Whitby v ZG Operations Australia Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Whitby v ZG Operations Australia Pty Ltd [2018] FCA 1934

File number: NSD 2023 of 2017
Judge: THAWLEY J
Date of judgment: 30 November 2018
Catchwords: INDUSTRIAL LAW – whether applicants were employees under the Fair Work Act 2009 (Cth) and/or the Superannuation Guarantee (Administration) Act 1992 (Cth) – whether applicants were workers under the Long Service Leave Act 1955 (NSW) – consideration of relevant factors – assessing totality of relationship
Legislation:

Fair Work Act 2009 (Cth) ss 12, 13, 15(1), 44, 45, 87(1), 90(2), 96, 99, 116, 118, 357, 550

Long Service Leave Act 1955 (NSW) ss 3(1), 4(1), 4(5)

Superannuation Guarantee (Administration) Act 1992 (Cth) s 12

Road Transport and Distribution Award 2010 cll 13.3, 14.1, 15, 21.2, 27.1, 29.1, 29.2, 30, 32

Cases cited:

ACE Insurance Ltd v Trifunovski(2011) 200 FCR 532

ACE Insurance Ltd v Trifunovski [2013] FCAFC 3

Australian Air Express Pty Limited v Langford [2005] NSWCA 96; 147 IR 240

Australian Communications and Media Authority v Mobilegate Ltd (No 8) (2010) 275 ALR 293

Briginshawv Briginshaw (1938) 60 CLR 336

Climaze Holdings Pty Ltd v Dyson (1995) 13 WAR 487

Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (2015) 230 FCR 298

Damevski v Giudice [2003] FCAFC 252

EZY Accounting 123 Pty Ltd v Fair Work Ombudsman [2018] FCAFC 134

Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 1365

Fair Work Ombudsman v Ecosway Pty Ltd [2016] FCA 296

Fair Work Ombudsman v Grouped Property Services Pty Ltd [2016] FCA 1034

Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd [2015] FCAFC 37

Fair Work Ombudsman v South Jin Pty Ltd [2015] FCA 1456

Hall (Inspector of Taxes) v Lorimer [1992] 1 WLR 939

Hollis v Vabu Pty Ltd(2001) 207 CLR 21

Humberstone v Northern Timber Mills (1949) 79 CLR 389

Marshall v Whittaker’s Building Supply Company (1963) 109 CLR 210

On Call Interpreters and Translators Agency Pty Ltd v Federal Commissioner of Taxation (No 3) (2011) 214 FCR 82

Roy Morgan Research Pty Ltd v Federal Commissioner of Taxation (2010) 184 FCR 448

Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16

Tattsbet Limited v Morrow (2015) 233 FCR 46

Vabu Pty Ltd v Federal Commissioner of Taxation (1996) 33 ATR 537

Wright v Attorney-General (Tas) (1954) 94 CLR 409

Date of hearing: 18-20 September 2018, 28 November 2018
Registry: New South Wales
Division: Fair Work Division
National Practice Area: Employment & Industrial Relations
Category: Catchwords
Number of paragraphs: 239
Counsel for the Applicants: Mr AD Crossland and Ms K Jones
Solicitor for the Applicants: Watson Law
Counsel for the Respondents: Mr S R Meehan
Solicitor for the Respondents: Agnew Legal
Table of Corrections
7 December 2018 On the cover page, the date of hearing “18-20 September 2018, 30 November 2018” has been replaced with “18-20 September 2018, 28 November 2018”

ORDERS

NSD 2023 of 2017
BETWEEN:

ROBERT WHITBY

First Applicant

MARTIN JAMSEK

Second Applicant
AND:
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Details
Case
[2018] FCA 1934
Decision Date

CaseChat Overview and Summary

Robert Whitby, Martin Jamsek and Robert Robinson initiated proceedings against ZG Operations Australia Pty Limited, Juergen Koprio, Ken Dick, Chris Dixon, Nick Giitsidis and ZG Lighting Australia Pty Ltd. The applicants sought various declarations and orders against ZG Operations and ZG Lighting for alleged contraventions of the Fair Work Act 2009 (Cth), the Superannuation Guarantee (Administration) Act 1992 (Cth) and the Long Service Leave Act 1955 (NSW). The applicants also sought orders against Chris Dixon for knowingly being involved in the alleged contraventions of the Fair Work Act. The primary question before the court was the nature of the relationship between the applicants and the respondent companies, specifically whether the applicants were employees within the meaning of the Fair Work Act or the Superannuation Guarantee (Administration) Act, or workers under the Long Service Leave Act. The court considered the totality of the relationship between the parties, including the nature of the contracts, the control exercised by the respondent companies, and the applicants’ conduct in relation to their work. The court concluded that the applicants were not employees for the purposes of the Fair Work Act. The contracts were with the applicants’ partnerships, and the contracts were for equipment and labour, not principally for the labour of the person. The applicants were not employees within the meaning of the Superannuation Guarantee (Administration) Act as they did not fall within the ordinary meaning of the word “employee” or any expanded meaning referred to in the provision. The court found that the applicants were not workers under the Long Service Leave Act, as they were not employees of the respondent companies. The court dismissed the proceedings against all respondents, and the applicants’ claims were not substantiated.

Orders

Orders of the court

1. The proceedings be dismissed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Likewise, I do not consider ZG Operations or ZG Lighting contravened s 4(5) of the LSL Act for any failure to pay the applicants amounts in respect of long service leave. FACTS Mr Jamsek started working as an employee of ALI on 7 September 1977. In his affidavit, he stated he worked for 12 months as a storeman, then for one or two years as an offsider with a driver on deliveries. He then became a delivery driver. In his oral evidence, he said he commenced as a driver in 1977. In any event, he was a driver for ALI at the latest by 1980. Mr Whitby began working for ALI in October 1977, initially in the company’s paint shop. He became a delivery driver in 1980. Both Mr Jamsek and Mr Whitby wore an ALI uniform and drove trucks with and an ALI logo. There was no dispute that, at least up until the events next described in late 1985 and early 1986, the applicants were employees of ALI. For most of the period that the applicants were drivers, warehouse staff “picked and packed” the orders for delivery and moved them to a despatch area of the relevant warehouse. They were sorted in that area before being loaded into the trucks. Both Mr Whitby and Mr Jamsek would move the products around on the back of their trucks using a pallet jack to ensure their safe transit. While the products were being “picked and packed”, the drivers would wait in a canteen and have a cup of tea or something to eat. The 1986 Contract In late 1985, ALI was looking to move the NSW branch of its business to Silverwater. Mr Jamsek and another driver, Mr Robinson, asked ALI’s manager, Mr Vittens, for a pay rise to compensate them for the extra travel time. The request was rejected. Mr Jamsek and Mr Robinson (who were members of the Transport Workers’ Union and were union representatives) reported this rejection to the remaining drivers. At the time there were five drivers. After a couple of weeks and immediately before Christmas 1985, Mr Vittens confirmed that ALI would not offer a pay rise but would offer the opportunity for the drivers to “become contractors”. The drivers, including the applicants, were told: “If you don’t agree to become contractors, we can’t guarantee you a job going forward”. The proposal was for the drivers to buy the trucks they were using and be paid “carton rates” with a minimum of $120 per day. The drivers would cover all expenses of operating and maintaining the trucks. Each of the five drivers took up the offer to become contractors. Mr Whitby and Mr Jamsek executed a written contract, I infer on behalf of their respective partnerships, with ALI, probably around 1 January 1986 (1986 Contract). A copy of this contract could not be located and was not in evidence. However, the applicants recalled that it was in similar terms to later contracts entered into (described below) with the exception that the pay was on a “per carton” rate (with a minimum daily payment of $120). The partnerships were identified as parties to each of the later written contracts.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The fact that Mr Jamsek paid for someone to carry out his delivery activities when he took leave in 2000 weighs against the conclusion he was an employee.Conclusion Assessing the ‘totality’ of the relationship, Mr Whitby and Mr Jamsek were not employees for the purposes of the FW Act. The present case is, in my view, an example of partnerships (and from 1 July 2012, Mr Whitby) running businesses of their own. Whilst it is true that the partnerships were working in the business of another entity, that is not inconsistent with working in a business of one’s own: ACE Insurance at [121], [128]; see also Tattsbet at [61].SUPERANNUATION GUARANTEE (ADMINISTRATION) ACT The applicants sought declaratory relief to the effect that they were employees within the meaning of the SGA Act. A question was raised about whether such declaratory relief would have been appropriate even if the applicants were employees. An application was made during final submissions to amend the originating application to alter the terms of the declaratory relief sought. As I would not grant any declaratory relief for the reasons given below, I refuse leave to amend the originating application. Section 12 of the SGA Act includes:Interpretation: employee, employer(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.…(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. It was not suggested that any other subsection was potentially relevant. The applicants were not employees with the meaning of the SGA Act. They do not fall within the “ordinary meaning” of the word “employee” for the reasons given above. They do not fall within any expanded meaning referred to in the provision. Section 12(3) does not apply. First, the relevant contracts were with the applicants’ partnerships, although in the case of Mr Whitby’s partnership, only until 30 June 2012. I reject the contention that the proper construction of the contractual arrangements was that the parties were the individual drivers, although I accept that, in the case of Mr Whitby, the contractual arrangement was between him and the company from 1 July 2012. Secondly, the contracts were not “principally for the labour of the person”. The contracts were for equipment (delivery vehicles) and labour. The applicants submitted that the contracts were “principally for the labour of the person” because “less than 50 percent of the applicants’ gross income was used to pay their expenses”. I reject that submission. The section focusses on what was provided under the contract, not what cost was associated with the provision of the relevant services and equipment. The contracts were plainly for the provision of substantial equipment and service and, accordingly, not “principally for the labour of the person”.

Ratio Decidendi

Legal Principle Established

On 15 November 2017, Mr Robert Whitby, Mr Martin Jamsek and Mr Robert Robinson commenced proceedings in this Court against six respondents: ZG Operations Australia Pty Limited, Mr Juergen Koprio, Mr Ken Dick, Mr Chris Dixon, Mr Nick Giitsidis and ZG Lighting Australia Pty Ltd. On 7 August 2018, Mr Robinson filed a notice of discontinuance with respect to the whole of the proceeding. On the same day, Mr Whitby and Mr Jamsek filed an amended originating application, which had the effect of abandoning their case against Mr Koprio and Mr Giitsidis. The matter was set down for a three-day hearing commencing 18 September 2018. On 20 September 2018, orders were made by consent dismissing the proceedings against Mr Dick. The matter was listed for further hearing on 28 November 2018 between the remaining parties, namely: ·Mr Whitby as first applicant;·Mr Jamsek as second applicant;·ZG Operations as first respondent;·Mr Dixon as third respondent; and·ZG Lighting as fourth respondent. OVERVIEW The most important question arising in the dispute concerned the nature of the relationship between the applicants and the respondent companies, ZG Operations and ZG Lighting, in particular whether the applicants were, at relevant times, “employees” within the meaning of the Fair Work Act 2009 (Cth) (FW Act) or the Superannuation Guarantee (Administration) Act 1992 (Cth) (SGA Act). A further question was whether the applicants were “workers” under the Long Service Leave Act 1955 (NSW) (LSL Act). The applicants sought various declarations and orders against ZG Operations and ZG Lighting for claimed contraventions of ss 44, 45 and 357 of the FW Act, and s 4(5) of the LSL Act. The applicants also sought orders under s 550(2)(c) of the FW Act against Mr Dixon, who was the “Supply Chain Manager” of ZG Operations and Thorn Lighting Pty Ltd from March 2008 and the “Operations Manager Australia” of ZG Operations from February 2013, on the basis that he was knowingly involved in the alleged contraventions of the FW Act. The final pleadings were contained in an amended originating application and further amended statement of claim. In substance, the applicants advanced the following contentions, as summarised by the respondents and accepted by the applicants as an accurate statement of the claims:(1)Pursuant to s 87(1) of the FW Act and cl 29.1 of the Road Transport and Distribution Award 2010, the applicants were each entitled to four weeks paid annual leave for each year of their (alleged) employment, and they were not given any such paid leave by ZG Operations and/or ZG Lighting.(2)Pursuant to cl 29.2 of the Award, ZG Operations and/or ZG Lighting were required to pay the applicants a loading of 17.5% of the minimum rate specified in cl 15 of the Award.(3)ZG Operations and/or ZG Lighting breached s 90(2) of the FW Act by failing to pay the applicants upon termination of their (alleged) employment amounts owing for leave accrued and not taken in the period 1 January 1986 (or alternatively 25 August 1993) to 20 January 2017.(4)Pursuant to s 96 of the FW Act and cl 30 of the Award, the applicants were each entitled to 10 days of personal leave per year for each year of service. ZG Operations and/or ZG Lighting failed to pay them in respect of their outstanding personal leave entitlements in breach of s 99 of the FW Act and cl 30 of the Award.(5)In breach of s 116 of the FW Act and cl 32 of the Award, ZG Operations and/or ZG Lighting failed to pay the applicants for certain designated public holidays each year on which they absented themselves from work, specifically 2 days in 2011, 9 days in each of the years 2012 to 2014, 8 days in 2015, 9 days in 2016 and 1 day in 2017.(6)Pursuant to cl 27.1 of the Award, the applicants were entitled to be paid overtime for all hours worked outside of ordinary working hours, being 7 hours 36 minutes each day over five days, Monday to Friday. ZG Operations and/or ZG Lighting contravened s 45 of the FW Act and cl 27.1 of the Award by failing to pay the applicants overtime, calculated at a rate of $66.88 per hour for the first two hours of time worked outside of ordinary hours, and $88.88 per hour for overtime in excess of two hours. (7)ZG Operations and/or ZG Lighting contravened cl 13.3 of the Award by failing to give the applicants a total of 10 days of paid time off work to search for another job during their 10-week notice period. (8)ZG Operations and/or ZG Lighting failed to pay the applicants 12 weeks of redundancy compensation, calculated at their weekly contract rate, in breach of s 118 of the FW Act and cl 14.1 of the Award.(9)Pursuant to cl 21.2 of the Award, ZG Operations and/or ZG Lighting were obliged to make such superannuation contributions for the applicants’ benefit to avoid being required to pay the superannuation guarantee charge. ZG Operations and/or ZG Lighting failed to make such superannuation contributions in breach of cl 21.2 of the Award. (10)In contravention of s 357 of the FW Act, ZG Operations and/or ZG Lighting put a contract to the applicants in or about December 2000 (which was subsequently entered into by the applicants’ respective partnerships in 2001), which identified the applicants as independent contractors, not employees.(11)ZG Operations and/or ZG Lighting did not permit the applicants to take long service leave in accordance with the LSL Act during the period they were “workers”, and on termination of their (alleged) employment, ZG Operations and/or ZG Lighting were obliged to pay to the applicants an amount equal to the value of their long service leave accrued over 33.8 weeks and calculated at the weekly contract rate prevailing upon termination. (12)To the extent they were not principal contraveners of the FW Act or the Award, ZG Operations and ZG Lighting, as well as Mr Dixon (for the period 21 November 2011 to 30 April 2015), were each knowingly concerned in or party to the contraventions of the FW Act or the Award for the purposes of s 550(2)(c) of the FW Act. Accordingly, they were taken to have personally contravened the FW Act.