Robert M Barnett and Australian Municipal Administrative and Clerical Services Union v Shire of Augusta - Margaret River [1995] IRCA 30

IN THE INDUSTRIAL RELATIONS COURT ) OF AUSTRALIA ) WESTERN AUSTRALIA ) DISTRICT REGISTRY ) No. WI 221 of 1994 B E T W E E N ROBERT M BARNETT - First Applicant and AUSTRALIAN MUNICIPAL ADMINISTRATIVE AND CLERICAL SERVICES UNION - Second Applicant -v- SHIRE OF AUGUSTA - MARGARET RIVER - Respondent BEFORE: JUDICIAL REGISTRAR WHEELER DATE: 10 JANUARY 1995 PLACE: PERTH REASONS FOR JUDGMENT By notice of motion dated 18 October 1994, the Respondent seeks orders:- (1) That the Applicant's application under S170 EA of the Industrial Relations Act be dismissed for want of jurisdiction; (2) The Applicant pay the Respondent's costs of this application. It is not in dispute in this case that from 1982 until July 1994 the applicant worked as a recreational centre manager for the respondent. He was first employed under a contract dated 31 August 1982 which was expressed to be for a term of one year. That contract was in writing. It was renewed, apparently with some variation from time to time, in subsequent years. In 1991, a further written contract was entered into, which was expressed to be for a term of three years. That contract was not renewed. In May 1994 the respondent advertised the position. The applicant applied but was unsuccessful in his application. The respondent submits that its relationship with the applicant falls outside Division VI of the Act because the applicant was not at any time its employee, but was rather an independent contractor. The series of contracts entered into between the respondent and the applicant referred to the applicant as "the contractor" and expressly provided: "nothing herein contained creates a partnership or the relationship of employer and employee between the municipality and the contractor". (Exhibit A, affidavit of Mr Preston, KSP5 and KSP9; exhibit B, affidavit of Mr Brown, AGB3 and AGB6). Such an assertion in a contract is in some cases an important indicator, but cannot be decisive. If the true relationship of the parties is that of employer and employee, the parties cannot alter that relationship by putting a different label upon it. Of course, if the relationship is ambiguous then the agreement itself may remove the ambiguity. (AMP Society v Chaplin (1978) 18 ALR 385 at 389). In determining whether an employer/employee relationship exists, an important factor is the degree of control which the employer exercises over the worker. The existence of control, while significant however, is not the sole criterion by which the relationship is judged. There are a number of indicia which must be considered in the determination of that question, so that each case will depend upon its own particular circumstances. See Stevens v Brodribb Sawmilling Company Pty Limited (1986) 160 CLR 16, particularly at 24-27. In this case, the contract itself provided for a substantial degree of control, in that the recreation centre manager was required to comply with directions of council officers (clause 3(1)) and was required to obtain permission before delegating any tasks to any other person (clause 2(j)). Clearly, a substantial degree of formal control was possible. As to the degree of actual control, which is also a relevant although not decisive criterion, the evidence of the two principal witnesses for the respondent differed somewhat. Mr Preston in cross-examination recalled that he had, he thought, given express permission to the applicant to employ his employee Norma Guthrie. Further, he gave evidence that he and the applicant would discuss certain promotions and certain ideas of the applicant's, and Preston might indicate to the applicant on behalf of Council that certain things would not be allowed. For example, because of the fear of damage to the floor, activities such as roller skating and rock concerts were forbidden. Mr Brown however, who apparently replaced Mr Preston, recalled that his discussions with the applicant were more in the nature of simple reports during which the applicant would explain to Mr Brown what had been happening at the centre and what maintenance needed to be carried out and so on. Mr Brown said that he would veto certain sports or promotions only if they required additional funding from the respondent which the respondent was unable or unwilling to provide. Turning to the other possible indicia of a relationship of employer and employee or independent contractor, the respondent points to these factors:- (1) The applicant in fact employed one Norma Guthrie as his employee to assist him in the business of sports centre manager. He, not the respondent, was responsible for her remuneration and conditions. While this may certainly point to the applicant being an independent contractor, it is clear that a person may employ others to provide at least minor assistance with his tasks, without taking himself outside the role of employee (AMP v Chaplin (1978) 18 ALR 385 at 391). Further, it is not entirely correct to regard Norma Guthrie as the applicant's employee alone. During the time that the applicant was on recreation leave, during which time on his evidence he received his usual retainer and commission, the respondent employed Norma Guthrie for four weeks in several successive years so that he could have his holidays and during that time the respondent paid her direct. (2) The applicant received his remuneration by submitting monthly invoices. He was paid each month one‑twelfth of an agreed retainer, plus a commission which varied from month to month but which in each case related to the amount taken by the centre. Additionally, he operated a shop known as "Barney's Sports Shop" on the recreation centre premises which hired out racquets, soft drinks, et cetera. From this business he received all of the takings. Again, it should be noted that a commission or piecework system of remuneration casts little light on the relationship in question (FCT v Barrett (1973) 129 CLR 395 at 405-6). (3) The applicant took out his own worker's compensation policy in respect of his own employees, and a public risk policy. These were contractual obligations. He received no annual leave, sick leave or long service leave. PAYE tax was not deducted from his income by the respondent until a ruling by the Commissioner of Taxation in 1993/1994 financial year. All of these factors do tend to suggest that the applicant could be regarded as an independent contractor. They are in my view important but by no means decisive indicators. (4) From the 1988 to the 1993 income years, the applicant lodged his income tax returns as a business proprietor rather than an employee, and he conducted other businesses in which he had an interest during those years, they apparently being "Gum Tree Cottage Herbal Gardens" and a tree farming business. So far as the taxation arrangements are concerned, they seem to me to follow from the contractual arrangements indicated at point 3 above. Again, the applicant's self‑description is relevant but by no means decisive. The other businesses I do not regard as significant. It is clear from the income tax returns which have been tendered in evidence that the income derived from other businesses was of a relatively minor nature. In his evidence the applicant described them as essentially hobby businesses, and nothing in the materials casts any doubts on that description. Pointing to an employer/employee relationship, are three sets of factors. Those factors relate to control, permanency, and use of the respondent's facilities and may be explained briefly as follows:- (a) Clearly there was in the contractual documents a significant degree of control provided for, albeit in fairly general terms. The actual day to day control of the centre was, as I have noted, subject of some difference of emphasis in the evidence called on behalf of the respondent. What seems not to be in doubt is that the respondent was responsible for setting the fees which could be charged for use of the recreation centre, that it was responsible for setting at least some minimum opening hours of the centre, and that the business which it allowed the applicant to conduct from the sports store on the premises was limited (although this limitation may have existed only in the early days of its operation. It seems to have stemmed from a desire to limit competition with other retail outlets elsewhere in the shire). (b) The applicant's contract with the respondent was renewed annually for more than a decade. The contract was often renewed retrospectively; the applicant simply continued in his business past the stated expiry date of the contract, and at some point during the year following, the shire would declare the contract "renewed". During all of this time, the contract was never advertised. Indeed, it seems that it was not advertised when the applicant first entered into it. He was a replacement for one, Earl, who had earlier been manager of the recreation centre. There had been an advertisement, to the best of Mr Preston's recollection, prior to Earl's appointment but when Earl left it seems that it was simply thought that Mr Barnett was available and he was offered the position. There was some argument on both sides as to whether, if this was indeed an independent contractor relationship, the arrangements breached the Local Government Tendering Regulations. I do not think it necessary to resolve that question. In the context of this case what is important to note is that the relationship was characterised by the "elements of stability and continuity which are such a central part of every contract of service extending over a period of time". (BWIU v Odoco (1991) 91 ALR 735 at 753, FCT v Barrett (1973) 129 CLR 395 at 406). Until 1994, it seems not to have entered the head of either party that the contract would not be renewed or that any person other than the applicant might be invited to apply for the position. (c) The applicant made substantial use of the respondent's facilities in carrying out his duties. This is not a case in which the evidence is all one way on that point. It is clear from the applicant's taxation returns that he supplied some, fairly limited, equipment, that he carried public liability insurance for the recreation centre and that he advertised its programs. However the evidence was that the respondent owned the premises, made arrangements for maintenance, supplied the applicant with typing facilities, with receipt books, with photocopying facilities and with a telephone. The applicant had delegated authority to order equipment on council order vouchers for the centre, according to Mr Brown. There seems to have been no attempt to set off these expenses against any income earned by the applicant by way of commission. Rather, they were simply absorbed by the respondent. In my view, although the indicators are by no means unequivocal, the control exercised by the respondent over important aspects of the operation of the recreation centre, and the degree of day to day supervision which existed at least during Mr Preston's day, combined with the stability and permanency of the applicant's duties and the rather limited nature of the contribution he made to the business of running the centre over and above simply supplying his labour, all establish the relationship between the applicant and the respondent as one of employee and employer. The Respondent's Motion is dismissed. I certify that this and the preceding 8 pages are a true copy of the reasons for judgment of Judgicial Registrar Wheeler. Associate: Date: Applicant: Mr M F Williams Respondent: Mr J L Sher Date of hearing: 10 January 1995 Date of Judgment: 10 January 1995