genuine and practical entitlement to do so) then this suggests independent contract.

• Whether the worker has a separate place of work and or advertises his or her services to the world at large.



• Whether the worker provides and maintains significant tools or equipment.

Where the worker's investment in capital equipment is substantial and a substantial degree of skill or training is required to use or operate that equipment the worker will be an independent contractor in the absence of overwhelming indications to the contrary.

• Whether the work can be delegated or subcontracted.

If the worker is contractually entitled to delegate the work to others (without reference to the putative employer) then this is a strong indicator that the worker is an independent contractor. This is because a contract of service (as distinct from a contract for services) is personal in nature: it is a contract for the supply of the services of the worker personally.

• Whether the putative employer has the right to suspend or dismiss the person engaged.



• Whether the putative employer presents the worker to the world at large as an emanation of the business.

Typically, this will arise because the worker is required to wear the livery of the putative employer.

• Whether income tax is deducted from remuneration paid to the worker.



• Whether the worker is remunerated by periodic wage or salary or by reference to completion of tasks.

Employees tend to be paid a periodic wage or salary. Independent contractors tend to be paid by reference to completion of tasks. Obviously, in the modern economy this distinction has reduced relevance.

• Whether the worker is provided with paid holidays or sick leave.



• Whether the work involves a profession, trade or distinct calling on the part of the person engaged.

Such persons tend to be engaged as independent contractors rather than as employees.

• Whether the worker creates goodwill or saleable assets in the course of his or her work.



• Whether the worker spends a significant portion of his remuneration on business expenses.

This list is not exhaustive. 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) If the indicia point both ways and do not yield a clear result the determination should be guided primarily by whether it can be said that, viewed as a practical matter, the individual in question was or was not running his or her own business or enterprise with independence in the conduct of his or her operations as distinct from operating as a representative of another business with little or no independence in the conduct of his or her operations.

(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 (see above).”

[26] The reference to the extracts from Hollis above, is as follows (footnotes omitted):

“[41] In Bazley v Curry, the Supreme Court of Canada saw two fundamental or major concerns as underlying the imposition of vicarious liability. The first is the provision of a just and practical remedy for the harm suffered as a result of the wrongs committed in the course of the conduct of the defendant's enterprise. The second is the deterrence of future harm, by the incentive given to employers to reduce the risk of accident, even where there has been no negligence in the legal sense in the particular case giving rise to the claim.

[42] In general, under contemporary Australian conditions, the conduct by the defendant of an enterprise in which persons are identified as representing that enterprise should carry an obligation to third persons to bear the cost of injury or damage to them which may fairly be said to be characteristic of the conduct of that enterprise. In delivering the judgment of the Supreme Court of Canada in Bazley v Curry, McLachlin J said of such cases that "the employer's enterprise [has] created the risk that produced the tortious act" and the employer must bear responsibility for it. McLachlin J termed this risk "enterprise risk" and said that "where the employee's conduct is closely tied to a risk that the employer's enterprise has placed in the community, the employer may justly be held vicariously liable for the employee's wrong". Earlier, in Ira S Bushey & Sons, Inc v United States, Judge Friendly had said that the doctrine of respondeat superior rests:

"in a deeply rooted sentiment that a business enterprise cannot justly disclaim responsibility for accidents which may fairly be said to be characteristic of its activities". 7

[27] I also note that the following extract from Hollis was relied upon by the Full Bench in Abdalla to illustrate the import of the High Court decision:

"[47] In classifying the bicycle couriers as independent contractors, the Court of Appeal fell into error in making too much of the circumstances that the bicycle couriers owned their own bicycles, bore the expenses of running them and supplied many of their own accessories. Viewed as a practical matter, the bicycle couriers were not running their own business or enterprise, nor did they have independence in the conduct of their operations. A different conclusion might, for example, be appropriate where the investment in capital equipment was more significant, and greater skill and training were required to operate it. The case does not deal with situations of that character. The concern here is with the bicycle couriers engaged on Vabu's business. A consideration of the nature of their engagement, as evidenced by the documents to which reference has been made and by the work practices imposed by Vabu, indicates that they were employees." 8

4. The indicia concerning the relationship

[28] Without detracting from the overall assessment of the relationship that is required, it is convenient to initially consider the various indicia under general headings adapted from those used by the Full Bench in Abdalla. These also inform that overall assessment.

[29] I have applied these in terms of the relationship operating at the time of its conclusion. I will deal with the consequences of the operational changes that took place in May 2011 as part of my broader consideration of this matter.

Control over how work is performed and the hours of work etc.

[30] This indicia is concerned with the exercise, or the right to exercise, control over the manner in which the work is performed including the place of work, hours and the like. This must be considered in the light of the nature and circumstances of the work in question.

[31] There are elements of control evident in the Chauffeurs Manual. Although these are in the main matters of common sense and consistent with the nature of the service involved, the fact that compliance with a detailed manual was considered to be a compulsory part of the relationship is an indicator of control.

[32] Within the parameters of the manual, Mr Bertok had discretion as to what routes he would use to transport the clients and importantly, could indicate that he would not be available to accept jobs.

[33] Mr Bertok could refuse a particular job and I find that this occurred on a reasonably regular basis when the location of the job or other circumstances made it inconvenient. However, there is evidence that if Mr Bertok refused a job due to the price attaching to it as part of the arrangement between Halsan and the client, this was not viewed well by management and could lead to the threat of the loss of future job allocations.

[34] Mr Bertok could control his hours simply by indicating that he would not be available for a whole or part day. This was communicated and administered largely through a diary system and otherwise by declining work.

[35] There are elements of control more consistent with employment. However, the capacity for Mr Bertok to control when and if he intended to be available for work must also be taken into account.

The entitlement to work for others (in the context of a full-time arrangement)

[36] There was nothing in the arrangements with Halsan that prevented Mr Bertok from using his vehicle to work for others. He was not required to always make himself or his vehicle available to Halsan.

[37] This entitlement must also be seen in the context of the practical reality of the situation and the need for Mr Bertok to maximise his income through the arrangements with Halsan. Even in that light, the absence of the right to an exclusive service is more consistent with an independent contractual relationship.

A separate place of work and the advertising of the services

[38] The location of the work should be considered in the context of the nature of the services provided. Mr Bertok attended the operations base of Halsan regularly but did not work from there in the normal course. Rather, he worked from his vehicle and also waited at his home and other places for work assignments. This aspect is a neutral indicator.

[39] The service was provided under the umbrella of the relevant trading name of Halsan and was advertised and delivered in that context. This is more consistent with an employment relationship.

The provision and maintenance of tools and equipment

[40] Mr Bertok brought to the relationship a significant investment in terms of his vehicle and he was responsible for its registration, and all operating costs associated with the provision of his part of the service.

[41] These costs included paying a commission to Halsan and various fees (via a deduction from the gross earnings) in relation to the provision of the work, base services, access to cleaning facilities and a share of the mobile phone costs. I note in that regard that the mobile phone was supplied by Halsan as part of a group purchase plan.

[42] This indicia is more consistent with an independent contractual relationship.

The entitlement to delegate or sub-contract work

[43] The evidence reveals that Mr Bertok was permitted under the arrangements with Halsan to place another driver (with chauffeur accreditation from the authorities) into the car without the permission of Halsan. 9

[44] The fact that Mr Bertok did not consider that this was feasible in his particular circumstances must be considered in terms of the practical effect of that entitlement. However, the fact that the contract did not need to be undertaken by Mr Bertok personally is a strong indicator of an independent contractual relationship.

The right to suspend or dismiss

[45] There is no indication of a right to suspend the contract in any traditional sense. There was however an apparent capacity for Halsan to withdraw future offers of jobs and indeed the events leading to this application appear to involve Halsan indicating to Mr Bertok that he would be offered no further work as a result of alleged client complaints.

[46] The existence of a right to end a contract due to non or poor performance is not of itself a strong indicator of the nature of the relationship. All contracts have obligations and either expressly or impliedly allow for termination as a consequence of failing to meet the service obligations in the contract.

The public presentation of the workers (uniforms and other badging)

[47] The service was provided under the umbrella of the relevant trading name of Halsan and Mr Bertok was required to wear a uniform when driving for Halsan. This is more consistent with an employment relationship.

[48] In terms of the badging of the vehicle, I accept that this is a requirement of the relevant licensing authority when Mr Bertok was operating under his arrangements with Halsan. I also accept that Mr Bertok could have used a magnetic “sticker” over the badging should he have wished to use the vehicle for other purposes and clients. This means that this particular aspect tends to be a more neutral consideration.

Deduction of income tax

[49] Halsan did not deduct income tax and Mr Bertok was responsible for the payment and administration of his tax liabilities and affairs.

[50] This is more consistent with an independent contractual relationship.

The provision of invoices/periodic payment of “wages”

[51] The fact that the invoices were generated by Halsan is a relevant consideration. However, the fact these were generated based upon the performance of actual work by Mr Bertok and involved, in effect, the payment to Halsan for services rendered, is more consistent with an independent contractual relationship.

Paid holidays and leave

[52] There were no paid holidays, leave or other provisions that would be consistent with an employment relationship. This is more consistent with an independent contractual relationship.

The nature of the work (profession, trade or special calling)

[53] The work of a chauffeur requires accreditation and is a skilled function, but would not fit within the nature of special work contemplated by the relevant authorities.

The creation of goodwill and other saleable assets

[54] Mr Bertok was unable to generate goodwill, in the sense that it could be sold to another person or business, as part of the contract with Halsan. This is more consistent with an employment relationship.

The proportion of remuneration on business expenses

[55] There is no direct evidence about the proportion of remuneration on business expenses. It is however clear that the vehicle purchase, standing and running costs represented a significant outlay for Mr Bertok. It is also evident that Mr Bertok considered that some of the work offered by Halsan did not have a significant enough margin to cover his costs.

[56] The probable level of business expense is a factor to be taken into account.

5. Was Mr Bertok an employee?

[57] The indicia discussed above are not exhaustive and they also need to be weighed according to their importance in the circumstances being considered. There are elements of control and “badging” within the operations of Halsan that are more consistent with employment. However, the non-personal and non-exclusive nature of the commitments and the investment made by Mr Bertok in the form of the vehicle and related costs and arrangements are strongly indicative of an independent contractual relationship.

[58] There was no written contract between the parties. The paperwork surrounding the contract variously refers to Mr Bertok as being a “Contract Driver”, 10 and “Service Provider”11 and the work was described as being “contract work”.12 This is of little assistance in clearing up any uncertainty about the relationship.

[59] I have considered Mr Bertok’s recognition that the pre-May 2011 arrangement was an independent contractual relationship. I accept that the change to the method of allocation increased the level of uncertainty about the extent of work that would be offered from one day to the next and made the arrangement less attractive for him. However, I do not consider that it fundamentally changed the legal nature of the relationship.

[60] I have also considered the suggestion by Mr Bertok that the drivers committee should be considered to be akin to a “labour union” and indicative of employment. The drivers committee in this case was an informal group initiated by the drivers and welcomed by Halsan as a potential conduit for communications. There is no suggestion that it was a collective representative in any formal sense.

[61] Having regard to the totality of the relationship as a practical matter, I am on balance satisfied that Mr Bertok was conducting a business of his own within the meaning and contemplation of Hollis and was not an employee within the meaning of the Act.

6. Conclusions

[62] As I have found that Mr Bertok was not an employee, he was not protected from unfair dismissal and there is no jurisdiction to deal with this present application.

[63] An order dismissing the application is being issued in conjunction with this decision. 13

Appearances:

Z Bertok the applicant in person.

L Smith of Norman Waterhouse, with permission, for Halsan Pty Ltd T/A Hughes Chauffeured Cars-Limousines-Coaches, CitiCar, SmartCar & Skylink.

Hearing details:

2014

Adelaide

February 19.

 1   S.15 of the Act.

 2   Permission was granted having regard to the considerations of s.596 of the Act and in particular the efficiency of dealing with a matter of this nature with an appropriate representative. Mr Bertok did not oppose permission being granted.

 3 (2001) 207 CLR 21.

 4   [2013] FWC 7370.

 5   Department of Planning, Transport and Infrastructure under the Passenger Transport Act 1994 (SA).

 6   PR927971, 14 May 2003.

 7   Per Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ.

 8   Ibid.

 9   This is clear from the unchallenged evidence of Mr Kay on that issue.

 10   Attached to exhibit A1.

 11   Chauffeur Manual attached to exhibit R1.

 12   Invoices - part of exhibits A1 and R1.

 13   PR548412.

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