Adele Crane v Spanline Weatherstrong Building Systems Pty Limited [1995] IRCA 567

IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 2500 of 1995 B E T W E E N: Adele CRANE Applicant A N D SPANLINE WEATHERSTRONG BUILDING SYSTEMS PTY LTD Respondent REASONS FOR DECISION 17 October 1995 PARKINSON JR This is an application made pursuant to S170EA of the Industrial Relations Act 1988. The applicant was engaged as State Sales Manager for the product of the respondent. The applicant submits that she was employed by the respondent. The respondent submits that it was not the employer and that the applicant was either an independent contractor or employed by one or a number of its franchisees, although no particular franchisee is identified and no evidence in that regard was called by the respondent. The respondent says that the arrangements entered into were that the applicant would be an independent contractor and, whilst subject to the direction of the respondent in terms of the manner in which the respondent's product was sold and marketed, this was no more than in the nature of the obligations imposed on the various franchisees. The respondent submits that the applicant was engaged as an independent contractor and that in this context she operated independently and free of the limitations, restrictions and accountability applicable to employees. The applicant's evidence was that she responded to an advertisement placed by the respondent in the employment pages of the Age newspaper and that she was employed subsequent to two interviews, one of which took place at the registered address of the respondent in Byron Bay, New South Wales. Her appointment as Melbourne Metropolitan Sales Manager for Spanline Weatherstrong Building Systems was confirmed in writing by letter dated 16 December 1994 (Exhibit R1). That letter, on the respondent's letterhead, was signed by a Mr Glen Cox, whose evidence was that he was retained by the respondent to act on its behalf and continues to be so retained. The letter congratulates the applicant upon her appointment. I am satisfied that the respondent was represented by Mr Cox as its authorised agent. The applicant's evidence was that her understanding was that she was employed by the respondent. The arrangements between the applicant and the respondent were in part identified in Exhibit AC2. That document is titled 'Sales Manager Protocol Agreement'. This document is also relied upon by the respondent as in some way establishing an independent contractor relationship between the parties. This document is referred to in further correspondence between the applicant and Mr Anthony Way, the managing director of the respondent, on 3 March 1995 (Exhibit AC3). That letter constituted a confirmation of the applicant's appointment. The evidence was that the applicant sought written confirmation of actual earnings at that time for the purposes of a bank loan that she was seeking. In that letter the applicant was informed that she was being appointed as Victorian Sales Manager for Spanline Australia, this, as was identified on the letterhead of the respondent, being the respondent's trading name. There was no mention in that letter of any base wage or salary. In the course of Exhibit AC3 reference was made to Exhibit AC2 and, in particular, to the terms and conditions of appointment. In my view the evidence establishes that the applicant was an employee of the respondent and that this was the reality of the arrangements between them, notwithstanding the absence of any reference to "employment" or "employee" in the correspondence confirming the appointment. The respondent relied upon aspect of the sales protocol agreement as establishing the relationship for which it contended, however as I appreciate that document it is clear that it refers to and is contemplating the relationship as one of employer and employee. This is clear not only from the level of direction and control exercised by the respondent pursuant to the agreement, but also from the actual use of the terminology of employment to describe the position. An example of this is contained at what is unnumbered page 4 of Exhibit AC2, where, at paragraph (a), the document states: In accepting the position of Spanline Weatherstrong Building System Sales Manager/Director it is agreed that, .... (a) The Sales Manager/Director shall ensure that all material supplied (written, printed, samples, videos, uniforms, promotional/ display material, photographs, manuals, product engineering data, plans, customer names and addresses, enquiry names and addresses, performance records, operational information, company code of ethics, job description and any other such material that is provided or gained through employment) remains the property of Spanline Australia and the Spanline Weatherstrong Building Systems Franchisee both during the employment and after. In my view any attempt to characterise the applicant as other than an employee is not a true reflection of the arrangements between the parties. The reality of the arrangement was that it was one of employment of the applicant by the respondent. Whilst the respondent attempted to characterise the applicant's involvement in obtaining premises and office equipment for it as being done on her own behalf as an independent contractor, I do not accept that this was so. The duties and tasks undertaken by the applicant in the initial period of the employment were of a type and nature normally associated with a senior manager engaged at the establishment stage of a project or business. The applicant's memorandum during the period to Mr Glen Cox clearly identifies that the tasks were being performed for and on behalf of the respondent. I do not accept the evidence of Mr Tony Way or Mr Glen Cox as to the nature of the employment arrangements between the parties. I find that the applicant was an employee of the respondent and consequently is a person entitled to bring these proceedings. Having thus found I turn now to consider the circumstances of the termination of the employment. The evidence is clear that, subject to some contingencies, the applicant informed the respondent in writing on 23 March 1995 that she intended to end their relationship effective that day. Her evidence was that she resigned as a consequence of the respondent failing and refusing to pay to her the wages she was owed as a result of the employment relationship, and its failure to respond satisfactorily to her repeated written requests in relation to her entitlements and the entitlements of other staff members. This evidence is consistent with the contents of the document of resignation, Exhibit AC5. I have previously considered whether a resignation in such circumstances could constitute a termination of employment at the initiative of the employer and I repeat the observations made in that case as being equally apposite in this matter. In Martin Vincent Appleby v Darbay Pty Limited (unreported, 6 July 1995) I said at page 4: The conduct of the respondent in failing to pay the wages of the applicant on more than one occasion when they were due and payable amounted to a course of conduct in fundamental breach of the agreement between the parties. So too did the conduct of the respondent on 30 January 1995 in refusing to pay the applicant's wages for that prior pay period, or to allow him his annual leave entitlements. These were fundamental breaches of the terms of the contract between the parties. According to the authorities, on mere contractual principles alone, the applicant was entitled to treat the contract as having been rescinded by the respondent, and in the circumstances his employment terminated. See also Western Excavating Ltd v Sharp (CA) [1978] 1 QB 761 at 769. I adopt that approach in this matter. Therefore it is necessary, for the purpose of establishing whether there was a termination of employment at the initiative of the employer, to determine whether there was a contractual obligation to pay wages to the applicant which had not been met. In this matter I am unable to be satisfied that the applicant had an entitlement to payment beyond that of the amount of commission agreed. I am not satisfied that at the time of the resignation there was a fundamental failure to pay to the applicant amounts owed in commission, the evidence being that the applicant was paid approximately $2,000.00 in commission in the period. During the course of the proceedings I enquired as to the application of award regulation to the employment. Neither counsel in the proceeding was able to direct me to any award or like industrial regulation which may establish an obligation to make any minimum wage payment in respect of employees in the class or category of the applicant, and there was no argument upon the application of any state common rule award. None of the documentation up to 23 March 1995 included any reference to or written request for payment of the wages alleged to be owning to the applicant. On 1 February 1995 the applicant, by letter to Mr Cox at Spanline (Exhibit A1 -Doc 7), referred to the necessity for her to earn a certain amount of money each week. She described the amount required as not being a certain sum, but rather said: "unfortunately it is in the $1,000's". There was no mention in this correspondence of any specific amount agreed between the parties as a base retainer, and the discussion was in the context of the need to get the sales operations running as soon as possible to generate income. The only reference to the remuneration of the applicant was to payment of commissions and a request for confirmation as to the manner in which they would be paid. On 2 March 1995 the applicant wrote to the respondent requesting that a letter containing details of the applicable 5 per cent commission structure and the exact date of her commencement be faxed to her for provision to her bank in relation to a property purchase she was pursuing. This request was as a result of a need to satisfy the bank as to her income regularity. The applicant says that she was at the same time continually pressing Mr Cox verbally as to the payment of her outstanding retainer and being reassured by him as to its payment, yet there is no request for details of, or confirmation of, such amount in this letter to the financial institution. On 23 March 1995 the applicant wrote the letter of resignation discussed earlier herein. The contents of that letter includes what is in effect a demand for payment from that time on of an amount of $1,000.00 per week guaranteed income. In the absence of such a guarantee the applicant would not continue her association with the respondent. There is nothing in the correspondence, even at that late stage, which suggests an existing obligation or entitlement to such a payment and there is no reference to any undertaking in that regard having been made by Mr Cox. Rather what was sought to be negotiated by the applicant was a different method of payment to that which had previously been agreed. The letter continues on to indicate that the applicant was considering seeking compensation for "ten weeks loss of income/expenses incurred based on the expectations of income your company outlined." In my view what is being referred to here is the actual arrangement between the parties, and the expected income was based upon representations made to the applicant as to the amount of commissions which would be generated to her. That this did not occur does not however constitute the cessation of the employment as being at the respondent's initiative. The evidence suggests that there were indeed representations as to the potential of the company to generate commission earnings for the applicant. But this is a long way short of a guaranteed minimum or base wage the non-payment of which would constitute a constructive dismissal or termination of employment at the initiative of the employer. Whilst potential earnings and expected earnings were indicated, I am not satisfied, despite the applicant's interpretation of the arrangement, that there was ever a wage rate agreed between the parties. In the absence of a minimum wage operating in the State in respect of the applicant's classification, it does not appear that there was any obligation in this case to make any minimum payment of wages to the applicant. Whilst this is an unsatisfactory state of affairs, it nevertheless results in there being no conduct on the part of the respondent which constituted an initiation of the events which led to the termination of employment. Thus it must be my decision that in this case there was no termination of employment at the initiative of the employer, and consequently the application fails. I am satisfied that the applicant resigned her employment by letter dated 23 March 1995. The order of the court will be that the application be dismissed. I certify that this and the preceding seven (7) pages are a true copy of the reasons for judgment of Judicial Registrar Parkinson. Associate: Dated: 17 October 1995 APPEARANCES Solicitors for the applicant: Holding Redlich Counsel appearing for the applicant: Mr L Carter Solicitor for the respondent: Angus Begg Solicitor appearing for the respondent: Mr A Begg Date of hearing: 23 August 1995 Date of judgment: 17 October 1995