Pitt v Blue Haven Pools and Spas (Qld) Pty Ltd
[2016] QIRC 116
•31 October 2016
QUEENSLAND INDUSTRIAL RELATIONS COMMISSION
| CITATION: | Pitt v Blue Haven Pools and Spas (Qld) Pty Ltd [2016] QIRC 116 |
PARTIES: | David Wilson Pitt v Blue Haven Pools and Spas (Qld) Pty Ltd |
CASE NO: | EC/2016/94 |
PROCEEDING: | Application for payment instead of taking long service leave |
DELIVERED ON: | 31 October 2016 |
HEARING DATES: | 16 May 2016 (Telephone Hearing) |
HEARD AT: | Brisbane |
MEMBER: | Deputy President Swan |
| ORDERS | 1. Application for payment instead of taking long service leave dismissed. |
| CATCHWORDS: | INDUSTRIAL LAW – APPLICATION FOR PAYMENT INSTEAD OF TAKING LONG SERVICE LEAVE – whether the Applicant was entitled to long service leave – whether the Applicant was an employee or independent contractor – determined that the Applicant was an independent contractor – intermittent period of employment only for six months – Application Dismissed. |
| CASES: | Industrial Relation Act 1999, s 53 Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16 Fair Work Ombudsman v Ecosway Pty Ltd [2016] FCA 296 |
| APPEARANCES: | Mr C. Pollard of CMTA Workplace Consultants, for the Applicant. |
Decision
Mr David Wilson Pitt (the Applicant) has lodged an application for payment instead of taking long service leave against Blue Haven Pools and Spas (Qld) Pty Ltd (the Respondent) pursuant to s 53(4) of the Industrial Relations Act 1999 (the Act), on the basis of financial hardship.
The Respondent rejected the claim, stating that the Applicant had been an independent contractor and not an employee of the Respondent and thereby ineligible for long service leave.
Section 53(4) of the Act states:
"53 Payment instead of long service leave
(1) An employee may be paid for all or part of an entitlement to long service leave instead of taking the leave or part of the leave if subsection (2) or (3) applies.
(2) If the relevant industrial instrument provides for the employee to be paid for all or part of an entitlement to long service leave instead of taking the leave or part of the leave, payment may be made, in accordance with the industrial instrument, if the employee and employer agree by a signed agreement.
(3) If no industrial instrument provides for the employee to be paid for all or part of an entitlement to long service leave instead of taking the leave or part of the leave, payment may be made only if the payment is ordered by the commission on application by the employee.
(4) The commission may order the payment only if satisfied the payment should be made -
(a) on compassionate grounds; or
(b) on the ground of financial hardship."
The Matter to be Determined
The Applicant submits that the following two propositions require determination by the Commission:
1. Whether at all material times the Applicant was, and remains, an employee of the Respondent in accordance with the provisions of the Act and its predecessors; and [if so]
2. If the Applicant is suffering financial hardship such to warrant the making of an order to pay out Long Service Leave entitlements.
Witnesses
Witnesses for the Applicant were:
· Mr David Wilson Pitt, the Applicant; and
· Mr Gregory Ross Simpson (Statutory Declaration tendered and not called to give evidence);
Witnesses for the Respondent were:
· Mr Michael Said, Director of Blue Haven Pools and Spas Qld Pty Ltd;
· Mr James Wingate, Chartered Accountant;
· Mr Derek Edgar (Affidavit tendered and not called to give evidence);
· Mr Donald William McMillan (Affidavit tendered and not called to give evidence); and
· Mr Graham Cooper (Affidavit tendered and not called to give evidence);
Applicant and Respondent Initial Submissions
The Applicant initially commenced employment with Blue Haven Pools and Spas (NSW) Pty Ltd (hereafter Blue Haven NSW), on or about August 1989. In August 1999, Blue Haven Pools and Spas (Qld) Pty Ltd (hereafter Blue Haven Qld), purchased the business of Blue Haven Pools and Spas NSW and all of its assets.
The Applicant submits that he continued to work for Blue Haven Qld on the same terms and conditions as he did with the former employer.
The Applicant believed that he had been incorrectly classified as an independent contractor. He claims that he was actually working as an employee and entitled to all the benefits of an employee including long service leave. The Applicant states that his entitlement to long service leave occurred on or about August 1990 and was made on the basis of financial hardship.
The Respondent states that prior to 2002 the Applicant was a contracted salesman to Blue Haven Qld and Blue Haven Pools & Spas (Mt Gravatt) Pty Ltd. In 2002, the Partnership of DW & TC Pitt (ABN 58 466 415 981) became subcontracted salespersons to Blue Haven Qld. The Respondent stated that from 2002, the Applicant was paid by way of commission only, at a rate of 6 per cent of the marked price of any pool sold by him plus sales above the marked price.
The Respondent's further claim was that the Applicant issued a Tax Invoice for the commission on a sale when he delivered a contract from the purchaser. Further stated was that the Applicant agreed that he not be paid holiday pay, WorkCover, superannuation or have income tax withheld.
From 2013, the Respondent said that the Applicant received a base salary of $80,000 per annum and commission calculated at 7 per cent of the marked price of any pool sold less $80,000 per annum, in addition to any amount over the marked price of a pool. As well, it was submitted that the Applicant worked his own hours, supplied his own vehicle and equipment (i.e. mobile phone, laptop, together with any charges associated with such met by him). He had no obligation to work for Blue Haven Qld. Attendance at the office was only for the purpose of returning signed contracts and/or to submit invoices and collect commission cheques. Blue Haven Qld would provide the Applicant with leads for prospective customers that were obtained via advertising. These leads were provided to the Applicant via telephone or text message. The Respondent said it did not check whether the Applicant had made a sale, or attempted to make a sale or whether the Applicant had pursued a lead.
The Respondent submitted that:
· The type, style and dimensions of a pool which was sold was at the discretion of the Applicant;
· The Applicant was free to work for other companies in other salesman jobs;
· The Applicant at one point had worked as a car salesman at a car dealership in preference to selling pools;
· The Applicant could delegate his leads to other entities;
· The Applicant's commission was paid to different entities;
· That since July 2013, the Applicant had worked an average of two to three days per week.
· When the Applicant submitted Tax Invoices they were generally under the name of DR & TC Pitt (ABN 58466415981) including a claim for GST.
On 1 January 2008, the Applicant had been invited to join the business and he was placed on a six month trial as an employee. An agreed salary of $40,000 for six months was paid to the Applicant and the Respondent paid superannuation and WorkCover payments. This arrangement finalised on 30 June 2008 and the previous commission‑only income arrangement recommenced.
In September 2010, upon the Applicant's request, accounts were prepared by Blue Haven Qld for submission to the Applicant's bank declaring that the Pitt Family Trust (ABN 19089828864) was entitled to commission income from Blue Haven Qld for the 2009 and 2010 financial years. In the application forms from Suncorp Bank, the Applicant acknowledged and declared that he was self-employed.
During the 2009 and 2010 financial years, the Applicant was not registered for GST but, during that time period he charged GST on his Tax Invoices. In February 2013, the Applicant had ceased to act for Blue Haven Qld but GST was still being claimed on all of the Applicant's Tax Invoices until February 2013.
In July 2013, the Respondent states that the Applicant had sought to re-engage with Blue Haven Qld. He agreed to receive a salary of $80,000 per annum, have his PAYG withheld and was entitled to superannuation, WorkCover and Annual Leave. It was determined that the Applicant's remuneration package include commissions over and above his salary, which were paid as bonuses and taxed as per the Applicant's request.
Since March 2016, the Applicant, without notice, had absented himself from the workplace. In the interim, it was noted that the Applicant had applied for compensation for stress from WorkCover Queensland.
In relation to a timeframe of these events, in January 2016 the Applicant made his WorkCover claim which was unsuccessful and he became aware of the outcome in March 2016. His Application for long service leave was made on 27 April 2016.
More Detailed Particulars of Applicant's Claim
The Applicant says that he was working with Blue Haven NSW in or about 1989 as a contractor. At that time he paid for all expenses related to the installation of pools and submitted an invoice to Blue Haven NSW for payment. At that time he was prohibited from installing pools for other companies, but he retained the view that he was an independent contractor.
In or about 1990, the Applicant said he became an employee of Blue Haven NSW. Around that time, the Applicant began working for Blue Haven Qld and Blue Haven Pools and Spas (Mt Gravatt). By then the Applicant was required to provide his own car and mobile phone, but all letterhead, business cards and other promotional material was paid for by Blue Haven Qld. Mr Michael Said (Director, Blue Haven Qld), in cross‑examination, agreed that Blue Haven Qld had provided business cards for the Applicant.
The Applicant's claim was that at this time, he was working as an employee. In or about 2008, the Sales Office for Blue Haven Qld moved to Mt Gravatt and the Applicant said his duties remained unchanged.
Entitlement to Long Service Leave
The ten year period claimed commenced in August 1990. The accrual is .86667 weeks for each year of service resulting in a total accrual of 22.53342 weeks.
The Applicant said he was required to submit an invoice for pools sold and he was paid a percentage commission on the full amount of the sale, but it was not correct to state that a flat rate was paid each month and then an extra amount was paid for commission, as was claimed by the Respondent.
Applicant's Claim as to the Duties he Performed
The Applicant:
· Received phone calls at the Blue Haven Qld office from potential clients;
· Would make cold-calls, attend exhibitions and take other steps to achieve sales on behalf of Blue Haven Qld;
· Would visit potential customers to provide a quote and promote the business of Blue Haven Qld;
· Would prepare the quote using the Blue Haven Qld quoting book;
· Would attend the office to complete the necessary contracts and reports for Blue Haven Qld to be able to complete the sale of the pool;
· Would regularly attend the sales office at the direction of his employer, Mr Said;
· Was not permitted to sell pools for another entity;
· Was only able to delegate sales to other sales persons who were engaged within the Blue Haven Qld Sales Office;
· Was required to sell pools at prices no less than those stipulated by Blue Haven Qld. Although there were arrangements to pay commissions for prices achieved over the minimums, there was no obligation on the Applicant to refund to Blue Haven Qld any loss incurred paid below the minimums.
More Detailed Particulars of Respondent's Response
The Respondent did not accept that the Applicant's application was genuine. It stated:
"Given his stated financial hardship arising from his failure to address his taxation liabilities, his matrimonial settlement and his failed attempt to obtain economic relief through his WorkCover claim, it is submitted that Mr Pitt has, after twenty‑six years, brought this Application as a bald attempt to obtain monies by manufacturing a case to bring himself within those cases which have held that some independent contractors were employees."
The Respondent submits that there was no evidence produced by the Applicant concerning his alleged employment or otherwise when he was selling pools for Blue Haven NSW. It submitted that a Jones v Dunkel[1] adverse inference, should be drawn to the effect that any evidence as to the conditions and terms of his engagement with Blue Haven NSW as a salesperson would not be helpful to his case. Similarly, the same adverse inference should be drawn from the Applicant's non-disclosure of any of his taxation returns, the taxation returns of the Pitt Partnership or any BAS returns of that Partnership.
[1] Jones v Dunkel (1959) 101 CLR 298
When GST was introduced in 2000, Mr Pitt registered the Pitt Partnership for an ABN (viz., ABN 58 466 415 981) and he charged GST.
There was no question that the Applicant had sought an accountant's advice to use the partnership and then the Trust (later) (The Pitt Family Trust ABN 19 089 828 864), to split his income and to avoid the obstacle of receiving income from a single source so that he wouldn't be an employee of either Blue Havens. The Applicant was content to have engineered a system where splitting his income was advantageous to him and as long as the taxation implications were favourable to him, he had not sought to be considered an employee of Blue Haven Qld.
The Respondent states:
"… apart from the six month trial period, he did not receive holiday pay nor holiday loading, did not receive superannuation, took out his own accident income protection, and loss et cetera with an insurer, advised the ATO that he was self- employed, advised Suncorp for the purposes of an investment housing loan that he was self-employed and that he did not lie on that application and had draft Trust Tax returns compiled by his accountant for the purpose of a finance application on his own behalf indicating that he received his sole income from his Trust."
A full discretion to "markup" the sale price of a pool, over and above the official Blue Haven Qld price and retain the profit above that price was not indicative of an employee relationship.
There was no evidence led that the Applicant was directed or encouraged by Blue Haven Qld to set up a Partnership. Rather, it was the intention of the Applicant that the Partnership would invoice for work done and that the Applicant and his wife would split the income. In 2002, the Applicant had continued in the same capacity with Blue Haven Qld as he had previously done prior to 2002, using the Partnership of DW & TC Pitt (the Partnership) as a contracted salesman.
The Partnership claimed GST from both Blue Havens (Qld and NSW) and remitted it to the ATO together with remitting BAS returns on a quarterly basis, although on occasions there were defaults on the GST remittance.
Blue Haven Qld says that the evidence shows that both Blue Havens (Qld and NSW) operated on the understanding that the Applicant was an independent contractor.
The evidence showed that, save for the six month trial period in Queensland (1 January 2008 to 30 June 2008), for a period of eleven years from 1 May 2002 until July 2013, the Applicant issued Tax Invoices to Blue Haven Qld in the name of the Partnership and was paid GST.
The underlying interest of the Applicant was the pursuit of a process where his difficult taxation situation could be most effectively addressed. There appeared to be no genuine conversation between the Applicant and Blue Haven Qld on the issue of identifying the Applicant as an employee. In fact, Blue Haven Qld said that the issue of "employee entitlements" had never arisen.
Mr James Wingate (Chartered Accountant) gave evidence that he had not sought to categorise the Applicant as an employee and Blue Haven Qld's view was that it was the Applicant who had attempted to categorise himself as an employee and that this was a recent invention manufactured for the purposes of this case.
While the Applicant denied that he had his own working hours and could come and go from the business as he wished, he admitted, during cross-examination, that he was only required to be in the office every second weekend. Mr Derek Edgar's affidavit was accepted without cross-examination (Exhibit 2) and stated that he had worked as an electrician, real estate agent and property developer while contracted to Blue Haven Qld. He claimed that he:
"… was under no obligation in respect of commitments to any systemized or regular hours required by the company".
Similarly, affidavits from Mr Donald McMillan (Exhibit 3) and Mr Graham Cooper (Exhibit 4) which were also admitted without cross-examination, support the submissions of Blue Haven Qld to the extent that, during the relevant periods of time they were engaged by Blue Haven Qld:
· the services of Mr McMillan (2003 to 2008) and Mr Cooper (2004 to 2007), were strictly on a commission basis;
· the commission, plus GST, was invoiced to Blue Haven Qld;
· there was no restriction from Blue Haven Qld as to the days or hours that work was to be performed;
· there was no restriction from Blue Haven Qld for them to pursue income from other sources;
· they were solely responsible for out of pocket expenses, telephone and motor vehicles;
· Mr Cooper states the he was not entitled to receive superannuation, holiday pay nor was tax withheld;
· Mr McMillan further states that during his time he was not entitled to any sick leave or annual leave.
Relevant Case Law
Stevens v Brodribb[2] outlines the basic test applicable to determining whether an employee/employer relationship exists between parties.
[2] Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16
Most recently, in Fair Work Ombudsman v Ecosway Pty Ltd[3], White J stated [footnotes omitted]:
"The law has not been able to identify a single test to be applied in determining whether a given relationship is one of employment or one for the provision of services. It adopts a multi-factorial approach. Perram J summarised the position in AC [2011] FCA 1204; (2011) 200 FCR 532, at first instance, at [29] E Insurance Ltd v Trifunovski:
First, the distinction between an employee and an independent contractor is 'rooted fundamentally in the difference between a person who serves his employer in his, the employer's business, and a person who carries on a trade or business of his own Hollis v Vabu Pty Ltd ([2001] HCA 44; (2001) 207 CLR 21 at 39 [40] per Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ citing Marshall v Whittaker's Building Co (1963) 109 CLR 210 at 217 Per Windeyer J); secondly, the answers to that question are to be determined by reference to the 'totality' of the relationship (Hollis at 33 [24]; thirdly a number of indicia have accreted over time in the authorities which are thought to throw light to varying degrees on the outcome without being determinative: the terms of the contract; the intention of the parties; whether tax is deducted; whether sub-contracting is permitted; whether uniforms are worn; whether tools are supplied; whether holidays were permitted; the extent of control of, or the right to control, the putative employee whether actual or de jure; whether wages are paid or instead whether there exists a commission structure; what is disclosed in the tax returns; whether one party 'represents' the other; for the benefit of whom does the goodwill in the business inure; how 'business-like' is the alleged business of the putative employee – are there systems, manuals and invoices; and so on – the list is neither exhaustive nor short: see Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR at 24 per Mason J and 36-37 per Wilson and Dawson JJ; for application see Hollis at 42-45 [48] – [57] per Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ; Sweeney at 172-173 [30]-[33] per Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ …
It is the totality of the relationship between the contracting parties which must be considered (Stevens v Brodribb)."
[3] Fair Work Ombudsman v Ecosway Pty Ltd [2016] FCA 296
Consideration of the Evidence and Conclusion
The above case law has been applied to the circumstances of this case.
I have not found the Applicant to be a credible witness. His inability to recall what might have been pertinent facts regarding his working arrangements does not assist his claim. The Respondent submits that a Jones v Dunkel[4]inference should be drawn to the effect that non-disclosure by the Applicant of relevant documentation to support his claim generally, has not been produced. That submission is accepted.
[4] Jones v Dunkel (1959) 101 CLR 298
The Applicant described his relationship with Blue Haven Qld as follows:
"There was no set terms, just that I would go out, represent Blue Haven Pools, present a product to a client, and sell that product and be paid a - a commission."
I have accepted that the Applicant operated within a discretionary environment. If he sold a pool above the listed Blue Haven retail price, he received a commission of 6 to 7 per cent, plus a percentage of whatever "overs" arose.
It is clear that no income tax was withheld by Blue Haven Qld and no holidays, accrual of sick leave and superannuation contributions were paid to the Applicant by Blue Haven Qld. I have also accepted that the Applicant did not engage in any communications with Blue Haven Qld for the purposes of clarifying the status of his engagement with them.
If a sale was not made, the Applicant did not receive income from Blue Haven Qld. The evidence supports the conclusion that the Applicant was not under any regulated supervision from Blue Haven Qld.
It is also evident that the Applicant did not have any regulated hours of work. The Respondent submits that there was no evidence to show that the Applicant would face any adverse action from Blue Haven Qld if he did not make a sale or that he had not chosen to make a sale and I have accepted that evidence
While the Applicant denied that he was able to pursue other endeavours for the purpose of remuneration, the uncontested evidence from other salesmen for Blue Haven Qld was that they did engage in other pursuits (Exhibit 16). The salesmen were not required to advise Blue Haven of their availability for selling pools and as the Respondent stated, the salesmen:
"… had no reporting requirements, were not required to attend the office, had no stipulated working hours and were answerable to no one."
This evidence, while not determinative of the Applicant's situation, indicates these were normal work arrangements for other salesmen in a similar position to that of the Applicant. Significantly, however, those affidavits were not challenged by the Applicant, although the Applicant did state that those affidavits were not pertinent to his position with Blue Haven Qld.
The evidence shows that the Applicant paid for his own motor vehicle, laptop computer and mobile phone and stationery supplies. If it was the case that Blue Haven Qld paid for Mr Pitt's business cards, this was not put to Mr Said and the Respondent submits that it is not of itself indicative of an employer/employee relationship.
While the Applicant submits that the payment of GST occurred as a result of his lack of understanding of how he should have been remunerated, the evidence is to the contrary:
· The Applicant obtained professional advice concerning the establishment of his Partnership and Trust.
· The commencement of the Applicant's Partnership had occurred prior to his engagement with Blue Haven Qld.
· The Respondent submits that given that the "entities" were created by accountants, it can fairly be assumed that those persons must have questioned and obtained the relevant instructions as to the relationship between the Applicant and both Blue Haven (Qld and NSW).
· The Applicant had utilised his Partnership for around thirteen years prior to raising the issue of his misunderstanding.
· The Applicant, through these arrangements, was able to split his income.
· Having taken accountancy advice, the Applicant would have been conversant with GST law as a consequence of instituting an ABN.
· Upon professional advice, the Applicant changed his Partnership structure to a Trust structure. The Respondent said this occurred "because his wife objected to her additional taxation liabilities from the Partnership and her Ambulance Officer job and to accommodate him receiving wages during the so-called six months trial as well as being able to sue his discretionary Trust to allocate monies as he chose".
· The Applicant represented to Suncorp that he was "self-employed".
The above categorisation by the Respondent accurately reflects the evidence before the Commission which I have accepted.
Examples of the Applicant's invoices to Blue Haven Qld under the ABN of the Partnership is shown in Exhibit 13. In August 2010, the invoice issued by the Applicant to Blue Haven Qld was made by the Family Trust. Mr Said's evidence was that he had no knowledge of where the Applicant placed his payment but, evidence provided in Exhibit 15 shows that Mr Pitt, directed Blue Haven Qld to pay any monies into various bank accounts on occasions. I have accepted that while Mr Said had not made a cheque out specifically to any particular entity (e.g. The Pitt Family Trust), he had dispersed payments into accounts nominated by Mr Pitt, the identity of which was unknown to him.
The Respondent submitted that:
"Mr Pitt presented draft Trust tax returns to Suncorp divulging that his income was derived from that Trust and not Blue Haven. The reason that those tax returns were in draft was, according to Mr Wingate, because information regarding deductions had not yet been provided so that the tax returns could be completed."
Of significance was the agreement between Blue Haven Qld and the Applicant to proceed with a "six month trial" and from January 2008, to commence an employee/employer relationship attracting all of the benefits of such a contract. More than anything, this indicates that other than for the six month trial, the relationship that was in place was that of an independent contractor.
What is also significant is that, after so many years, the Applicant seeks to be categorised as an employee. I find that proposition difficult to accept. The Applicant has claimed ignorance of his true status with Blue Haven Qld. This proposition is contrary to the actions taken by the Applicant over time to ensure that he maximised his opportunity to minimise his Taxation commitments. I am unable to accept the Applicant’s submission that he believed that he was wrongly categorised as an independent contractor with Blue Haven Qld. The Applicant’s evidence on this point is further compromised as he described on official documentation (e.g. Suncorp application for a loan) that he was self-employed.
Having considered the evidence and against the backdrop of the cited case law, I have found that the Applicant was engaged by Blue Haven Qld as an independent contractor, save for the six month period in 2008, where he worked as an employee for Blue Haven Qld.
The Application for payment of long service leave is dismissed.
0
8
0