Roy Morgan Research Pty Ltd and Commissioner of Taxation
[2009] AATA 702
•11 September 2009
CATCHWORDS – TAXATION – Superannuation Shortfall Guarantee – Market research interviewers - Whether employees or independent contractors – Control over manner of performing tasks - S 12 Superannuation Guarantee (Administration) Act 1992 – decision affirmed
Income Tax Assessment Act 1936, ss 221A, 221C
Pay-roll Tax Act 1971 (SA)
Pay-roll Tax Act 1971 (Vic), ss 3, 7
Retirement Savings Accounts Act 1997, ss 8, 19
Superannuation Guarantee (Administration) Act 1992, ss 6, 12, 16, 17, 19, 22, 23, 23A, 26, 27, 28, 33, 64A, 64B, 65, 66, 67
Superannuation Guarantee Charge Act 1992, ss 3, 5, 6
Taxation Administration Act 1953
Australasian Meat Industry Employees’ Union v Sunland Enterprises Pty Ltd (1988) 24 IR 467
Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540
Australian Mutual Provident Society v Chaplin (1978) 52 ALJR 407; 18 ALR 385
Bazley v Curry [1999] 2 SCR 534
Blair v Curran (1939) 62 CLR 464
Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520; 68 ALJR 331; 120 ALR 42
Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2) [1967] 1 AC 853
Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of Australia (1931) 46 CLR 41; 38 ALR 73
Commissioner of State Taxation v Roy Morgan Research Centre Pty Ltd (2004) 90 SASR 12
Connelly v Wells (1994) 55 IR 73
Doyle v Sydney Steel Company Ltd [1936] HCA 66; (1936) 56 CLR 545
Green v Victorian Workcover Authority [1971] 1 VR 364
Hall (Inspector of Taxes) v Lorimer [1992] 1 WLR 939
Hollis v Vabu Pty Ltd (2001) 207 CLR 21; 47 ATR 559; 75 ALJR 1356
Humberstone v Northern Timber Mills (1949) 79 CLR 389; [1950] VLR 44
Marshall v Whittaker’s Building Supply Co (1963) 109 CLR 210; 37 ALJR 92
Neale v Atlas Products (Vic) Pty Ltd (1955) 94 CLR 419; 10 ATD 460; 29 ALJ 28
Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313; 71 ALJR 1428; 146 ALR 572
Performing Right Society Pty Ltd v Mitchell & Booker (Palais de Danse) Ltd [1924] 1 KB 762
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; 36 ALR 3
Queensland Stations Pty Ltd v Federal Commissioner of Taxation (1945) 70 CLR 539; 8 ATD 30; [1945] ALR 273
Reed v Blue Line Cruises Ltd (1996) 73 IR 420
Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue (Vic) (1996) 33 ATR 361; 96 ATC 4767
Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue (Vic) (1997) 37 ATR 528; 97 ATC 5070
Roy Morgan Research Centre Pty Ltd v Commissioner for State Taxation [2003] SASC 342
Scott v Davis (2000) 204 CLR 333; 74 ALJR 1410; 175 ALR 217
Secretary, Department of Social Secretary, Department of Employment and Workplace Relations v Vanderpluym [2007] FCA 876
Spriggs v Federal Commissioner of Taxation; Riddell v Federal Commissioner of Taxation 72 ATR 148; 83 ALJR 749; [2009] HCA 22
Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16; 60 ALJR 194; 63 ALR 513
Vabu Pty Ltd v Federal Commissioner of Taxation (1996) 33 ATR 537; 96 ATC 4898
Wilton & Cumberland v Coal & Allied Operations Pty Ltd [2007] FCA 725; 161 FRC 300
World Book (Australia) Pty Ltd v Federal Commissioner of Taxation (1992) 23 ATR 412; 27 NSWLR 377; 108 ALR 510
Wright v Attorney-General (Tas) (1954) 94 CLR 409; 28 ALJ 183
Zuijs v Wirth Brothers Pty Ltd (1955) 93 CLR 561; [1956] ALR 123
DECISION AND REASONS FOR DECISION [2009] AATA 702
ADMINISTRATIVE APPEALS TRIBUNAL )
) 2008/4387
TAXATION APPEALS DIVISION )Re:ROY MORGAN RESEARCH PTY LTD
Applicant
And:COMMISSIONER OF TAXATION
Respondent
DECISION
Tribunal: Deputy President S A Forgie
Date: 11 September 2009
Place: Melbourne
Decision:The objection decision dated 18 July 2008 of the respondent is affirmed.
S A Forgie
Deputy President
REASONS FOR DECISION
Between 1 July 2000 and 30 June 2006 (relevant period), Roy Morgan Research Pty Ltd (Roy Morgan) conducted market research. Some was conducted on a regular basis and other on a sporadic basis according to client demand. It gathered information it required for that research through face to face interviews and, mainly in Melbourne, through computer aided telephone interviews. Roy Morgan gathered some of the information it required for its market research by paying persons to interview members of the public either face to face or over the telephone (interviewers). Roy Morgan did not regard the interviewers as its employees, did not lodge superannuation guarantee statements in relation to them under the Superannuation Guarantee (Administration) Act 1992 (SGAA) or report that it had a any superannuation guarantee shortfall in respect of the periods prescribed under that legislation. On 13 September 2007, the Commissioner of Taxation (Commissioner) issued various superannuation guarantee default assessments and amended assessments in relation to the periods in respect of which he considered Roy Morgan had been required to report.[1] The assessments determined the amount of superannuation guarantee charge (SGC) that Roy Morgan was liable to make in respect of the relevant period.[2] When Roy Morgan lodged an objection, the Commissioner disallowed it.[3]
[1] They were the financial years ending 30 June 2001 and 2003 and 12 quarters beginning with the quarter ending 30 September 2003 and concluding with the quarter ending 30 June 2006.
[2] Documents lodged under s 37, Administrative Appeals Tribunal Act 1975 (T documents), T64-T77 at 437-516
[3] T documents, T84 at 538-542 and T 87 at 582-590. The ‘Notice of Decision on Objection’ was dated 18 July 2008.
The main issue in this case is whether the interviewers were employees, other than exempt employees, of Roy Morgan within the meaning of s 12 of the SGAA. That is to say, were the interviewers employees in the ordinary meaning of that word as specified in s 12(1) or did they work under a contract that was wholly or principally for their labour as specified in s 12(3)? If they came within either description, they were employees for the purposes of the SGAA and the Commissioner’s objection decision must be affirmed. I have decided that the interviewers are employees whether regard is had to ss 12(1) or (3).
Roy Morgan did not dispute the amount of the SGC assessed by the Commissioner as payable but did raise the question whether the Commissioner, and so this Tribunal, has any discretion to reduce the amount of the SGC assessed. I have decided that the SGAA does not allow for any discretion.
LEGISLATIVE FRAMEWORK
Superannuation Guarantee (Administration) Act 1992: outline of legislation
The SGAA relates to the establishment and administration of the Superannuation Guarantee Scheme.[4] In general terms, employers must provide for superannuation contributions on behalf of employees and pay them to a complying retirement savings account within the meaning of the Retirement Savings Accounts Act 1997[5] (RSA Act) or a complying superannuation fund or scheme.[6] Payments must comply with the choice of fund provisions in Part 3A of the SGAA. The Superannuation Guarantee Charge Act 1992 (SGC Act) imposes a charge on any shortfall in the amount contributed by an employer.[7] That charge is the SGC. Section 5 of the SGC Act provides that a “Charge is imposed on any superannuation guarantee shortfall of an employer for a quarter.” Section 16 of the SGAA emphasises that the SGC imposed on an employer’s superannuation guarantee shortfall for a quarter is payable by the employer. Part 3 of the SGAA sets out the liability of employers other than the Commonwealth and tax-exempt Commonwealth authorities to pay an SGC. Section 19 of the RSA Act defines the terms “employer” and “employee” in terms consistent with those in the SGAA.[8]
[4] SGAA, Long Title
[5] SGAA, s 7A. Section 3 of the SGC Act states that the SGAA is to be incorporated in and read as one with it. An “RSA” has the same meaning as in the Retirement Savings Accounts Act 1997 (RSA Act): SGAA, s 6(1) and RSA Act, s 8(1).
[6] SGAA, s 7A
[7] SGAA, s 6(1)
[8] SGAA, s 12
Section 6 of the SGC Act specifies the amount of the SGC that is payable by the employer:
“The amount of superannuation guarantee charge payable on a superannuation guarantee shortfall of an employer for a quarter is an amount equal to the amount of the shortfall.”
The superannuation guarantee shortfall is given its meaning by s 17 of the SGAA.[9] At the heart of the calculation of an employer’s superannuation guarantee shortfall is the calculation of that employer’s individual superannuation guarantee shortfalls. If the employer has one or more individual superannuation guarantee shortfalls for a quarter:
“… the employer has a superannuation guarantee shortfall for the quarter worked out by adding together:
(a)the total of the employer’s individual superannuation guarantee shortfalls for the quarter; and
(b)the employer’s nominal interest component for the quarter; and
(c)the employer’s administration component for the quarter.”[10]
[9] SGAA, s 6(1)
[10] SGAA, s 17
Section 19 sets out the manner in which individual superannuation guarantee shortfalls are calculated in various circumstances. Section 19(1) is an example of those formulae:
“An employer’s individual superannuation guarantee shortfall for an employee for a quarter is the amount worked out using the formula:
| Total salary or wages paid by the employer to the employee for the quarter | x | Charge percentage for the employer for the quarter |
| 100 |
Where:
Charge percentage, for an employee for a quarter, means:
(a)the number specified in subsection (2) (unless paragraph (b) applies); or
(b)if the number specified in subsection (2) is reduced in respect of the employee by either or both sections 22 and 23 – the number as reduced.”
Subsection 19(2) provides that “The charge percentage is 9.” An employer can, however, reduce the charge percentage if, in general terms, making a contribution on behalf of employees either to a defined benefit superannuation scheme[11] or to an RSA or to a superannuation fund or scheme other than a defined benefit superannuation scheme.[12] Those contributions must satisfy the choice of fund requirements in Part 3A of the SGAA and the criteria set out in ss 22 or 23.
[11] SGAA, s 22
[12] SGAA, s 23
If an employer makes a contribution to a complying superannuation fund or an RSA but is late in doing so, that contribution is set off against the SGC if it is made before the employer’s original assessment for the quarter to which it is made relates and the employer elects to have it offset.[13]
[13] SGAA, s 23A
Not every period in which an employer is paid salary or wages in a quarter is regarded as a period in which an employee is employed by an employer. Those periods are set out in ss 27 and 28. Salary or wages paid in those periods are described as excluded salary or wages.[14] Examples include salary or wages to employees over 70 years of age[15] or to a part time employee aged under 18[16] and those who less than $450 by way of salary or wages in a month.[17]
[14] SGAA, s 26
[15] SGAA, s 27(1)(a)
[16] SGAA, s 28
[17] SGAA, s 27(2)
Employers must advise the Commissioner of various details relating to any individual superannuation guarantee shortfall for certain periods. In its present form and since 1 July 2003, s 33(1) has provided:
“An employer who has a superannuation guarantee shortfall for a quarter must lodge a superannuation guarantee statement for the quarter on or before:
(a)for a quarter beginning on 1 January – 28 May in the next quarter; and
(b)for a quarter beginning on 1 April – 28 August in the next quarter; and
(c)for a quarter beginning on 1 July – 28 November in the next quarter; and
(d)for a quarter beginning on 1 October – 28 February in the next quarter.”
Before 1 July 2003, an employer who had a superannuation guarantee shortfall for a year had to lodge a superannuation guarantee statement for the year on or before 14 August in the following year or a later day allowed by the Commissioner.[18]
[18] SGAA, s 33(1) before its amendment by the Taxation Laws Amendment (Superannuation) Act (No 2) 2002, s 3, Schedule 1, item 136
Section 12 sets out an interpretation of the words “employee” and “employer”. Although the parties focused on ss 12(1) and (3), I think it important to see them in context. Section 12 provides:
“(1) Subject to this section, in this Act, employee and employer have their ordinary meaning. However, for the purposes of this Act, subsections (2) to (11):
(a)expand the meaning of those terms; and
(b)make particular provision to avoid doubt as to the status of certain persons.
(2)A person who is entitled to payment for the performance of duties as a member of the executive body (whether described as the board of directors or otherwise) of a body corporate is, in relation to those duties, an employee of the body corporate.
(3)If a person works under a contract that is wholly or principally for the labour of the person, the person is an employee of the other party to the contract.
(4)A member of the Parliament of the Commonwealth is an employee of the Commonwealth.
(5)A member of the Parliament of a State is an employee of the State;
(6)A member of the Legislative Assembly for the Australian Capital Territory is an employee of the Australian Capital Territory.
(7)A member of the Legislative Assembly for the Northern Territory is an employee of the Northern Territory.
(8)The following are employees for the purposes of this Act:
(a)a person who is paid to perform or present, or to participate in the performance or presentation of, any music, play, dance, entertainment, sport, display or promotional activity or any similar activity involving the exercise of intellectual, artistic, musical, physical or other personal skills is an employee of the person liable to make the payment;
(b)a person who is paid to provide services in connection with an activity referred to in paragraph (a) is an employee of the person liable to make the payment;
(c)a person who is paid to perform services in, or in connection with, the making of any film, tape or disc or of any television or radio broadcast is an employee of the person liable to make the payment.
(9)A person who:
(a)holds, or performs the duties of, an appointment, office or position under the Constitution or under a law of the Commonwealth, of a State or of a Territory; or
(b)is otherwise in the service of the Commonwealth, of a State or of a Territory (including service as a member of the Defence Force or as a member of a police force);
is an employee of the Commonwealth, the State or the Territory, as the case requires. However, this rule does not apply to a person in the capacity of the holder of an office as a member of a local government council.
(9A)Subject to subsection (10), a person who holds office as a member of a local government council is not an employee of the council.
(10)A person covered by paragraph 12‑45 (1)(e) in Schedule 1 to the Taxation Administration Act 1953 (about members of local governing bodies subject to PAYG withholding) is an employee of the body mentioned in that paragraph.
(11)A person who is paid to do work wholly or principally of a domestic or private nature for not more than 30 hours per week is not regarded as an employee in relation to that work.
Once an SGC has been paid, Part 8 of the SGAA sets out the way in which the Commissioner must pay, or otherwise deal with, an amount, which is called the shortfall component, for the benefit of a benefiting employee under ss 64A or 64B or under ss 65 to 67.
FACTUAL BACKGROUND
Roy Morgan’s Chief Executive Officer, Ms Michele Levine, gave evidence on its behalf. She holds a degree in Science (Psychology) and has been employed in survey research for some 25 years. Before joining Roy Morgan,
Ms Levine undertook social research work at the University of Melbourne and with the Institute of Family Studies. As its Chief Executive Officer, she is responsible for Roy Morgan’s overall performance.
Ms Levine’s evidence was uncontradicted. On the basis of it, I find that the company, which has been in business continuously since 1941, is primarily engaged in market research including survey research and database compilation and reporting and offers services relating to all aspects of statistical research. Survey research is also known as market research. The results of that research are intended:
“… to help people and organisations understand their customer’s attitudes to various factors, help them to identify potential customers, or simply find out the views of the public on particular issues. In simple terms this involves the collection of information from people, processing of that information, and the preparation of a report answering the client’s initial query.”[19]
[19] Exhibit A at [11]
In the course of conducting its business, Roy Morgan enters contracts with various people or bodies. Some of them are design consultants who design brochures, leaflets and power point presentations and others are software consultants, project managers and consultants with specialist knowledge about matters such as mathematics or statistics. Roy Morgan may approach persons such as these but it may also be approached by those who feel that they have particular skills or models that may be useful to it.
Sometimes, Roy Morgan will prepare research without an existing contract with a client for that information but in the expectation that there will be such a client. It has done so on a large scale and continuous basis since early 1995. Much of the information gathered for this type of research is collected by means of surveys posted to and returned by pre-paid post by respondents when they have completed them. The respondents complete the surveys without assistance or the intervention of any interviewer but may be encouraged to do so by the possibility of winning a prize. A number of the questions asked in the surveys are drawn from the omnibus survey it uses when conducting door to door interviewing. Roy Morgan regards the data as having a high degree of consistency because there is no interviewer bias or error. The results of research undertaken on that basis may require further analysis to meet the needs of the client who eventuates.
Roy Morgan may be approached by a client asking it to conduct market research. The two work together to ascertain the purpose of the information sought by the client and, armed with that knowledge, Roy Morgan can suggest the most appropriate service it can offer and, perhaps, other or additional information that may be useful to the client. At times, Roy Morgan assembles a focus group of some eight people to discuss relevant topics.
Usually, a questionnaire is designed to collect the information sought by the client. At times, the focus group may be part of that process. Its design is not an end of the matter because decisions have to be made as to whether to collect the information by means of interviews, be they interviews of individual persons or groups of persons, door to door interviews, by telephone or in shopping centres. If the information is not to be collected by interviews, a decision has to be made whether the information will be collected by self completion surveys or internet based surveys. Both the questionnaire and the means of collection may have to be varied if they prove to be inadequate in collecting the expected range of information. If interviews are the chosen method of collection, Roy Morgan does not give its client any contractual undertaking regarding the manner in which the interviewers will perform their duties. In some instances, questionnaires and interviews are not used at all. Instead, the client’s own databases of information such as customer transactions, enquiries, warranty cards and, in the case of retail stores, scanners provide the relevant information.
Once the information is collected, Roy Morgan collates and analyses it. It then prepares a report setting out the findings and conclusions it draws from the information collected.
During the relevant period, Roy Morgan had three divisions which arranged interviews: the Establishment Survey Department (ESD); Ad Hoc Department; and the Computer Aided Telephone Interviewing Department (CATI Department). CATID constituted approximately 10% of the business. The ESD is the oldest of the three and organises the collection of information for Roy Morgan’s Omnibus Survey. The Omnibus Survey is conducted on most weekends of the year. Questions are added to and removed from that survey each weekend according to the information required by Roy Morgan’s clients. The survey itself is carried out in substantially the same way each time it is conducted.
The ESD engaged approximately 120 people to conduct interviews and each of those had to conduct eight interviews. Interviews are conducted in each of the Commonwealth Electoral Divisions. The ESD kept a list of people willing to accept work to conduct interviews. Roy Morgan does not give those people a guarantee that they will be given an assignment in any particular week and, equally, those people do not guarantee that they will be available. While some have agreed in advance that they will perform assignments, there are always assignments which no-one has agreed to perform and the ESD must arrange them on a week to week basis. The ESD called on those who made themselves available more often than not before turning to others on its list. Of those who had agreed in advance, there were “enough to be a nuisance” who did not perform what they had agreed. In any weekend, sufficient interviewers were required to complete sufficient assignments to obtain a cross-section of opinion in the community. If advised in advance that a person was unavailable, Roy Morgan could reallocate the assignment.
The ESD mailed assignments to those people each week together with any explanatory material regarding unusual or special aspects of that questionnaire and any display cards or samples that had to be shown to those answering the questions. After completing the assignment, the interviewers must complete various forms summarising the work and claiming payment for the assignment. They return the forms with the completed questionnaires. If an interviewer should fail to complete an assignment, Roy Morgan only becomes aware of that when the time for the return of the assignment has passed. Roy Morgan does not take any action against an interviewer who fails to complete an assignment. It is Roy Morgan’s view that it has no legal recourse against interviewers who fail to complete assignments.
The Ad Hoc Department arranged its work in a similar fashion but needed to negotiate more carefully with interviewers because their availability depended on the nature, venue and subject matter of the assignment. The same was true for the CATI Department.
From time to time, Roy Morgan advertised for interviewers. It sent a package of information to each person who expressed interest. Included in the package was a page headed “Frequently Asked Questions”. It advised that an “assignment” meant eight face to face interviews conducted in a weekend. The work was described as:
“… flexible; you only work when you choose. We would like you to commit to an average of two weekends per month however this is entirely up to you; you can work every weekend if work is available in your area.”[20]
Given that Roy Morgan had been conducting face to face interviews since 1941, conducted approximately 1,100 every weekend and will continue to do so well into the future, potential interviewers were told “You can continue to interview for as long as you like.”[21]
[20] T Documents, ST11 at 663
[21] T documents, ST11 at 663
People would know the interviewer was a “Morgan Poll Interviewer” because “Official identification is provided to reassure the public that interviewers are working for Roy Morgan Research.”[22] In the 2003 version of the COTI Manual, the section on identity cards was more extensive than in the 1995 version. The later
[22] T documents, ST11 at 663
version told interviewers that they were:
“… issued with an ID card which must be displayed in a prominent position on your clothing whenever you are working for Roy Morgan Research. There are two types of ID cards:
a)Temporary ID – issued to new interviewers when they first join the Company. This ID has an expiry date of three months from the date of issue.
b)Photo ID – issued when temporary ID expires. This ID has an expiry date of two years from the date of issue.
…
It is mandatory that you return your ID card, whether temporary or permanent, to Roy Morgan Research if you should terminate your employment with us.”[23]
Successful applicants were given canvas bags carrying its corporate insignia by Roy Morgan and, in 1995, offered Roy Morgan fridge magnets or, in 2003, Roy Morgan company souvenirs to respondents who completed the questionnaire.
[23] T documents, ST 13 at 758
Another document sent to potential interviewers was headed “Key Facts for Interviewers Establishment Survey – Ongoing Work”. It took various forms over the relevant period but each form covered information similar to that in the first document. It also included the following information:
“@ Interviewers are paid at a package rate based on the ‘calculated average predicted time that it should take to complete an assignment.’ This averages from $200 - $230, depending on the length of the survey. [[24]]
@Interviews are usually conducted close to home. A travel reimbursement fee is paid (59 cents per kilometre). You must have your own transport.
@Roy Morgan Research interviewers work as independent contractors and therefore tax is not deducted. For this reason you will need to apply for an ABN (Australian Business Number). An ABN costs absolutely nothing and it is very easy to obtain. …
…
@Interviewers should commence interviewing on Saturday morning and complete their assignment by late Sunday afternoon. If they complete the interviews any earlier, it is spare time for them and the full package rate is still paid.
@Interviewers are required to report on their progress after each weekend that they work. This can either be a brief phone call, email, fax or SMS.
@Official identification is provided to reassure the public that interviewers are working for Roy Morgan Research.
@Personal instruction (briefing) and manuals are provided. Advice, assistance and support are available at all times.”[25]
[24] The document estimated that the average length of each interview was one hour: T documents, ST11 at 663 and 664
[25] T documents, ST11 at 664
Each applicant was sent a trial questionnaire to complete. Roy Morgan assessed the completed questionnaires to assess whether the applicants had sufficient English skills to follow the instructions in order to complete them properly. Everybody who completed the trial questionnaire properly was invited to attend a briefing session. During that session, Roy Morgan explained the work available to interviewers together with a brief overview of the company. On many occasions, the briefing session was held over the telephone. At the briefing sessions:
“It was RMR policy to explain to the potential interviewers during the briefing sessions that RMR was offering work as independent contractors. It was to be made clear to them that they would be paid on the basis of completed interviews, and that they would be responsible for their own taxation payments, as RMR would not deduct taxation from any fees paid to them.”[26]
[26] Exhibit A at [101]
Once they have been assigned work, I find on the basis of Ms Levine’s evidence that all interviewers engaged by Roy Morgan must follow a structured questionnaire and must not depart from it:
“63. … All of the contract interviewers are instructed that they must read the questionnaires exactly as written and not ad lib or prompt, except as specifically set out in the questionnaire. These are the same instructions provided to an external company providing interviewing services. They are also the same standard instructions which any company dealing with interviewers would provide to those interviewers.
64. The contract interviewers must not depart from the questionnaires in any way because of the great care which is taken in designing the questionnaires. Even slight variations in the wording of a question can result in a significantly different answer being offered in response. The skill to be able to draft questions properly is only developed over time with specific training. RMR did not select the contract interviewers because they possess such a skill, it did not engage them to exercise this skill, or train them to develop this skill.
65. In order to provide a valuable statistical result all respondents must answer the same question. It is therefore necessary that in an interviewing situation all respondents to a questionnaire be asked exactly the same questions. For this reason it is vital that interviewers be able to read and comprehend English. This is a skill for which RMR selected the contract interviewers, and one which … [it] engaged them to exercise. It is not a skill in respect of which … [Roy Morgan] provided any training.”[27]
[27] Exhibit A
I also find that matters of this sort were dealt with at briefing sessions held for interviewers based in metropolitan areas and in a Consumer Opinion Trends Interviewer’s Manual (COTI Manual) provided to each interviewer. That COTI Manual took various forms. One included in the T documents was issued in
30 September 1995[28] and another was issued in April 2003.[29] The information in each is much the same although the latter is a more streamlined version of the first with additional material relating to changes in the privacy law. I will set out extracts from the earlier version and note differences between the two.[28] T documents, ST11 at 688-732
[29] T documents, ST 13 at 743-804
The COTI Manual emphasised that:
∙the interviewer must never “… aid, prompt, or comment. But do make sure the respondent has answered the question asked.”[30]
[30] T documents, ST11 at 712
∙“Read the introduction printed on the top card conversationally while handing a copy of the findings to the respondents. Do not interview a ‘visitor’ ie; a person calling for the day or a person temporarily staying as a guest. Then, if possible sit down. Avoid indicating how long the interview may take. Promptly ask the first question. Try to draw the respondent into the interview situation as soon as possible. If you can’t avoid interviewing in the presence of others, ask them not to say anything likely to influence the respondent. Interview only one person in each dwelling.
…
∙The Questions: The respondent must not read the questions or write answers. Face the respondent, and read the questions exactly as worded. Emphasise words underlined. You will find that at each successive interview, your ‘control’ of the situation becomes stronger.
You may repeat a question but never reword it. If [the] respondent still can’t say, circle appropriately. Each time an interviewer rewords a question the meaning of the question changes and there is no consistency. …
…
Vague Answers. If an answer is vague or unrelated to the question, say
‘I may not have read the question clearly. Then repeat it. If you are given a reason which is too general (such as ‘I like it’ or ‘I like the taste’) ask
‘What, in particular, do you like about it?’, or ‘What else can you say about it?’We need concise answers that accurately reflect respondents’ views and opinions.
Probing ‘Open ended’ questions require thorough probing. A question can be probed in several ways:
original question re-asked.
respondent having given one reason, the interviewer can probe by asking ‘Any other reason?’
The interviewer can probe ‘Why’ the respondent has the opinion/reason he/she stated:
‘Why is that?’
‘Why do you think/say that?’
‘What makes you think/say that?’
‘In what way?’
Please note – one or two word answers are not acceptable.
You must never suggest anything or help the respondent in any way to answer the question.”[31]
[31] T documents at 712-714
The COTI Manual told interviewers that:
“… If a respondent sees a card before its question is asked, it may affect answers to other questions which should not be aided. Therefore, when you issue the cards, the respondent must not look through them. If necessary take them back after each use and re-issue them only when needed.”[32]
[32] T documents at 716
On the basis of Ms Levine’s oral evidence, I also find that Roy Morgan insisted that interviewers asked questions precisely as written because a change in the order in which a question is asked can change the response. There is a 7% difference in responses, for example, if the position of the Australian Labour Party and the Liberal Party of Australia are alternated in a question.
Interviewers are not free to interview whom they please for it is important that respondents be randomly selected and not selected according to an interviewer’s likes and dislikes. Random selection leads to a representative sample, and so, statistically valid responses. Therefore, Roy Morgan required that:
“… the contract interviewers follow any instructions given to them regarding selection of respondents. This is the same requirement that is placed upon an external interviewing company. …”[33]
As an example:
“68. … the interviewers arranged by the Establishment Survey Department are given a starting address and required to begin interviewing at the next house. They are required to only interview between 9.30am and 5.00pm on Saturday and Sunday. Each of the requirements is made solely for the purposes of statistical validity.
69. The reason the Establishment Survey interviewers are required to start at the house next to the nominated address is to preserve the anonymity of respondents. Each nominated address is selected from the electoral role [sic], and therefore the name could in theory be known to someone at RMR.
70. The requirements to conduct Establishment Survey surveys only on weekends, arises from the greater likelihood of such responses accurately reflecting the Australian population as a whole.”[34]
[33] Exhibit A at [66]
[34] Exhibit A
I also find that that the belief that there was a greater likelihood of responses accurately reflecting the views of the Australian population if conducted at the weekend has its foundation in the view that there is a better chance of interviewing both employed and unemployed persons at the weekend than during the week.
Having regard to the COTI Manual, I also find that Roy Morgan directed its interviewers not to interview a visitor in a household and not to interview a teenager between 14 and 17 years without a parent’s consent. It directed them to try to interview some young men and women under the age of 25 years and to try to interview equal numbers of men and women.[35] If, during an interview, interviewers thought the respondent could not speak, read or understand English, had poor eyesight or was totally blind, had poor hearing or was totally deaf, had an intellectual disability, became rude or offensive, was under the influence of alcohol or drugs or was not a permanent resident in the household, the COTI Manual stated that they
“… should cease interviewing and politely leave.”[36] If they had to take this course, they were to use the ninth practice questionnaire to interview another respondent in the area.[35] T documents, ST11 at 716
[36] T documents, ST 11 at 717
Interviewers engaged by Roy Morgan must be able to persuade the people they approach to answer the questionnaires. I accept Ms Levine’s evidence that Roy Morgan does not train interviewers in ways in which to improve their persuasive skills. I also accept her evidence that it does, however, provide them with a manual setting out what are thought to be the best techniques for encouraging people to respond to questionnaires whether they are being interviewed face to face or over the telephone. That is the COTI Manual. I have already found that it contains sections that interviewers must follow but there are other sections that could be regarded as advisory. In Section 4, for example, advice is given to interviewers to improve their chances of securing respondents to questionnaires. That advice relates to matters such as being well groomed, self assured and professional. I also accept her evidence and find that application of the best techniques and of the suggestions in the COTI Manual is not a guarantee of success in any given situation and Roy Morgan does not require interviewers to follow its manual. Unless interviewers use “extreme methods” or it receives a complaint from a respondent, Roy Morgan does not concern itself with the methods interviewers use to obtain and keep respondents’ co-operation.
I also find that Roy Morgan does not monitor the way in which interviewers conduct interviews at the time the interviews takes place. It assists them in improving their techniques by means of the COTI Manual. Monitoring does occur, however, and it occurs after the interviewers return their questionnaires. It takes place in relation to whether the questionnaire has been asked as it has been written and whether the nominated person has been interviewed. Monitoring of that sort is performed by Roy Morgan’s telephoning the respondents to the survey and asking questions such as whether the interview took place at all, whether any display cards had been used and a random sample of questions asked. Roy Morgan also used the call as an opportunity to thank the respondent for participating in the survey.
No questions were asked about the interviewers’ demeanour or behaviour as Roy Morgan is not concerned with such matters. It recommends that its interviewers wear neat casual dress but it does not require that they do. Roy Morgan is concerned only with its reputation for accuracy. It does not want information that it could otherwise use to counsel or train interviewers. To the best of Ms Levine’s knowledge, Roy Morgan is the only market research company in Australia which never conducts supervised interviews. It is technically feasible for it to do so but it has never undertaken it.
With one qualification, I accept Ms Levine’s evidence that Roy Morgan is not concerned with the manner in which interviewers exercise their skill because it has designed the questionnaires to remove variations that would otherwise be caused by variations in interviewing styles. Having regard to the COTI Manual, her reference to the “manner” in which the interviews are conducted must be read subject to the requirements in that manual. That manual emphasises that interviewers must follow Roy Morgan’s “manner” of asking questions and presenting information to respondents. It is directory and not recommendatory in that regard. On the basis of Ms Levine’s oral evidence, I find that CATI interviewers were also required to follow the manner and order of asking questions prescribed by Roy Morgan.
Monitoring also occurs for those who are engaged in the computer aided telephone interviews. The 2005 version of the CATI Interviewer Handbook for Melbourne and Adelaide (CATI 2005 Handbook) states that, when being audited,
checks whether the interviewer reads and records verbatim, progresses through the survey correctly, leads the respondent, is professional, asks the filtering questions, observes privacy and confidentiality, asks permission when required and discloses full and correct details of both the interviewer and the company.[37]
Roy Morgan[37] T documents, ST14 at 809
During the periods in which interviewers are expected to conduct interviews, they can telephone a person who can give them very basic help.
Roy Morgan provides the interviewer with help in relation to such matters as missing materials, absence of houses where they are directed to start interviews or difficulties with the layout of the questionnaire. Roy Morgan directs the person providing assistance not to assist interviewers with the questions they must ask respondents. Instead, that person must advise interviewers to read the question as written. That person cannot assist interviewers with difficulties in obtaining people’s cooperation to answer the questionnaire.
Roy Morgan takes the view that there is little that it can do to control its interviewers. It claims that it cannot know how they do their work and states that it does not attempt or try to reserve any right to exercise any control over how they perform their task. In most instances, it does not know how they are performing their task and cannot find out how they are going. I do not accept this evidence without qualification. I have already referred to the COTI Manual and to the monitoring that does take place. Although no mention is made of it in the general payment provisions in the manual, there is reference to quality of the questionnaires returned by the interviewers. The first is made in relation to the New Interviewer Bonus paid after interviewers:
“… have completed four assignments in our weekly omnibus survey, ‘Consumer Opinion Trends’ (C.O.T.) and attained a fair standard of speed and accuracy. This compensates new interviewers for being slower than experienced interviewers.”[38]
The second is made in relation to the COT Bonus payment when one of the conditions for its payment is that “The completed 8 questionnaires must be of a reasonable standard.”[39]
[38] T documents, ST11 at 720
[39] T documents, ST 11 at 721
Roy Morgan pays its interviewers a fee for each assignment which is based on the time that each interview should take. It pays other allowances but only in order to reimburse an interviewer’s expenses. At the end of each financial year, Roy Morgan sends each interviewer a statement of earnings paid during the year but does not deduct any tax on a PAYE basis or issue a Group Certificate. It does not offer interviewers sick leave or annual leave on a paid basis or otherwise.
Some interviewers are engaged by Roy Morgan under the names of individuals. Others are engaged under the name of a company or a business name. Some provide an Australian Business Number (ABN) and, after the introduction of the Goods and Services Tax (GST), added GST to their invoices. In the course of her evidence, Ms Levine said that Roy Morgan does not specifically ask interviewers not to delegate the task of interviewing but it has no way of knowing if they do. This evidence is somewhat at odds with the record of information given at an interview conducted by two officers of the Australian Taxation Office (ATO) at the premises of Roy Morgan on 9 February 2005. The officers recorded that “When asked about delegation RMR indicated that the contractor was not free to delegate the duties.”[40] Ms Levine’s evidence was to the same effect although she added that Roy Morgan had no way of knowing if an interviewer did delegate the task or not. Given the fact that, for at least part of the relevant period, interviewers were required to wear photographic identification after an initial three month period, I am not satisfied that interviewers were permitted to delegate the task of interviewing.
[40] T documents, T 8 at 59
On the basis of Ms Levine’s oral evidence, I find that those engaged by Roy Morgan to conduct interviews may also conduct interviews for its competitors. Those competitors include the Australian Bureau of Statistics and Roy Morgan finds it particularly difficult to find interviewers when the Australian census is being conducted. The fact that a person is an interviewer for one of its competitors does not have any negative effect on Roy Morgan’s willingness to engage that person as an interviewer.
I also find that not only are the results of the interviews Roy Morgan’s property but:
“It is completely against Roy Morgan Research’s policy for any other business to be conducted whilst representing the Company or whilst on Company business.
Respondents … do not expect to be bombarded with a sales pitch or to answer questions for another company. To do this breaches your contractual obligations to Roy Morgan Research and the MRSA Code of Professional Behaviour.
Any information revealed to you while conducting your work, such as names and addresses, etc., belongs to Roy Morgan Research and must never be used for any other purposes. This is a strict condition of the Market Research Society of Australia’s Code of Professional Behaviour. It is also illegal, under the Privacy Act, to reveal this type of personal information to any other person.
Any interviewers breaching the terms of their contract in any way will have their services terminated immediately.”[41]
[41] T documents, ST 13 at 789
On the basis of Ms Levine’s oral evidence, I also find that approximately a third of Roy Morgan’s survey information comes from its use of an internet panel and self-completion surveys.
EMPLOYEES or INDEPENDENT CONTRACTORS: Ms Levine’s evidence
In her statement, Ms Levine made a number of references to those
Roy Morgan regarded as its employees. She also pointed to differences between the manner in which it regarded as its employees and those it regarded as its independent contractors.
Ms Levine said that Roy Morgan regards itself as providing a career path for those it regards as its employees. Most of those are found in departments not related to interviewing: the Production, Client Service, Customised Research, Corporate Services and Information Technology departments. These departments are engaged in activities such as dealing with clients, questionnaire and research design and computer and administrative support.
Ms Levine said that Roy Morgan does use employees or its executives to conduct group discussions unless a client asks that it use a leader outside its organisation and on a contract basis. She explained why Roy Morgan chooses an employee over what she described as contract interviewers:
“104. Small group discussions are less structured than other interviewing. They cannot provide information which can be analysed statistically. The person who leads these discussions must have a thorough understanding of the subject matter, and be able to adjust the discussion as it progresses depending on what issues arise.
105. It is therefore not a type of interviewing given to contract interviewers. The skill required is knowledge of the subject, not ability to keep the interest of [the] respondent. In the case of group discussions the leader is guaranteed of the participation of the respondents as someone else has organised it.
106. RMR needs an employee to conduct these discussions because we want to control the exercise of the skill of the interviewer. RMR is not concerned with how the contract interviewers exercise their skill because in the design of the questionnaire we have taken out the likely statistical variation.”[42]
[42] Exhibit A
For the most part, she said, it engages employees on a full time basis and has formal processes in place for their training, performance appraisal, counselling and discipline. It was highly unusual for Roy Morgan to dismiss one of its employees. If an employee proved unsatisfactory, it would work with that person perhaps providing further training or moving the person to another department more suited to that person’s skills. Roy Morgan employees were entitled to annual leave, sick leave and long service leave. Those not paid a salary were entitled to take leave for additional time worked. Roy Morgan deducted PAYE taxation deductions from the remuneration paid to its employees and WorkCare contributions in respect of them. It gave each employee an Annual Statement of Earnings each year.
Potential interviewers were told in the Key Facts for Interviewers Establishment Survey – Ongoing Work that Roy Morgan did not deduct PAYE from the payments it made to interviewers as they worked as independent contractors.[43]
As independent contractors, though, they were entitled to workers’ compensation.[44][43] T documents, ST 11 at 664
[44] T documents, ST 11 at 694
The advice given in the CATI 2005 Handbook was a little different.
It said that fluctuations in the market research industry meant that Roy Morgan hires independent contractors for its interviewing work in Melbourne and Adelaide. Independent contractors were required to provide an ABN or otherwise Roy Morgan would withhold tax at the rate of 48.5%. Provided they earned more than $450 in a calendar month, superannuation would be paid.[45][45] T documents, ST 14 at 815
Payment for their work was on an hourly rate but with a guaranteed safety net payment for those who were “trying very hard but not managing to get a reasonable number of interviews.”[46] Interviewers are not paid for breaks.
Roy Morgan has a performance monitoring system regarding interviewers’ performance. The CATI Interviewer Coordinator of the CATI Field Manager completes a report on the work of the interviewers and discusses the results with them. The report is prepared on the first 12 hours, 40 hours, 100 hours, 300 hours and at any other time deemed necessary.[47]
[46] T documents, ST 14 at 818
[47] T documents, ST 14 at 825
WHETHER INTERVIEWING INTEGRAL TO ROY MORGAN’S BUSINESS: Ms Levine’s evidence
Ms Levine addressed this issue in her statement:
“28. Interviewing is not integral to RMR’s business. Having answers, which can form the basis of some statistical analysis, is fundamental to our business. In this sense then the interviewing currently organised by a number of departments of RMR is not necessarily a core business of RMR.
29.In addition to the self-completion surveys referred to above, other possible avenues for gathering information which have emerged since the relevant time including use of the internet. This may include questions appended to web sites of our clients, or questions emailed to our panel of internet uses [sic] which we can design and analyse for interpretation. Clients’ own databases of their customer transaction, enquiries, warranty cards etc are often analysed for this purpose.
30.For quality control reasons RMR is often reluctant to perform what are in effect, joint ventures with outside organisations. However, clients will require varying levels of service and it is not uncommon for management consultants to approach us to perform information gathering for research already designed, or substantially so, by the other consultant.
31.I am aware that during the relevant period, a company called Wells Research conducted a business which only provided interviewing services. Had RMR wished, we could have used this, or other similar organisations, to conduct any necessary interviewing. Whilst the information which can be obtained by interviewing is fundamental to market research, it is not integral to the business of RMR that such information be obtained by interviewing. A further example of such a method is the data collected from check out scanners at retail stores.”[48]
[48] Exhibit A
THE COMMISSIONER’S PAY ROLL TAX DECISION: the letter
In 1957, Roy Morgan conducted its business under the name of the Australian Sales & Service Bureau (ASSB). On 28 August 1957, the then Deputy Commissioner of Taxation wrote to ASSB stating:
“I refer to your letter of the 6th August, 1957, and desire to advise that payments made to interviewers under such conditions are not subject to Payroll Tax.”[49]
[49] Exhibit B
THE AUTHORITIES
The principles I must consider in deciding whether a person engaged as an interviewer by Roy Morgan is an employee in the ordinary meaning of the word are set out in a number of authorities to which the parties referred. I will set them out and then consider the evidence and findings of fact I have made under the headings of the broad principles they identify.
I have also referred to the cases in which various courts have considered whether Roy Morgan’s interviewers are not employees as they were drawn to my attention by the parties.
Hollis v Vabu Pty Limited: liability for the negligence of another
Vabu Pty Ltd v Federal Commissioner of Taxation: imposition of the SGC
Both parties referred me to Hollis v Vabu Pty Limited[50] (Vabu negligence case) in which the High Court considered whether a company operating
a courier business, Vabu Pty Limited (Vabu), was liable for the injury caused to
a person by the negligent act of a bicycle courier engaged to make deliveries. The majority, Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ, decided that Vabu was vicariously liable for the bicycle courier’s negligence on the basis that he was one of its employees. McHugh J also decided that Vabu was vicariously liable but did so on the ground that he was one of its agents and was acting within its authority as its representative in carrying out its contractual obligations for its benefit. His Honour considered that the bicycle courier was neither an employee nor an independent contractor. Callinan J dissented.[50] (2001) 207 CLR 21
The trial judge had found that Vabu set the rates of remuneration of its bicycle couriers and permitted no negotiation of it. It allocated the work and again permitted no negotiation of its allocation. Couriers would call in each morning with their call signs and indicate their readiness for work. Vabu’s fleet controller would allocate jobs on the basis of matters that included the time the couriers had first called in and their location. It assumed all responsibility for any training it gave its couriers, directed their actions and their attire and disciplined them. Vabu gave the couriers its livery to wear and required them to meet the cost of insurance by means of deductions from the remuneration it paid. It gave its couriers a means of communication with it. The trial judge found that the couriers were independent contractors and not employees or agents of Vabu. He also considered that he was bound by the decision of the Court of Appeal (NSW) in Vabu Pty Ltd v Federal Commissioner of Taxation[51] (Vabu SGC case).
[51] (1996) 33 ATR 537
In the Vabu SGC case, the Court of Appeal had concluded that the couriers were independent contractors and not Vabu’s employees. It had done so after considering whether Vabu was an “employer” and a courier an “employee” for the purposes of the SGAA. The definitions of those terms were in the same terms as they now appear in s 12. The majority in the Vabu negligence case summarised the Court of Appeal’s judgment in the Vabu SGC case:
“… Meagher JA observed that the decision of this Court in Stevens v Brodribb Sawmilling Co Pty Ltd [[52]] meant that ‘[t]he old test of “control” is now superseded by something more flexible’ [[53]]. His Honour accepted that the cumulative effect of the conditions of work ‘certainly gives [Vabu] a deal of control over its courier’ but said that ‘a person may supervise others without becoming their employer’ and that several considerations supported the conclusion that the couriers were not employees [[54]]. One consideration was that the couriers supplied their own vehicles and had to bear the expense of providing for and maintaining those vehicles, making payments for repairs and insurance, which were ‘very considerable’. Other considerations were the couriers had to provide themselves with their own street directories, telephone books, ropes, blankets and tarpaulins; and that the couriers received no wage or salary. Meagher JA continued [[55]]:
‘Normally, if they were true employees, one would expect a certain sum to be paid each day, week or month. The company’s documents provide for no such thing. They are paid a prescribed rate for the number of successful deliveries they make. It is not, I think, fanciful to say that each courier conducts his own operation, permitting himself for his own economic advantage to be supervised by the company. If this were not so, why would the documents anticipate that the courier may use a business name or corporate name if he so wishes? A company does not usually have employee corporations.’
He concluded that, ‘[a]lthough this part of the case is hardly without difficulty’, the couriers would be classified at common law as independent contractors. [[56]]
Sheller JA agreed that the matters referred to by Meagher JA indicated that ‘there was not between [Vabu] and the couriers it engaged a common law relationship of employer and employee [[57]]. His Honour also concluded that the relationship between the couriers and Vabu did not answer the description in s 12(3) of the Superannuation Act of one ‘wholly or principally for the labour of’ a person. Beazley JA agreed with both judgments. …”[58]
[52] (1986) 160 CLR 16
[53] Vabu Pty Ltd (1996) 33 ATR 537 at 538
[54] Vabu Pty Ltd (1996) 33 ATR 537 at 538
[55] Vabu Pty Ltd (1996) 33 ATR 537 at 539
[56] Vabu Pty Ltd (1996) 33 ATR 537 at 539
[57] Vabu Pty Ltd (1996) 33 ATR 537 at 542
[58] (2001) 207 CLR 21 at 30-31, [19]-[20]
At the heart of the issues facing the High Court in the Vabu negligence case was the proposition that:
“… It has long been accepted, as a general rule [[59]], that an employer is vicariously liable for the tortious acts of an employee but that a principal is not liable for the tortious acts of an independent contractor [[60]]. …”[61]
[59] “See the observations of Brennan J in Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520 at 575.”
[60]Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313 at 329-330, 366.”
[61] (2001) 207 CLR 21 at 36, [32]
The majority explored the rationale for excluding vicarious liability in relation to a person’s independent contractors but not in relation to that person’s employees. They referred to the explanation given by Dixon J in Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of Australia,[62] regarding the dichotomy between the relationships of employer and employee, and the principal and independent contractor:
“… His Honour explained that, in the case of an independent contractor [[63]]:
‘[t]he work, although done at [the principal’s] request and for his benefit, is considered as the independent function of the person who undertakes it, and not as something which the person obtaining the benefit does by his representative standing in his place and, therefore, identified with him for the purpose of liability arising in the course of its performance. The independent contractor carries out his work, not as a representative but as a principal.’
This statement merits close attention. It indicates that employees and the independent contractors perform work for the benefit of their employers and principals respectively. Thus, by itself, the circumstance that the business enterprise of a party said to be an employer is benefited by the activities of the person in question cannot be a sufficient indication that this person is an employee. However, Dixon J fixed upon the absence of representation and of identification with the alleged employer as indicative of a relationship of principal and independent contractor. These notions were later expressed positively by Windeyer J in Marshall v Whittaker’s Building Supply Co [[64]]. His Honour said that 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’. In Northern Sandblasting [[65]], McHugh J said:
‘The rationale for excluding liability for independent contractors is that the work which the contractor has agreed to do is not done as the representative of the employer.’
…
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. …”[66]
[62] (1931) 46 CLR 41
[63] “Colonial Mutual (1931) 46 CLR 41 at 48”
[64] (1963) 109 CLR 210 at 217
[65] (1997) 188 CLR 313 at 366
[66] (2001) 207 CLR 21 at 39-40, [39]-[42]
These notions, their Honours in the Vabu negligence case went on to say, influence the meaning to be given to “control” as a quality discriminating between an employee and an independent contractor. Control is a relevant factor but not the only quality discriminating between the two. What is encompassed within that quality has changed as society has changed from a predominantly agricultural society to a modern industrial society. It was once the case that an employer could be expected to know as much about a job as an employee and would usually work with that employee. Industrial conditions and legislative changes had, however, made it more difficult to apply the classic test requiring consideration of whether the contract placed the supposed employee subject to the command of the employer, Dixon J had said in Humberstone v Northern Timber Mills.[67] The majority in the Vabu negligence case then went on to adopt the statement that:
“… With the invention and growth of the limited liability company and the great advances of science and technology, the conditions which gave rise to the control test largely disappeared. Moreover, with the advent into industry of professional men and other occupations performing services which by their nature could not be subject to supervision, the distinction between employees and independent contractors often seemed a vague one.”[68]
[67] (1949) 79 CLR 389 at 404
[68] (2001) 207 CLR 21 at 40, [43], “Glass, McHugh and Douglas, The Liability of Employers in Damages for Personal Injury, 2nd ed (1979), pp 72-73.”
Despite these changes, Mason J in Stevens v Brodribb Sawmilling Co Pty Ltd[69] considered the common law to have:
“… been sufficiently flexible to adapt to changing social conditions by shifting the emphasis in the control test from the actual exercise of control to the right to exercise it, ‘so far as there is scope for it’, even if it be ‘only in incidental or collateral matters’: Zuijs v Wirth Brothers Pty Ltd[[70]]. Furthermore, control is not now regarded as the only relevant factor. Rather it is the totality of the relationship between the parties which must be considered.”[71]
[69] (1986) 160 CLR 16
[70] (1955) 93 CLR 561 at 571
[71] (1986) 160 CLR 16 at 29
Referring to these passages, the majority in the Vabu negligence case said:
“ So it is that, in the present case, guidance for the outcome is provided by various matters which are expressive of the fundamental concerns underlying the doctrine of vicarious liability. These include, but are not confined to, what is now considered ‘control’.”[72]
[72] (2001) 207 CLR 21 at 41
In reaching their conclusion that the bicycle couriers were employees rather than independent contractors, so that Vabu was vicariously liable for their actions, the majority focused on the following features of the evidence:
“… [T]he 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 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 they were employees.
First, these couriers were not providing skilled labour or labour which required special qualifications. A bicycle courier is unable to make an independent career as a free-lancer or to generate any "goodwill" as a bicycle courier. The notion that the couriers somehow were running their own enterprise is intuitively unsound, and denied by the facts disclosed on the record.
Secondly, the evidence shows that the couriers had little control over the manner of performing their work. They were required to be at work by
9 am … and were assigned in a work roster according to the order in which they signed on. … The evidence does not disclose whether the couriers were able to delegate any of their tasks or whether they could have worked for another courier operator in addition to Vabu during the day. It may be thought unlikely that the couriers would have been permitted by Vabu to engage in either activity.Thirdly, the facts show that couriers were presented to the public and to those using the courier service as emanations of Vabu. They were to wear uniforms bearing Vabu’s logo. Vabu stated … that ‘DRIVERS SHOULD ALWAYS BE AWARE THAT THEY ARE A DIRECT REPRESENTATION OF THE COMPANY. THEIR ATTITUDE AND APPEARANCE CAN ONLY BE SEEN AS A DIRECT REFLECTION OF OUR ORGANISATION’. …
…
Couriers were required to wear Vabu livery partly from Vabu’s wish to advertise its business. …
Fourthly, there is the matter of deterrence. Reference has been made to the findings of fact in this case respecting the knowledge of Vabu as to the dangers to pedestrians presented by its bicycle couriers and the failure to adopt effective means for the personal identification of those couriers by the public. One of the major policy considerations said by the Supreme Court of Canada in Bazley v Curry [[73]] to support vicarious liability was deterrence of future harm. …
Fifthly, Vabu superintended the couriers’ finances: Vabu produced pay summaries and couriers were required to dispute errors by 6 pm Friday of the same week. ‘Unjustified or unsubstantiated’ claims for additional charges, such as due to waiting time, wrong address or excess weight, could result in total deduction of that particular job payment. … Vabu was authorised to hold for six weeks the last week’s pay of a courier against any overcharges, unpaid cash jobs or outstanding insurance claims. Final cheques would not be processed until all of Vabu’s property had been returned. … The method of payment, per delivery and not per time period engaged, is a natural means to remunerate employees whose sole duty is to perform deliveries, not least for ease of calculation and to provide an incentive more efficiently to make deliveries.
Moreover, Vabu stipulated … that ‘[n]o annual leave will be considered for the period November to Christmas Eve, nor for the week prior to Easter. Leave requests will be considered in accordance with other applications and should be submitted to the manager in writing at least
14 days prior’. This suggests that their engagement by Vabu left the couriers with limited scope for the pursuit of any real business enterprise on their own account.Sixthly, the situation in respect to tools and equipment also favours,
if anything, a finding that the bicycle couriers were employees. Apart from providing bicycles and being responsible for the cost of repairs, couriers were required to bear the cost of replacing or repairing any equipment of Vabu that was lost or damaged, including radios and uniforms. Although a more beneficent employer might have provided bicycles for its employees and undertaken the cost of their repairs, there is nothing contrary to a relationship of employment in the fact that employees were here required to do so. This is all the more so because the capital outlay was relatively small and because bicycles are not tools that are inherently capable of use only for courier work but provide a means of personal transport or even a means of recreation out of work time. The fact that the couriers were responsible for their own bicycles reflects only that they were in a situation of employment more favourable than not to the employer; it does not indicate the existence of a relationship of independent contractor and principal.Finally, and as a corollary to the second point mentioned above, this is not a case where there was only the right to exercise control in incidental or collateral matters. Rather, there was considerable scope for the actual exercise of control [[74]]. Vabu’s whole business consisted of the delivery of documents and parcels by means of couriers. Vabu retained control of the allocation and direction of the various deliveries. The couriers had little latitude. The couriers had little latitude. Their work was allocated by Vabu’s fleet controller. They were to deliver goods in the manner in which Vabu directed. In this way, Vabu’s business involved the marshalling and direction of the labour of the couriers, whose efforts comprised the very essence of the public manifestation of Vabu’s business. It is not the case that the couriers supplemented or performed part of the work undertaken by Vabu or aided from time to time; rather, as the two documents relating to work practices suggest, to its customers they were Vabu and effectively performed all of Vabu’s operations in the outside world. It would be unrealistic to describe the couriers other than as employees.”[75]
[73] [1999] 2 SCR 534
[74] “Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 at 29.”
[75] (2001) 207 CLR 21 at 41-45, [47]-[57]
McHugh J also found Vabu vicariously liable but on the basis that Vabu had delegated to the courier concerned a task it had agreed to perform, the courier was working as its representatives, he was subject to Vabu’s general direction and control and he was acting within the scope of the authority conferred on him by Vabu.[76] His Honour did not regard the bicycle couriers engaged by Vabu as independent contractors:
“… in the sense of someone who acts as an independent principal, exercising an independent discretion in carrying out a task for his own business interest and who is retained simply to produce a result. The couriers in this case were far removed from the paradigm case of an independent contractor – the person who has a business enterprise and deals with any member of the public or a section of it upon terms and conditions that the contractor sets or negotiates. …”[77]
[76] (2001) 207 CLR 21 at 50-51, [73]
[77] (2001) 207 CLR 21 at 48, [68]
As for the question whether the bicycle couriers were Vabu’s employees, McHugh J said:
“… I agree that certain aspects of the work relationship between Vabu and the couriers suggest an employer/employee relationship, according to the classical tests [[78]]. But while the couriers were subject to extensive direction and control by Vabu, were Vabu’s representatives and worked for Vabu’s business interests, there were features of the relationship which are not typical of a traditional employment relationship. They include the provision by employees of their own equipment – in some cases, motor vehicles – the capacity to incorporate or form their own business structure, the tax and superannuation arrangements, and the lack of actual provision for annual leave and sick pay benefits[[79]].[80]
[78] “(1) the employer’s power of selection of his or her worker, (2) the payment of wages or other remuneration, (3) the employer’s right to control the method of doing the work, and (4) the employer’s right to suspension or dismissal: Short v J & W Henderson Ltd [1946] SC(HL) 24 at 33-34.”
[79] “Although the contract referred to annual leave, in practice there was no annual leave.”
[80] (2001) 207 CLR 21 at 48-49, [68]
Had the couriers been confined to bicycle couriers, McHugh J said:
“… there would be much force in the contention that, on the classical tests, they were employees. That is because the couriers were subject to extensive control and direction – always a strong indication that the worker is an employee [[81]]. But the couriers included those who provided their own motor vehicles. Given the course of authority in this Court concerning workers who provide their own equipment, it seems impossible to say that those couriers who provided their own motor vehicles were employees[[82]]. The right to supervise or direct the performance of a task cannot transform into a contract of service what is in substance an independent contract[[83]] and, when a person has to provide equipment such as a motor vehicle, the conventional view is that the person is not an employee. In principle, there can be no distinction between those couriers working for Vabu who provide their own bicycles and those couriers who provide their own motor vehicles.”[84]
[81] “Performing Right Society Pty Ltd v Mitchell & Booker (Palais de Danse) Ltd [1924] 1 KB 762 at 767.”
[82] “Queensland Stations Pty Ltd v Federal Commissioner of Taxation (1945) 70 CLR 539; Humberstone v Northern Timber Mills (1949) 79 CLR 839; Wright v Attorney-General (Tas) (1954) 94 CLR 409.”
[83] “Queensland Stations Pty Ltd v Federal Commissioner of Taxation (1945) 70 CLR 539 at 552.”
[84] (2001) 207 CLR 21 at 49-50, [71]
Before turning to the law of agency to establish Vabu’s vicarious liability, McHugh J said:
“ Rather than attempting to force new types of work arrangements into the so-called employee/independent contractor ‘dichotomy’ based on medieval concepts of servitude, it seems a better approach to develop the principles concerning vicarious liability in a way that gives effect to modern social conditions. As I pointed out in Burnie Port Authority v General Jones Pty Ltd [[85]] and reiterated in Scott v Davis [[86]], the genius of the common law is that the first statement of a common law rule or principle is not its final statement. The contours of rules and principles expand and contract with experience and changes in social conditions. The law in this area has been and should continue to be ‘sufficiently flexible to adapt to changing social conditions’ [[87]].”[88]
World Book (Australia) Pty Ltd v Federal Commissioner of Taxation: deduction of instalments of income tax from commission payments
[85] (1994) 179 CLR 520 at 585
[86] (2000) 204 CLR 333 at 370 [109]
[87] “Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 at 28-29, per Mason J.”
[88] (2001) 207 CLR 21 at 50, [72]
Section 221C(1A) of the Income Tax Assessment Act 1936 (ITAA36) provided that:
“Where an employer pays to an employee salary and wages, the employer shall, at the time of paying the salary or wages, make a deduction from the salary or wages at such rate (if any) prescribed …”
An “employee” meant a person who received, or who was entitled to receive, salary or wages. “Salary or wages” meant:
“… salary, wages, commission, bonuses or allowances paid … to an employee as such, and, without limiting the generality of the foregoing, includes … any payments made –
(a) under a contract that is wholly or principally for the labour of the person to whom the payments are made …”[89]
That definition had to be read with s 221A(2). That subsection provided that, for the purposes of the definition of salary and wages:
“a payment made to a person under a contract that is wholly or principally for the labour of any person shall be taken to be a payment made under a contract that is wholly or principally for the labour of the person to whom the payment is made …”
if that payment was made when the whole or the principal part of the labour was performed by the person being paid or the person paying has a reasonable expectation that the person receiving payment will perform the whole or the principal part of the labour in respect of which the payment is made.[90]
[89] ITAA36, s 221A(1)
[90] ITAA36, s 221A(2)(b)
World Book (Australia) Pty Ltd (World Book) had a business selling books. Under a written agreement, World Book paid its agent a commission for the sale of a set of encyclopaedia. Under the contract, commission was payable on each product in the order taken by the agent. World Book did not deduct income tax from the commission it paid its agent and claimed that it was not obliged to do so.
When the proceedings were before the Supreme Court, it was conceded that World Book and its agent did not fall within the common law relationship of employer and employee. Whether World Book should have deducted income tax did not depend on analysing whether the agent was an employee or an independent contractor. The issue turned on whether the contract between World Book and the agent was a “contract that is wholly or principally for the labour” of the agent.
In World Book (Australia) Pty Ltd v Federal Commissioner of Taxation,[91] Meagher JA, with whom Clarke JA agreed decided:
“… when the essence of the contract was to achieve a result and not to do work, and where under the contract the payee was not obliged to do any work at all (although in fact he apparently did a great deal), in my view the payment was not made under a contract of the kind to which the statutory definitions refer.”[92]
[91] (1992) 23 ATR 412
[92] (1992) 23 ATR 412 at 416
Their Honours concluded that World Book’s agent was not its employee as their contract was not wholly or principally for the agent’s labour but a result i.e. the sale of a book or books. Sheller JA reached the same conclusion but, in his judgment, he examined the distinction between a contract for service and a contract for services. He concluded:
“ In my opinion by retaining the description of contract wholly or principally for the labour of a person the legislature has maintained a distinction between a contract for labour and a contract, to use the expression of the High Court in Neale [[93]] at 425, ‘whereby the contractor has undertaken to produce a given result and’ (the amount to be paid) ‘becomes payable when, and only when, the contractual conditions have been fulfilled’. Undertaking the production of a given result has been considered to be a mark, if not the mark, of an independent contractor, see for example Queensland Stations Pty Ltd v FCT (1945) 70 CLR 539 at 545 and 548.
It may be that there are contracts for services which are wholly or principally for the labour of a person and which are not undertaken by the contractor to produce a given result. To the rewards of such contracts the definition may apply. But a contract which is undertaken by the contractor to produce a given result is not, in my opinion, a contract wholly or principally for the labour of a person for reason that the labour is undertaken not for the principal but for the contracting party himself to produce the result he has contracted to produce. In this respect a useful comparable distinction has long been perceived between contracts for the sale of goods and contracts for work and labour …In the present case it could be said that Mr Maiden contracted by use of his own resources and the resources of others and worked to achieve a given result, namely the sale of the appellant's books. He was by the terms of the agreement, amongst other things, authorised to act by himself or through his approved employees as a selling agent for the appellant’s products, he was entirely free to choose the areas in which and the times at which he solicited purchasers for the product, he was free to employ whatever legal style or method of selling he deemed suitable and the appellant agreed that it should not have any right to direct or control him in any respect whatsoever.”[94]
[93] Neale v Atlas Products (Vic) Pty Ltd (1955) 94 CLR 419 at 424-5
[94] (1992) 23 ATR 412 at 419-420
The case of Neale, to which Sheller JA referred, concerned the interpretation of s 221 of the ITAA36. That section provided that an employer was obliged to deduct taxation from salary or wages exceeding two pounds. The expression “salary or wages” was defined to mean “salary, wages, commission, bonuses or allowances paid (whether at piece-work rates or otherwise) to an employee as such” and included other payments including those “under a contract which is wholly or substantially for the labour of the person to whom payments are made.” The High Court said:
“… It is clear that moneys paid to an independent contractor in satisfaction of a contractual obligation do not, in the ordinary legal sense, represent salary or wages. Nor are the general words of the definition of ‘salary or wages’ appropriate to assimilate the remuneration of an independent contractor to the defined term. … In the argument addressed to this Court there may have been a suggestion that if in the case of any independent contractor it appeared that the parties contemplated that the contractual work would be substantially performed by the independent contractor himself, although the terms or conditions of the contract, whether express or implied, did not actually require it, the particular extension of the defined term would be sufficient justification for characterizing his remuneration as salary or wages for the purposes of
s. 221C. This suggestion, however, is without validity, for if the contract leaves the contractor free to do the work himself or to employ other persons to carry it out the contractual remuneration when paid is not a payment made wholly or at all for the labour of the person to whom the payments are made. It is a payment made under a contract whereby the contractor has undertaken to produce a given result and it becomes payable when, and only when, the contractual conditions have been fulfilled. Moreover, the nature of the payment is not affected by the circumstance that the contractor has himself performed the bulk of the work under the contract or that it was the expectation of the parties that he would do so if, in truth, the contract did not create the relationship of master and servant. It may be, however, that in cases where an independent contractor is required by the terms of his contract to perform the contractual work himself the addition to the general definition may have some application, but it is unnecessary, in the circumstances of this case, to express any concluded view concerning contracts of a such a special class. …”[95][95] (1955) 94 CLR 419 at 424-425
The powers of the Tribunal on review are similarly limited by the Administrative Appeals Tribunal Act 1975 and the legislative framework under which the decision was made. In this case, that legislative framework is the ITAA36.
To find myself prevented from reaching a decision different from the Commissioner’s decision in 1957 would be to have regard to a criterion not prescribed in ITAA36.
Permanent employees, casual employees and independent contractors: general principles
I have found the issue in this case difficult to resolve for changing social conditions and new work practices have led, as McHugh J said in the Vabu negligence case, to:
“ The practice of employers contracting out work that, in former times was done by their employees, is nowadays a common practice [[116]].”[117]
[116] Scott v Davis (2000) 204 CLR 333; 74 ALJR 1410; 175 ALR 216 at 336-367, 1427-1428, 241, [101].
[117] (2001) 207 CLR 21 at 53, [84]
It has also led to employers engaging casual employees as well as permanent employees and employees on a full-time and on a part-time basis. In Wilton & Cumberland v Coal & Allied Operations Pty Ltd,[118] Conti J considered the description “casual employee”:
[118] [2007] FCA 725; 161 FRC 300
“103 The applicants acknowledged that the term ‘casual employee’ has no fixed meaning, citing Doyle v Sydney SteelCompany Ltd [1936] HCA 66; (1936) 56 CLR 545 at 551, where Starke J provided the following description of the term:
‘The description “casual worker” is not one of precision: it is a colloquial expression, and where, upon all the facts, there is a reasonably debatable question whether the work is casual or regular, the question is one of fact for the commission.’
At 555,DixonJ (as he then was) described the term as follows:
‘But unfortunately what is casual employment is ill defined. Indeed it is scarcely too much to say that it seems open to a tribunal of fact to treat most forms of intermittent or irregular work as casual.’
At 565, McTiernan J considered that the expression ‘is not capable of exact definition’, and that ‘[e]ach case is to be determined on its own facts...’.
104 More recently in Australasian Meat Industry Employees’ Union v Sunland Enterprises Pty Ltd (1988) 24 IR 467 at 473, Gray J observed that the expression casual employee ‘does not have a recognised legal meaning’, so that any issue as to the terms on which a casual employee is engaged ‘becomes one of fact’. Accordingly it would seem that the expression has not materially changed in meaning since the High Court’s decision in Doyle.
105 Subsequently in Reed v Blue Line Cruises Ltd (1996) 73 IR 420, Moore J observed more illustratively at 425:
‘A characteristic of engagement on a casual basis is, in my opinion, that the employer can elect to offer employment on a particular day or days and when offered, the employee can elect to work. Another characteristic is that there is no certainty about the period over which employment of this type will be offered. It is the informality, uncertainty and irregularity of the engagement that gives it the characteristic of being casual.’”[119]
[119] [2007] FCA 725; 161 FCR 300, [103]-[105]
I do not have to decide in this case whether the interviewers are casual or permanent employees if I find that they are employees at all. I have mentioned casual employees only to illustrate the proposition that intermittent or irregular work does not necessarily lead to the conclusion that it is performed by an independent contractor. For some, it may lead to the contrary view. Dixon J, for example, was of
the view in Doyle v Sydney Steel Company Ltd that:
“… unfortunately what is casual employment is ill defined. Indeed it is scarcely too much to say that it seems open to a tribunal of fact to treat most forms of intermittent or irregular work as casual.”[120]
[120] (1936) 56 CLR 545 at 555
It may be open but only after an examination of the whole of the relationship between the two persons concerned. As part of that general consideration, the authorities to which I have referred have set out a number of aspects to be taken into account as part of that consideration.
In the same way, the fact that a person performs work for more than one person does not necessarily mean that the person is an independent contractor in every relationship. A person may earn a living by being employed on a full-time basis by one employer but another may do so by working as a casual employee for one or more employers. Yet another may do so by working as a casual employee as well as acting as an independent contractor in others. In those circumstances, it may be, as the High Court found in Spriggs v Federal Commissioner of Taxation,[121] that the person is engaged in the business of commercially exploiting their skills. That business would encompass contracts for employment and contracts for the provision of services entered by the person.
[121] [2009] HCA 22; 72 ATR 148; 83 ALJR 749
Intentions of Roy Morgan and the interviewers regarding their relationship
I find that Roy Morgan gave mixed messages regarding the basis on which it engaged interviewers. I accept that it told would be interviewers and those it engaged as interviewers that they would be engaged as independent contractors and consistently emphasised this in its written material including the various versions of the COTI Manual and the 2003 CATI Manual. Statements such as those in the CATI Manual that they can have as many breaks as they like but will not be paid for them are also consistent with their being independent contractors. So too are statements that taxation will not be deducted from their payments as they are independent contractors.
At the same time, I find that Roy Morgan also required those in the field to display an ID card whenever they were “working for Roy Morgan”. That language was used in the 1995 and 2003 versions of the COTI Manual. It is language more appropriate to describe an employer/employee relationship than that between two people in which one is bound to provide services or products to another but who are otherwise independent of each other.
The statement in the 2003 CATI Manual that interviewers earning more than $450 in a calendar month would be paid superannuation is also more consistent with a relationship of employer and employee than that of independent contractors. It is almost a subconscious recognition by Roy Morgan in 2005, and so during the relevant period, that at least its computer assisted telephone interviewers were in fact employees. That comes from the fact that, under the SGAA as enacted then and now, employees were not regarded as being employed by an employer if they were paid less than $450 by that employer by way of salary or wages in a month.
Given that Roy Morgan guaranteed an hourly rate of $18.00, I find that from at least the date the CATI Manual was used in 2005, superannuation would be paid if an interviewer worked for 25 hours or more each month.
I find that Roy Morgan did not give its interviewers, whether face to face or computer assisted telephone interviewers, any leave whether it be sick, recreation or long service leave. That is consistent with a relationship where the interviewer is an independent contractor but it could also be consistent with a relationship of casual employer and casual employee.
Control or supervision
I find that the task that Roy Morgan required of its interviewers cannot be simply described as the return of completed questionnaires. What Roy Morgan required of its interviewers was that they follow a series of steps and that they do so precisely. When they followed those steps, the result would be a questionnaire completed in accordance with Roy Morgan’s requirements. The steps included the manner in which the questions were to be asked and the manner in which the answers were to be recorded. I accept that Roy Morgan also made suggestions to interviewers as to the way in which they could encourage people to respond to the questionnaires and, if they chose to, to persist to the end of the interview and to be relaxed throughout. Suggestions of that sort were just that; suggestions and not requirements. The steps in relation to the asking of the questions and the recording of the answers were not. They were mandatory and that they were so is underlined by the fact that Roy Morgan’s monitoring focused on whether the interviewer had followed the steps whether the interviews were conducted in the field or over the telephone.
Certainly, Roy Morgan was not in a position to correct an interviewer in the field while conducting an interview. In that sense, it did not have control over the work of the interviewer and did not have an opportunity to see errors in the work until the questionnaires were returned and monitoring conducted. Having reviewed the quality of the work returned, Roy Morgan could exercise its ultimate control over the interviewer’s work by declining to offer any further work. That would be known to interviewers for it is inherent in the Manuals and the possibility that Roy Morgan might choose to take that course is a very real way in which it could ensure that interviewers would take the steps required of them very precisely and accurately.
The payments available to interviewers also reveal that regard was had to the quality of the questionnaires returned. New interviewers who completed only four of the eight interviews were initially paid the full fee if they had “attained a fair standard of speed and accuracy”. Clearly, Roy Morgan had to assess the questionnaires so that it could determine whether the interviewers had achieved that standard. That is a form of control over interviewers. Even though it is exercised after the work is done, it is made known to interviewers in the COTI Manual before they start. It is more than a form of encouragement for it is clear that they will not be paid the full fee if a fair standard has not been attained. It is a form of control intended to ensure that the work produced is of the required standard.
The same is true for more experienced interviewers required to complete eight interviews. They can be paid a COT bonus but only if “The completed 8 questionnaires … [are] of a reasonable standard.”[122] Again, that may be seen as a form of encouragement but the encouragement is itself intended to control the output.
[122] T documents, ST11 at 721
Are interviewers and their services an integral part of Roy Morgan’s business?
Ms Levine emphasised that interviewers and their services are not an integral part of Roy Morgan’s business. At the same time, she said that having answers, which can form the basis of statistical analysis, is fundamental to its business. Given the nature of Roy Morgan’s business in market research, that must be so. I accept her evidence that Roy Morgan can choose to gather information through avenues other than interviews and does choose to do so. I find that, when it chooses to use interviewers, the answers they gather must be fundamental to the particular statistical analysis being undertaken at the time. As statistical analysis is fundamental to Roy Morgan’s business, the work of interviewers must be an integral part of its business when it chooses to use them to gather information.
Were the interviewers required to produce results?
I have already found that the interviewers were required to follow specified steps. Roy Morgan wanted the product that resulted from their taking those steps. If those steps were followed and the respondent agreed to answer all the questions, the product would be a questionnaire completed to the standard it required.
To some extent, the terms of payment went hand in hand with the processes that Roy Morgan required its interviewer to follow but not entirely. They followed them for the computer assisted telephone interviewers when they set an hourly rate based on their completing four interviews in an hour. That suggested that Roy Morgan paid for results. So too did the fact that an interviewer could earn more than the hourly rate if completing more than four interviews each hour. They were paid for interviews. That is so but, for some interviewers or for all interviewers on some occasions, they were guaranteed that they would be paid the hourly rate if they were “trying very hard but not managing to get a reasonable number of interviews”[123] which would have been four interviews per hour. That suggests that they are being paid for their effort and not for a product in the form of an interview completed in the manner required by Roy Morgan.
[123] T documents, ST 14 at 818
The COTI manual is unclear as to whether the whole of the payment for an assignment would be paid if a face to face interviewer completed fewer than eight interviews. It is clear that an interviewer who terminates an interview, even if required to do so by the manual, must replace it with another and use the practice or ninth questionnaire to do so.[124] It is also clear that, to Roy Morgan, a completed assignment meant eight interviews in a weekend.[125] Payment is based on the time taken to conduct all eight, to prepare for the interviews, complete the clerical work and report the results to Roy Morgan.[126] Assignments, I find, must be returned in the time frames specified by Roy Morgan for “Surveys not returned immediately become outdated data and cannot be processed.”[127] Together with other information, interviewers are required to return eight completed questionnaires in the envelopes they return to Roy Morgan. The interviewer will not be paid if the assignments are not returned within that timeframe.[128]
[124] T documents, ST13 at 784
[125] See [26] above
[126] T documents, ST13 at 789
[127] T documents, ST13 at 790
[128] T documents, ST13 at 790
These matters might suggest that interviewers will not be paid if all eight interviews are not completed but, against this, is the requirement that they report various matters to Roy Morgan at the conclusion of the interview period. Among the information to be reported is information regarding the number of interviews completed by the interviewer. Were it essential that an interviewer complete all eight interviews before receiving payment, it is hard to know why this information would need to be reported at this stage. The failure to complete all eight would become apparent on the return of the assignment. The failure may be relevant in the statistical analysis of the questionnaires but, if it is, that would become apparent on the return of the questionnaires. If an interviewer were not paid for an incomplete assignment, it could be expected that he or she might quickly tire of returning an assignment however useful a partially completed assignment might be to Roy Morgan. I also note that it is Roy Morgan’s view that it has no legal recourse against interviewers who fail to complete assignments. Having regard to all of these matters, I am satisfied that Roy Morgan may pay interviewers for partially completed assignments provided the interviewer otherwise meets the criteria it has established.
May interviewers delegate or sub-contract their work for Roy Morgan to another?
I have already found that interviewers could not delegate their work.[129]
[129] See [46] above
Risk
Although interviewers face the prospect of not being paid if they do not complete their assignments and that is loss enough for them, they do not face any further financial consequences if they do not complete their assignments. Provided they follow the steps set out for them by Roy Morgan, I find they do not face any financial consequences if the results following from the statistical analysis of the answers they obtain does not meet Roy Morgan’s expectations or perhaps its contractual obligations to others.
Apart from providing small expenditure items such as a clip board and a pen and using some shoe leather, interviewers did not incur any significant expenditure in the course of their work. They were given an allowance for the cost of using their own vehicles or, in certain circumstances, reimbursed the cost of taxi fares.
Working for Roy Morgan alone: the boundaries
I find that interviewers were forbidden to take advantage of the opportunity afforded them by their work for Roy Morgan to further their own and separate interests. Face to face interviewers, for example, were told that they:
“… must not take advantage of the interview situation to promote or sell any of their private interests or marketing activities, or for any personal benefits. …
Any information obtained, for our surveys, from respondents is confidential and is obtained only on the understanding that it is to be used by our Company for statistical purposes. To disclose or use this information for any other purpose is illegal under the Privacy legislation.”[130]
[130] T documents, ST13 at 754 and see also 790
They were not told that they could not work for anybody else and, having regard to that and to the evidence of Ms Levine, I find that they could work for others and in fact do work for others. The work they do for others may be of the same type as they perform for Roy Morgan. All that they are prohibited from doing is performing work for others or for themselves at the same time as they are performing work for Roy Morgan.
Provision of tools and equipment
On the basis of the 2003 version of the COTI Manual, I find that interviewers were required to have their own reliable vehicle in which their documents could be safely stowed while they were working in the field.[131] It was made clear to interviewers that all costs, such as insurance, associated with the vehicle and all costs, such as parking and speeding fines, associated with the manner of its being driven, were their responsibility. Roy Morgan did, however, pay travel expenses and, where interviewers used their own vehicle, it was paid at a certain rate per kilometre.[132]
[131] T documents, ST13 at 758
[132] T documents, ST13 at 758 and 790. See also ST11 at 664
If interviewers did not have a vehicle available to them and the starting addresses they were given were more than three kilometres from home, Roy Morgan would reimburse the expenses incurred for taxis or for public transport in lieu of paying car expenses.[133]
[133] T documents, ST13 at 791
Whichever form of transport they used, interviewers needed to be able to locate the area and so required a street directory. It is reasonable to expect that interviewers would use any vehicle they used in their work for other purposes. The same could be said of the street directory. This is reflected in the fact that Roy Morgan reimbursed its interviewers half of the cost of a street directory.[134]
[134] T documents, ST11 at 720
After they had completed three assignments, I find that interviewers were provided with a Roy Morgan canvas bag in which to carry the questionnaires. No mention is made of Roy Morgan’s providing the clip board on which interviewers were required to keep their questionnaires and other papers provided by Roy Morgan or the pen with which they were to complete the questionnaires.
Overall assessment of relationship
The line between an employee and an independent contractor is not sharply drawn and, as I indicated earlier, Roy Morgan seemed to have a somewhat ambivalent view of them. Having regard to all of the evidence, it seems to me that the weight of it favours my finding that the interviewers were engaged by Roy Morgan, whether engaged to conduct face to face interviews or to conduct computer assisted telephone interviews, as employees rather than independent contractors. In so far as the crucial steps in their work were concerned, Roy Morgan controlled them with precision. It checked that they had performed those steps on a regular basis. Certainly, Roy Morgan looked to the interviewers to produce completed questionnaires but the interviewers had very little, if any, independent control over their contents. Interviewers were told how to ask the questions, whether they were closed or open, what words to emphasise and how to record the answers. They were not engaged for a result or a product but for their labour in following the steps that would produce the result those steps were designed to produce. They carried identification cards that showed that they were doing the task for Roy Morgan. Interviewers may well have other work that they perform whether as employees or as independent contractors. That they have is irrelevant while they are performing the task for Roy Morgan for, while they are engaged in that task, they may not pursue any other activity or work in which they may be engaged and may not use the information they obtain in any other activity or work. They were engaged in the business of Roy Morgan when they went about finding respondents to its questionnaire according to the procedures and processes it dictated. Given that they were reimbursed for their travel expenses and half the cost of a street directory, they invested little, if anything, other than their time and persuasive and recording skills. They were not engaged in business on their own account even if they might, on other occasions and in other guises, be engaged in business on their own account or employed by another. The fact that Roy Morgan paid money to someone other than the individual interviewer for that interviewer’s assignments does not change the fact that Roy Morgan engaged the individual. Once engaged, the relationship between Roy Morgan and the interviewer was that of employer and employee. The fact that an interviewer might reject an assignment or not be available to accept it from time to time does not change the relationship when the interviewer did choose to accept the assignment.
Roy Morgan chose those whom it described as employees to conduct group discussions where there were no defined questions but the fact that it did so does not weigh against my finding that the interviewers were also employees. It did so because, I find on the basis of Ms Levine’s evidence, it felt that it wanted to control the exercise of the skill of the interviewer. I accept that it did not care about the manner in which interviewers it did not regard as employees conducted interviews.
It did not do so because the way in which it had designed the questionnaire removed the statistical variation. Roy Morgan felt that it controlled the interviewers in the group situations but I find that its control was no less in the situations in which its other interviewers found themselves. It controlled them implicitly by means of the steps it required them to take and overtly controlled the interviewers in group situations.
I have, therefore, concluded that the relationship between Roy Morgan and its interviewers in the field and in those who conducted computer assisted interviews were, in the ordinary meaning of that word, employees of Roy Morgan in the relevant period. That means that I must affirm the decision.
I would reach the same conclusion if I were to consider the evidence in light of the extended meaning given to the word “employee” by s 12(3) of the SGAA. I have already found that those engaged to interview were engaged to carry out certain steps prescribed by Roy Morgan. Each entered a contract with Roy Morgan and, under that contract, each was engaged to carry out the prescribed steps. The outcome achieved by each interviewer who took the steps was a completed questionnaire which would then be returned to Roy Morgan. An interviewer could not exercise any discretion in asking the questions beyond that expressly conferred by Roy Morgan. They were not contracted to provide information as such but to take steps that would lead to the production of information. They were contracted to provide the labour to take those steps. Therefore, I find that interviewers were employees within the meaning of s 12(3) of the SGAA for they were engaged under contracts that were wholly or principally for the labour of the person; the person is an employee of the other party to the contract.
Does the Commissioner have discretion to reduce the amount of SGC assessed?
The SGAA sets out the way in which the SGC is assessed. It does not expressly provide that the Commissioner has discretion to reduce it. If he does have such discretion, it must be implicit in the terms of the legislation. Having regard to the structure and purpose of the SGAA and of the superannuation guarantee charge scheme, I have been unable to find that the Commissioner is intended to have any discretion to reduce the amount of the superannuation charge. The Commissioner applies the amount he receives by way of the SGC for the benefit of the employee in respect of whom the employer was obliged to provide superannuation contributions and pay them to a complying retirement savings account within the meaning of the RSA Act or a complying superannuation fund or scheme. That suggests that, rather than bestowing an implicit discretion on the Commissioner to reduce the amount of the SGC, the intention is that he have no such discretion.
For the reasons I have given, I affirm the objection decision of the respondent dated 18 July 2008.
I certify that the preceding one hundred and thirty one paragraphs are a true copy of the reasons for the decision herein of
Deputy President S A Forgie,
Signed: .......................................................................
Kate Conners Associate
Date of Hearing 18 May 2009
Date of Decision 11 September 2009
Counsel for the Applicant John Snaden
Counsel for the Respondent Philip Solomon
“ Clearly cl3, which, if it stood alone, would be conclusive in favour of the Society, cannot receive effect according to its terms if they contradict the effect of the agreement as a whole. Nevertheless, their Lordships attach importance to cl3, and they consider that the following statement by Lord Denning MR in Massey v Crown Life Insurance Co (4 November 1977, unreported) correctly states the way in which it can properly be used: ‘The law, as I see it, is this: if the true relationship of the parties is that of master and servant under a contract of service, the parties cannot alter the truth of that relationship by putting a different label upon it … On the other hand, if their relationship is ambiguous and is capable of being one or the other [ie either service or agency], then the parties can remove that ambiguity, by the very agreement itself which they make with one another. The agreement itself then becomes the best material from which to gather the true legal relationship between them.’”
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