Eileen Fitt & HSUA v Department of Health & Community Services [1995] IRCA 613

INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 3530 of 1995 B E T W E E N : EILEEN FITT & HSUA Applicants AND DEPARTMENT OF HEALTH & COMMUNITY SERVICES Respondent Before:Judicial Registrar Murphy Place: Melbourne Date: 17 November 1995 REASONS FOR JUDGMENT Within the public sector dedicated managers often seek to maintain service provision in the face of system-wide budgetary restraints and bureaucratic rigidities. In such an environment the central issue in this application was whether, following the departure of an incumbent employee, the replacement service being provided by the Applicant was as an employee or in some other capacity. Dental Services at Kew Cottages The Respondent, a large department of the State of Victoria, operates a residential care facility known as Kew Cottages (the Agency). For the 630 clients, dental services are provided on site. Prior to, and since February 1994 the services are provided by sessional dentists. Dentists require the assistance of nurses and prior to February 1994 there was a dental nurse on the staff of the Agency. She worked a 38 hour week and assisted the dentists during clinic hours. At other times she performed housekeeping functions in the clinic. In addition she performed other duties such as escorting clients to the Royal Dental Hospital in emergency situations. In January 1994 the incumbent dental nurse accepted a "voluntary departure package ("VDP")". A VDP is a term used to describe a monetary payment to a departing public sector employee. For the government agency involved, however, the terms under which the VDP was issued were that thenceforth the agency would not be provided with funding for the salary costs of the position that had been vacated. The evident intention of the VDP was to force agencies to economise; to do more with less - "there was to be no back-filling of positions." Where the agency still had to maintain the services that had been provided by the departing VDP employee this meant that funds had to be provided elsewhere within the agency budget for that service. So it was that in February 1994 the Applicant, a highly qualified and experienced dental nurse, was advised that a position was available at Kew Cottages. She spoke to the principal sessional dentist, Dr Sutterby, who advised that she would need to complete the formality of an interview with Mr Pat Kelly ("Kelly"), a Sector Manager with the Agency. On 18 February 1994 the Applicant attended an interview with Kelly and Ms Judith Corbett ("Corbett"), the Unit Manager of the Smorgon Health Complex ("the Complex"). Corbett reported, as one of a number of managers, to Kelly, and had budget and managerial responsibility for, inter alia, the dental clinic. At the interview Kelly advised that because the previous nurse had accepted a VDP the staff position as dental nurse was not available. His evidence was that he made it clear that funding for the position was now coming out of the Agency's operating budget, as distinct from the salary budget, and that the proposal was that the Applicant be paid on a four hourly sessional basis, working a total of 8 sessions per week. The Applicant's unchallenged evidence was that Kelly said that because of the VDP requirements the Applicant would not be able to work five days per week, but only four. The Applicant indicated that she wished to be paid $26,000.00 per annum for her duties. Kelly replied that the previous incumbent had only been paid $23,000.00 per annum. He, however, offered her sessional payments based on her salary requirement. Kelly proposed, and the Applicant accepted, that the Applicant work 8 sessions over four days, a total of 32 hours per week. On advice from senior management of the Respondent the Applicant's conditions on a sessional basis were that she was to be responsible for her own Workcover, and "professional indemnity and personal liability insurance". The Applicant was only to be paid for hours actually worked and not to be paid annual or sick leave, or public holidays. The Applicant was required to invoice the Agency each month for the services that she had rendered. No documents were exchanged at the meeting. They were to be drawn up. The Applicant commenced duties on 21 February. On 22 February Kelly wrote to the Applicant (Exhibit A2) making an offer in these terms:- "Further to our meeting of the 18th February, 1994 I write to confirm the offer made to you. POSITION: Dental Nurse (sessional basis) Sessions Maximum 8 sessions per week. Monday to Thursday inclusive. Hours 4 hours per session (minimum) Fees $67.50 per 4 hour session. Workcover That you provide your own Workcover. Insurance That you provide your own Personal Indemnity and Personal Liability Insurance. Payment Payment will be made on a monthly basis. An invoicing system which indicates hours and sessions worked is to be forwarded to the Sector 2 Manager at the end of each month. Payment will be made only for those hours and sessions actually worked. Term This contract shall be effective from Monday, 21st February, 1994 for a period of 3 calendar months." The Applicant did not sign this letter. She took it to her Union, the Second Applicant, to seek advice. She was concerned that payment by the month would cause her financial difficulties. She had never had to provide insurance and Workcover before. Further, when she sought to obtain Workcover insurance she was unable to do so. She was also concerned about the 3 months proposed duration. As a result of these matters she had further discussions with Kelly. On 19 April, Kelly, after seeking advice in relation to the Workcover issue, wrote to the Applicant offering a contract, (Exhibit A3) in identical terms to Exhibit A2, but providing that the Agency provide Workcover "during your sessional periods". The contract was to last for a period of 3 months from 25 April. The contract also proposed to reduce the payment from $67.50 per four hour session to $64.00 per four hour session, reflecting the cost to the Agency of Workcover for the Applicant. The document also provided that where a public holiday fell on Monday - Thursday no additional sessions would be worked. In response to this letter the Applicant wrote a letter to Kelly on 6 May (Exhibit R5). In that letter she asked Kelly to clarify a few issues for her. One of the issues she sought to clarify was whether, given that she was under the direct supervision of dentists for 24 of her 32 hours per week: "I am not an independent contractor but rather an employee. Is this correct?" She also sought to clarify, if she was an employee, deduction of taxation from her wages, and worker's compensation arrangements. On 11 May 1995 there was a meeting between the Applicant and Kelly. The evidence was that the Applicant wanted to become a permanent staff member with the Agency. I am satisfied that Kelly advised the Applicant at that meeting that his hands were tied "on the matter of employee/sessional position". He advised that a staff position for a dental nurse did not exist on either a full time or casual basis. He also advised her that he had raised with the dentist, Dr Sutterby, that the dentist actually employ her but he had declined. He further advised her in that meeting that the basis of her sessional remuneration ($1,084 per fortnight) was she would be paid $26,000 per annum but this was calculated on a sessional basis over 48 weeks. After the meeting the Applicant sought a meeting between Kelly and her union representative, Mr Etterschank ("Etterschank"). Before that meeting Kelly advised the Applicant that he had sought advice and it was not possible for the Agency to change the position of the Applicant's status as a sessional nurse. At a meeting with Etterschank the latter raised the issue that the Agency appeared to be in breach of the law by failing to deduct PAYE taxation from the Applicant's remuneration. Kelly's evidence was that he advised Etterschank that the Applicant was in the same position as other contractors of the Agency such as dentists and "we don't pay their taxes". Following the discussions between the Applicant and Kelly in May the status quo continued. The Applicant was paid fortnightly and the Agency accepted responsibility for Workcover. The Applicant did not sign any written agreement with the Agency. The proposed reduction in the sessional payment from $67.50 to $64 to cover the Agency's Workcover cost did not eventuate. Nothing was said at the expiration of the three months contract period referred to in Exhibit A3 and the Applicant continued working. In September the Applicant wrote to Kelly in these terms (Exhibit R3):- "It has been several months since our discussion regarding the terms of my employment with Kew Cottages. Understanding the difficulties that you are faced with I am prepared to work along the current lines, however I do wish to have Workcover by Kew Cottages. I would appreciate your attention to this matter enabling me to report back to David Etterschank." Kelly put the question of further negotiations with the Applicant in the hands of Corbett who presented to the Applicant in November a proposed contract (Exhibit A4) in virtually identical terms to that proposed in April (Exhibit A3). The only significant difference was that the reference to personal liability insurance had been deleted and the number of sessions was described as "maximum 8 sessions per week within the period Monday - Friday only". The contract was to be effective for a period of six calendar months from 1 December. The Applicant did not sign this contract. She continued working. In relation to the working relationship between the parties three other matters are of significance. The first was the issue of public holidays. The Applicant was originally to work Monday - Thursday. At some stage Kelly agreed with the Applicant that where a public holiday fell on a Monday the Applicant could work on the Friday of that week to maintain her 4 days/8 sessions per week arrangement. This Monday - Friday arrangement for the provision of the 8 sessions appears to be reflected in the November contract (Exhibit A4) referred to above. Something similar occurred around Christmas 1994. The dentists were to be on leave so it appeared that the services of the Applicant were not required. The Applicant proposed to Corbett that the Agency retain the services of other dentists so that the clinic could remain functioning as the Applicant did not wish to take any leave at that time. Corbett managed to arrange other dentists so that the Applicant's services were utilised over the holiday period. Another matter which arose in late 1994 was that the Applicant became aware that her daughter, in the United Kingdom, was expecting. She raised with Corbett "the not unreasonable" (Corbett's evidence) request that she have a period of leave around the time of the birth. In April 1995 the Applicant renewed the request. Corbett said that there would be no difficulty and asked the Applicant for the precise dates. Corbett maintained however that the Applicant did not really need to obtain permission. Corbett arranged for a dental nurse from an agency to replace the Applicant and there was a short changeover period. The Applicant went on leave on 18 May 1995 and was due to return to work on 22 June 1995.