ROETTGER v FITZSIMMONS
[2016] FCCA 2965
•21 October 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| ROETTGER v FITZSIMMONS | [2016] FCCA 2965 |
| Catchwords: INDUSTRIAL LAW – Application pursuant to s.548 of the Fair Work Act 2009 to be paid entitlements under the Building and Construction General On-Site Award 2010 (the Award) – whether Applicant was employee or independent contractor – held Applicant an employee – held Respondent covered by the Award – held Applicant employed as a Construction Worker Level 3 under the Award – order made for the payment of underpayments. |
| Legislation: Fair Work Act 2009 (Cth) ss.45, 48, 86, 90, 117, 123(1)(c) |
| Cases cited: Fair Work Ombudsman v Grouped Property ServicesPty Ltd [2016] FCA 1034 |
| Applicant: | MARVIN ROETTGER |
| Respondent: | CARL FITZSIMMONS |
| File Number: | MLG 594 of 2016 |
| Judgment of: | Judge Jones |
| Hearing date: | 21 October 2016 |
| Date of Last Submission: | 21 October 2016 |
| Delivered at: | Melbourne |
| Delivered on: | 21 October 2016 |
REPRESENTATION
| Counsel for the Applicant: | Self-represented |
| Counsel for the Respondent: | Self-represented |
DECLARATION
The Applicant was engaged by the Respondent from 17 November 2015 to 8 December 2015 as an employee;
The Respondent contravened s.45 of the Fair Work Act 2009 by failing to pay the Applicant:
(a)the rates of pay applicable to the classification Construction Worker Level 3, Schedule B to the Building and Construction General On-Site Award 2010 (the Award);
(b)allowances in accordance with cl.20.1 of the Award; and
(c)allowances in accordance with cl.21.2 of the Award.
ORDERS
The Respondent pay the Applicant the amount of $1,673.00 within
14 days of these orders.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 594 of 2016
| MARVIN ROETTGER |
Applicant
And
| CARL FITZSIMMONS |
Respondent
REASONS FOR JUDGMENT
Introduction
This decision concerns an application filed by the Applicant on
23 March 2016 pursuant to s.548 of the Fair Work Act 2009 (“the Act”). The Applicant filed a Form 5 – Small Claim (“Form 5”) under the Act. The Respondent filed his response together with an affidavit on
17 October 2016.
The Applicant claims that he was employed from 17 November 2015 to 8 December 2015 on a full-time basis as a bricklayer under the Building and Construction General On-Site Award 2010 (“the Award”). He claims that he should have been paid as a Construction Worker Level 3, classification B.2.3 of schedule B to the Award.
The Respondent argues that the Applicant was engaged as an independent contractor for the period 17 November 2015 to
8 December 2015 and that the Applicant’s claim should be dismissed.
There are three issues to be decided:
a)whether the Applicant was an employee or an independent contractor;
b)if the Applicant was an employee, whether the Respondent was covered by the Award; and
c)if the Respondent was covered by the Award, whether the Applicant’s classification at all relevant times was as a Construction Worker Level 3 under the Award;
d)whether the Applicant was entitled to be paid both annual leave and an amount in lieu of notice in accordance with s.90 and s.117 of the Act respectively; and
e)whether the Applicant was entitled to be paid various allowances specified under the Award.
Employee/Independent Contract – Relevant Principles
In Fair Work Ombudsman v Grouped Property ServicesPty Ltd [2016] FCA 1034 (Grouped Property Services) [39]-[42], Katzman J summarised the approach to be adopted in determining whether someone is an employee or independent contract:
39The question of whether someone is an employee or an independent contractor is not to be determined by what they may be called or, indeed, what they may call themselves. A label, consensual or otherwise, cannot affect “the inherent character” of the relationship: Curtis v Perth and Fremantle Bottle Exchange Co Ltd (1914) 18 CLR 17 at 25 (Isaacs J). It is the substance or reality of the relationship that counts: Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at [24], [58]. Further, as the majority observed in Hollis v Vabu at [24]:
[T]he relationship between the parties … is to be found not merely from these contractual terms. The system which was operated thereunder and the work practices imposed by Vabu go to establishing “the totality of the relationship” between the parties; it is this which is to be considered.
(Citations omitted)
40Bromberg J discussed at some length the reason for, and the importance of, this approach in On Call Interpreters and Translators Agency Pty Ltd v Federal Commissioner of Taxation (No 3) (2011) 214 FCR 82.
41A contract of employment is based on personal service. Shortly put, the difference 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”: Marshall v Whittaker’s Building Supply Co (1963) 109 CLR 210 at 217 (Windeyer J). Control (and later the right to control) the manner in which the work is done was once determinative. For some time now, however, it is regarded as only one relevant factor (albeit an important one); the totality of the relationship must be considered: Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 at 29 (Mason J). Other indicia of an employment relationship include “whether tax is deducted; whether sub-contracting is permitted; … whether uniforms are worn; whether tools are supplied; whether holidays are permitted; … whether wages are paid …; 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 …”: ACE Insurance Ltd v Trifunovski (2011) 200 FCR 532 at [29] (Perram J) citing Stevens v Brodribb at 24 (Mason J) and 36–37 (Wilson and Dawson JJ).
42As Bromberg J put it in On Call Interpreters at [204], the modern approach to determining whether someone is an employee is “multi-factorial”. His Honour described the exercise as one involving a level of intuition, referring at [205], amongst other things, to the following passage in Hall (Inspector of Taxes) v Lorimer [1992] 1 WLR 939 at 944 where Mummery J said:
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 evaluation 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 Evidence
Both the Applicant and Respondent attested to the truth of the documents they had filed and each were cross-examined.
A significant issue arose in relation to the evidence of the Respondent. This is because during the course of giving evidence to the Court, he stated that, because of a psychiatric condition, he had difficulty with his memory. He told the court he had difficulty recalling the evidence the Applicant had given only half an hour before because of his difficulty with memory recall. However, he maintained that he could recall, in the terms clearly set out in his affidavit, the contents of a telephone conversation he alleged he had with the Applicant on
9 November 2015. This admission by the Respondent about his capacity to recall matters clearly has significance for the weight the Court would give to his evidence.
The Applicant, who was assisted by an interpreter in the German and English languages, gave his evidence in a straightforward manner without prevaricating. I formed the view he was credible witness.
Consequently, in circumstances where the Respondent has given sworn evidence that he has difficulties with memory recall and demonstrated this difficulty in cross examination, I have formed the view that where there is a dispute between the evidence of the Applicant and the Respondent, I should prefer the evidence of the Applicant.
The Respondent was, at the relevant times, the owner and operator of a bricklaying business operating in the Sydney area, New South Wales, known as Pure Brickwork. It is apparent that this business operates as a contractor to various builders engaged to build and/or renovate on residential sites. He maintained that he has only ever used contractors to assist him in the various works he did throughout Sydney.
His evidence was that during the tax year 2015 to 2016 he had used
21 contractors, all of whom have been required to provide an ABN number and sign a pro forma “Pure Brickwork Contractor Agreement”, a copy of which is at Annexure B to his Response.
The Applicant is a German national on a working holiday visa in Australia. He was born on 2 August 1994 and is 22 years old.
He acquired an apprenticeship in bricklaying in Germany and subsequently worked two years as a qualified bricklayer in Germany. To use the colloquial language he is a young “backpacker.”
He said that he made enquiries with the Respondent about working for him when he saw an advertisement on a website, au.indeed.com.
A copy of this advertisement is contained in Annexure 1 of the Applicant’s Form 5. The advertisement is headed, “Bricklayers Wanted. $45 Per Hour” and is placed under the name of Pure Brickwork. The advertisement states that the Respondent has 1 to 2 years of work ahead and that the business is looking for good bricklayers to join the team working in various areas of Sydney. It states also, “Everyone is paid accordingly based on their skills and we don’t mind paying extra for the rite [sic] trowels.” There is then reference to the following matters set out in sequence: “White card, own hand tools, transport not essential”. The white card is a document which is necessary to satisfy Occupational Health and Safety regulations.
Was the Applicant an Employee or Independent Contractor?
There is no dispute that the Applicant has never had an Australian Business Number (“ABN”). In Grouped Property Services Katzmann J described the ABN as (at [48]):
“….an Australian Business Number. Companies registered under the Corporations Act are entitled to an ABN. Otherwise, to qualify for an ABN, one needs to be carrying on an enterprise (as defined in A New Tax System (Goods and Services Tax) Act 1999 (Cth), s 9-20) in Australia or, in the course or furtherance of doing so, make supplies that are connected with Australia: see
A New Tax System (Australian Business Number) Act 1999 (Cth), s 8. A person is not entitled to an ABN if the only work the person performs is in someone else’s enterprise.”
The Applicant’s evidence is that he was never asked by the Respondent for an ABN number and that there was never a discussion about him acquiring an ABN number. He says the Respondent only asked him for his Tax File Number (“TFN”). The Applicant says that at the time he did not know what an ABN number was. The Respondent’s evidence is that during a telephone conversation with the Applicant on 9 November 2015, he was told by the Applicant that he had an ABN number.
The Respondent says he made numerous requests to the Applicant to provide him with an ABN number, including in a conversation he alleged he had with the Applicant on 9 November 2015.
The Respondent says that the Applicant told him during the latter part of his engagement with the Respondent that he had tried to acquire an ABN but could not. The Applicant’s evidence was that, other than conversing with the Respondent on site, he only ever communicated with the Respondent by text. He denies there was a telephone conversation on 9 November 2015. For reasons which I have earlier provided, I prefer the Applicant’s evidence which is that he was never requested by the Respondent to obtain an ABN number.
At no time during the course of his engagement by the Respondent did the Applicant sign a Pure Brickwork Contractor Agreement. The Respondent deposed in his affidavit that he spoke to the Applicant on 17 November 2015, requesting him to provide his ABN and to sign the Pure Brickwork Contractor Agreement. The Applicant was not cross-examined on whether he was asked to sign the Pure Brickwork Contractor Agreement. I do not accept the Respondent’s assertion that he requested the Applicant to sign the Pure Brickwork Contractor Agreement.
At no time during the course of his engagement by the Respondent did the Applicant provide invoices for the time he worked for the Respondent. Rather, payment was effected by the Respondent based on timesheets which he says were completed by the supervisor on-site and co-signed by him.
There is no dispute that the Respondent asked the Applicant to provide a trowel and a level. The Applicant said that he purchased these tools before commencing work with the Respondent. The Applicant’s evidence was that he also used other tools provided on-site. These included a line, a brick rep (used to cart bricks from one area to another), tapes to measure heights and a brick saw. The brick saw is a machine that cuts bricks to various sizes. The Applicant operated this machine as part of his work. The Applicant said that he was told by the Respondent what days he was to work and on which sites he was to work as well as his hours of work. He said he was told by the Respondent what work he was required to do; that is where and which bricks he was required to lay. This evidence was not disputed by the Respondent.
The Applicant was cross-examined by the Respondent about his preparedness to provide bricklaying services to a residential owner.
The Applicant said that he and his girlfriend at the time were living out of a van. He said that he and his girlfriend were searching for an area to park the van for the purpose of living in it. He said that they were invited by a kind and elderly couple to park their van in the driveway of their residential home. He said they parked their van in the driveway for a period of around four weeks whilst he worked for the Respondent. The Applicant said that the male resident asked him to help them with the construction of his brick fence. The Applicant said that he was happy to do this in exchange for the couple having allowed them to park their van and live in their driveway. He maintained that there was no question that he sought payment or would be paid for doing this. Helping with the construction of the fence, however, required the Applicant to carry many hundreds of bricks from one area to the other. The Applicant said that he asked the Respondent for a brick rep to cart the bricks but the Respondent refused. Consequently, he was not able to assist the couple and building their fence. The Respondent agrees he was asked by the Applicant to borrow the brick rep and that he refused.
The parties agree that the Applicant was engaged by the Respondent for the following hours:
a)28 hours in the first week, commencing 14 November 2015;
b)32 hours in the second week, commencing 21 November 2015;
c)29 hours in the third week, commencing 30 November 2015;[1] and
d)16 hours in the fourth and final week, commencing 7 December 2015.[2]
[1] The hours for the first three weeks are set out in a weekly timesheet contained in Annexure U to the Response. The Applicant agreed in evidence that these were the correct hours
[2] The hours for the fourth week are those estimated by the Applicant and contained in Annexure 5 to the Applicant's Form 5.
The Respondent paid the Applicant $30.00 per hour and on this basis paid the Applicant $840 gross, transferred into the Applicant’s bank account on 20 November 2015 for his first week of engagement and $960 gross paid into the Applicant’s bank account on 27 December 2015 for his second week of engagement. The Respondent did not pay the Applicant for time worked in the third and fourth week of engagement. The Respondent says that he withheld this payment in accordance with the requirements issued by the Australian Taxation Office (ATO) in relation to contractors who do not provide an ABN number. The requirement is said to be contained in a screenshot from the ATO website at Annexure C to the Response. The screenshot is headed, “PAYG withholding - When a business doesn’t quote its ABN”. It states, amongst other things, “If the business supplies you with goods or services it should quote its ABN. If it does not you must generally withhold 49% from the payment you make to them and send the withheld amount to us”. The Respondent says that, because the Applicant failed to provide him with an ABN number, he withheld the amount the Applicant should have paid for tax purposes.
The Respondent said that he had not paid this amount to the ATO but retained it for his own use.
It should be noted that the Respondent’s reliance on what he says are the requirements of the ATO depend of course on whether or not the Applicant was a business.
There is a dispute about the rate per hour the Respondent agreed to pay the Applicant. The Applicant’s evidence was that the Respondent said, on the second day of work, that he would pay him $40 an hour.
When questioned by the Respondent why he did not complain about being paid amounts, for the hours he worked, which were less than $40 an hour in the first and second week of his work with the Respondent, the Applicant said he thought that the difference might be that the percentage tax (around 32%) he was required to pay as a backpacker from his wage. If required, I would accept the Applicant’s evidence. However, it is unnecessary to resolve this dispute for the purpose of determining the Applicant’s claims.
I am satisfied the Applicant did not operate a business, he had no idea at the relevant time what an ABN number was. The Applicant did not carry on a trade or business of his own but each day that he was engaged by the employer he served the employer in the employer’s business. The Applicant turned up to work in his trade when told so by the employer. His days and hours of work were determined by the employer and recorded by a supervisor in timesheets. This record formed the basis for the amount the Applicant was paid. The Applicant never issued invoices for the time he worked with the employer.
He had his own two tools required in the bricklaying trade but used the Respondent’s bricklaying tools on-site. Once on-site he was directed by the Respondent about the manner in which he was to conduct his work. Other than the fact the Applicant was paid a gross amount and the Applicant used a limited number of his own tools, the overwhelming evidence points to the Applicant being employed as an employee.
I reject the employer’s argument that the Applicant offered his services for payment to others. I accept the Applicant’s evidence that he was happy to help an elderly couple build a brick fence at their residential property as a quid pro quo for being able to park his van, in which he and his girlfriend lived, in the couple’s driveway.
Even if I accepted the Respondent’s evidence that he had asked the Applicant to provide an ABN number; that is, to set up his own business this would not have been determinative. Nor would I have been convinced by the fact (if it had happened) that the Applicant had signed a pro forma Pure Brickwork Contractor Agreement.
In fact, if I had accepted the Respondent’s evidence that he requested the Applicant to sign a Pure Brickwork Contractor Agreement and obtain an ABN number, on the evidence before me, I would simply have concluded that these requirements constituted an attempt by the Respondent to enter into, with a young backpacker, a sham contracting agreement.
Which award covered the Respondent?
Having found that the Applicant was an employee, the next step is to consider whether the employer was covered by the award. Clause 4 of the Award deals with the Award’s coverage and clause 4.1 provides:
4.1.This industry award covers employers throughout Australia in the on-site building, engineering and civil construction industry and their employees in the classifications within Schedule B—Classification Definitions to the exclusion of any other modern award.
Clause 4.10 of the Award relevantly provides:
4.10. For the purposes of clause 4.1:
(a)general building and construction means:
(i) the construction, alteration, extension, restoration, repair, demolition or dismantling of buildings, structures or works that form, or are to form, part of land, whether or not the buildings, structures or works are permanent and maintenance undertaken by employees of employers covered by clause 4.1 of such buildings, structures or works;
(ii) site clearance, earth-moving, excavation, site restoration, landscaping and the provision of car parks and other access works associated with the activities within clause 4.10(a)(i);and
(iii) the installation in any building, structure or works of fittings and services;
I am satisfied that the Respondent’s business falls within the definition of “general building and construction” and consequently, to the extent that the Applicant was employed under a classification set out in schedule B to the Award, the employer is covered by the Award.
Classification B.2.3 (Construction Worker Level 3/Engineering Construction Worker Level 3 (Engineering Construction Tradesperson level 1) (CW/ECW 3)) relevantly provides that the employee has successfully completed a relevant trade apprenticeship or its
AQF equivalent: B.2.3(a)(i). The indicative tasks which an employee may perform at this level include(B.2.3(c)):
●trade skills associated with certificated trades within the scope of this award; and
●operates machinery and equipment requiring the exercise of skill and knowledge beyond that of an employee at CW/ECW 2;
Furthermore, the classification of Bricklayer is specifically listed at this classification level: B.2.3(d) under this Award.
I am satisfied, having regard to the Applicant’s qualifications, duties and responsibilities that he was employed under Classification B.2.3 – Construction Worker Level 3, schedule B to the Award.
I find therefore that the employer was covered by the Award and the Applicant was entitled to be paid the rates of pay applicable to a Construction Worker Level 3, schedule B to the Award.
Underpayment
I turn to calculate the amount of underpayments. In his Form 5 the Applicant claimed the following amounts he was entitled to under the award but was not paid:
a)wages – $3462.34.00;
b)accrued annual leave – $350.76;
c)annual leave loading – $61.38;
d)payment in lieu of notice of termination of employment – $1644.48.
The claims with respect to annual leave and notice in lieu of employment arise from the Applicant’s allegation the Respondent breached s.90(2) of the Act. The Applicant also claimed in his Form 5 that the Respondent had breached the provisions of the Award dealing with tool allowance (cl.20.1), site allowance (cl.21), Industry allowance (cl.21.2).
The Fair Work Ombudsman (FWO), who was present at the hearing of this matter, has helpfully provided calculations based on the agreed hours worked by the Applicant in the period 17 November 2015 to
8 December 2015, and assuming the applicable rates of pay are those for a “Level 3 (CW/ECW 3) Bricklayer.
Turning to the claim for underpayment of wages of work, the rates of pay applicable to a Construction Worker Level 3 vary according to whether the type of employment of the employee is daily hire, full-time weekly hire, part-time weekly hire or casual employee. The Applicant claimed he was employed on a full-time basis. I am not satisfied the evidence supports this. The Applicant’s hours of work varied as follows:
a)Week 1 – 28 hrs;
b)Week 2 – 33 hrs;
c)Week 3 – 48 hrs;
d)Week 4 – 15 hrs.
Having regard to the evidence I find that the Applicant was engaged as a casual employee. His hours were irregular and the Respondent decided what hours of work he would offer the Applicant. I am satisfied that the Applicant was entitled to refuse any offer of work: see Reed v Blue Line Cruises Ltd (1996) 73 IR 420 at 425 and the discussion in Sappideen C, O’Grady P and Riley J, Macken’s Law of Employment, Law Book Company, Eighth Edition at [2.30].
The FWO has provided calculations, which I accept as correct, based on a determination by the Court that the Applicant was engaged on a casual basis, for the hours worked (see [35] above) as follows:
a)Total amount the Applicant was entitled to be paid as Construction Worker Level 3 - $3,267.40
b)Amount Applicant was paid $1,800; underpayment - $1,467.40
Accordingly the Applicant has been underpaid by an amount equivalent to $1,467.00 in wages.
As the Applicant was engaged as a casual employee he was not entitled to the Annual Leave under Part 2.2, Division 6 of the Act: see s.86 of the Act. He was also not entitled to payment in lieu of notice pursuant to s.117 of the Act: see s.123(1)(c) of the Act. Accordingly, the Applicant’s claims so far as they relate to claimed entitlements to annual leave and payment in lieu of notice are dismissed.
The Applicant was entitled to be paid a tool allowance pursuant to clause 20.1 of the Award. Clause 20.1 provides that an allowance each week must be paid to certain classifications under the Award.
These classifications include a “bricklayer”. The Applicant was not paid a tool allowance in accordance with this clause. The FWO calculates, based on 4 weeks employment at the rate of a weekly allowance of $21.33 specified in the clause 20.1 of the Award, a total amount of $85.32.
The Applicant also claimed he was entitled to the payment of an industry allowance under clause 21.2 of the Award. Clause 21.2 provides:
21.2Industry allowance
In addition to the rates prescribed in clause 19—Minimum wages, an employee must be paid an allowance at the rate of 3.7% of the weekly standard rate per week to compensate for the following disabilities associated with construction work:
(a)climatic conditions when working in the open on all types of work;
(b)the physical disadvantage of having to climb stairs or ladders;
(c)the disability of dust blowing in the wind, brick dust and drippings from newly poured concrete;
(d)sloppy and muddy conditions associated with the initial stages of the erection of a building;
(e)the disability of working on all types of scaffolds or ladders, other than a swing scaffold, suspended scaffold, or a bosun’s chair;
(f)the lack of the usual amenities associated with factory work,(e.g. meal rooms, change rooms, lockers).
I am satisfied the Applicant was entitled to be paid this allowance, which was not paid by the Respondent. The Applicant’s entitlement to wages over his period of employment was $3,267.40. 3.7% of this is amount is $120.90. I find the Applicant was entitled to paid $120.90 under clause 21.2 of the Award and was not paid this amount by the Respondent.
The Applicant also claimed he was entitled to be paid allowances in accordance with clause 25.2 – Fares and travel patterns allowance – Metropolitan areas. Even if the Applicant was entitled to amounts under this clause, he has not provided probative evidence for the Court to determine his precise entitlement. Consequently, this claim is dismissed.
Conclusion
For the reasons set out in this judgment I will make a declaration that:
a)
The Applicant was engaged by the Respondent from
17 November 2015 to 8 December 2015 as an employee;
b)The Respondent contravened s.45 of the Fair Work Act 2009 by failing to pay the Applicant:
i)the rates of pay applicable to the classification Construction Worker Level 3, Schedule B to the Building and Construction General On-Site Award 2010 (the Award);
ii)Allowances in accordance with clause 20.1 of the Award; and
iii)allowances in accordance with cl.21.2 of the Award
An order will also be made that the Respondent pay the Applicant the amount of underpayment, being $1,673.22.
I certify that the preceding forty-five (45) paragraphs are a true copy of the reasons for judgment of Judge Jones
Date: 16 November 2016
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