Clarke v Custom Security Services Pty Limited (A.C.N. 052 469 164) [1996] IRCA 108

CATCHWORDS INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - EMPLOYEE - INDEPENDENT CONTRACTOR - COMPENSATION Industrial Relations Act, 1988 Ss 4(1) 170 EA and EE Stevens v. Brodribb Sawmilling Pty Limited 63 ALR 513 Purvis v. Chieftain Management Pty Limited (unreported, Judgment No 527/95, 29 September 1995) JASON DENNIS CLARKE v CUSTOM SECURITY SERVICES PTY LIMITED (A.C.N. 052 469 164) No. AI 1359 of 1995 CORAM: LINKENBAGH J.R. PLACE: CANBERRA DATE: 15 MARCH 1996

IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY No. AI 95/1359 BETWEEN: Jason Dennis CLARKE Applicant AND: CUSTOM SECURITY SERVICES PTY LIMITED (A.C.N. 052 469 164) Respondent CORAM: JUDICIAL REGISTRAR LINKENBAGH PLACE: CANBERRA DATE: 15 MARCH 1996 REASONS FOR JUDGMENT (Delivered ex tempore, revised from transcript) This is an application made pursuant to the provisions of section 170EA of Industrial Relations Act, 1988 in which the applicant seeks a remedy in respect of the termination of his employment by the respondent which became effective on 2 November 1995. I make a formal finding that the employment commenced on 1 September 1995. The evidence in that regard is the evidence of Ms Hamilton, who witnessed the signatures of the applicant and Mr Newell on behalf of the respondent and who gave very clear evidence to me that the date on the agreement between the parties is in her handwriting that it was definitely 1 September 1995. The applicant's statement in his initial application that he started work on 11 July 1995 is not supported by the evidence. The applicant's evidence as to how he pinpointed the date of 11 July is that that was the date on the Employment Separation Certificate, a copy of which is Exhibit B. That document was completed by the respondent. The applicant in using the date of 11 July is not relying on any independent recollection of his own or on any other evidence before me, other than the separation certificate. The evidence of the respondent's witness, Ms Hamilton, quite clearly is that the date on the separation certificate is incorrect. There are several questions of law arising in these proceedings. The first is whether or not the applicant is a person who is entitled to bring an Application. The respondent asserts that the applicant was an independent contractor and that he therefore is not an employee, so as to bring him within the requirements of section 170EA, which grants the right to bring an application to "employees". The Act defines the word "employee" in section 4(1) as: "Employee" includes any person whose actual occupation is that of employee That definition is, at first blush, circuitous and totally unhelpful and what it does is to put back to the Court the question of whether or not, on the evidence before the Court, the relationship between the parties is that of employer and employee or something else. The Judges of the Court have on many occasions looked at the issue of whether or not a person in a particular case is an employer or an employee. The decision of Justice Marshall in Purvis v Chieftan Management Pty Limited is one of the most recent decisions and in that case His Honour referred to an earlier decision of Justice Gray in an earlier case to the effect that "You cannot call a rooster a duck" and the fact that the parties, or one of them, seeks to call the rooster a duck does not make any difference. The rooster is still a rooster and the duck is still a duck. And that is the reasoning that is appropriate in considering the evidence in this case. The respondent in relying on his assertion that the applicant was an independent contractor, relies on a document, a copy of which is Exhibit A, and is entitled "Contract of Installation Person". That agreement makes provisions as to the duties which are to be performed by the sub-contractor and details those duties as, in summary: installing alarm systems and other items, being responsible for outgoings such as income tax, provisional tax and other forms of taxation, payment of insurance including accident and other insurance required by law, whatever that might mean, payment of insurance to cover damage done to clients' property; payment of his own holiday pay, long service pay, superannuation and time not worked due to accident or sickness or any other reason; provision and maintenance of his own motor vehicle; and provision of and payment for his own petrol, oil and vehicle insurance. The agreement goes on to specify that the contractor's only responsibility is to pay the sub-contractor the sum of $100 per day worked installing the products of the respondent, or such other amount as might be mutually agreed. The contract finally provides that it is a contract for one year which is terminable at the end of that year by one month's previous written notice and provides for re-engagement on one month's written notice. It does not specify on what terms the re-engagement might occur. The final paragraph of the agreement purports to be an express acknowledgment by both the parties that the agreement is not an agreement for employment, and that the respondent will not be responsible for any of the matters in respect of which responsibility is assumed by the sub-contractor pursuant to the terms of the agreement. The applicant argues that in spite of that agreement, the fact was that he was an employee, if you like, in heavy disguise, that everything that he did in the course of his day's work, together with the manner in which he came to have the work in the first place and to enter into the contract in the first place, points to his being an employee. In that argument, he relies on the fact that he came to meet the respondent and take up the position because of an advertisement in The Canberra Times in the "Positions Vacant" column. He is a young man, aged 20 years. He could be said, I think, to be relatively unsophisticated generally, and particularly in relation to dealings with prospective employers. His evidence was that he answered the advertisement and that he was, in effect, desperate for the job. I quote his words, "At the time, I was just interested in work." He had worked in the field of installing alarms previously for some months in Queensland, and this job suited him because of that previous experience. He went to an interview with Mr Newham, at which it may well have been that the terms of the agreement were read over to him. It may even have been that the terms of the agreement were explained to him in some detail by Mr Newham, but his evidence was that he did not understand the meaning of what he signed, and that he was motivated by the desire to get work. He in fact started work the following Monday. The obligations which were put on the applicant by the agreement in relation to payment of tax and insurance and so on, remained responsibilities which he accepted, albeit unclear on the evidence as to what extent he actually performed those obligations. The respondent certainly did not make any Income Tax deductions, did not pay Superannuation Guarantee Levy contributions, and did not cover the applicant for Workers Compensation and did not pay him holiday pay or sick leave. The applicant provided his own motor vehicle to some extent, although at times when work took the applicant out of the Canberra area, the respondent provided a vehicle. The respondent also, for part of the time when the applicant was employed, provided a telephone and he provided, at least a staple gun, if not some other tools, for use by the applicant. The manner in which work was arranged by and for the applicant is an important question in considering whether or not the relationship can be categorised as an employment relationship. The considerations that apply to assist in determining the true character of the relationship are considered in the matter of Stevens v Brodribb Sawmilling Pty Limited, which is reported in 63 ALR 513. In that case, I think it is fair to summarise what the High Court said, as that no single test can be applied to determine the matter one way or the other, that in every case one has to look at the overall circumstances and it is a matter for the Court in the particular case to decide on which side of the line the arrangement falls. The High Court disagreed with some earlier cases in which it had been attempted to suggest that the test of the measure of control of the worker by the boss, was a telling factor. It is certainly a major factor, but only one of the factors to be taken into account. In this case I find on the facts that the respondent exercised almost complete control over the applicant in the performance of the work. The respondent arranged the work with the customers. The respondent selected the materials which were to be used for the job. The respondent gave the instructions to the applicant as to where to go and at what time to go. The respondent made the contract with the client and the applicant had no authority whatsoever in relation to making arrangements with the client. The only freedom on the evidence before me that the applicant could exercise in his day's work was, in consultation with his fellow workers, to decide the precise location in which items of equipment was to installed, and the precise detail of the manner in which the alarm system was to be installed at particular premises. I have no hesitation in finding that the respondent exercised a high degree of control over the day-to-day discharge of the applicant's work duties. Another factor is the availability of work. Mr Newham for the respondent, gave evidence that work was available on a day-to-day basis and that the employee telephoned each afternoon between the hours of 2.00pm and 4.00pm and indicated whether or not he would be available for work the following day, and that Mr Newham would then telephone him back and give him instructions for the next day's work. That practice was not put to the applicant in cross-examination and is directly in conflict with the applicant's evidence that he did know in advance what he would be doing on any particular day. His evidence was that he went to the head office of the respondent at 7.00 am each morning and that he was then informed as to where he would go and what he would do that day, although he did agree that if he was going to be sent to the country where he would be away overnight, he was given some notice of those arrangements. I preferred the evidence of the applicant. It was within the respondent's power to adduce evidence to support his contention about the method for making arrangements for work, and he has not done so. In addition to that, overall, whilst the applicant's memory is appallingly bad, I find that on a comparison of the credibility of the applicant and Mr Newham I prefer the evidence of the applicant generally. It was not, on the evidence before me, open to the applicant to refuse to come to work, or to not make himself available for work on any day. He was committed to working for the respondent, or to making himself available for work for the respondent, Monday to Friday, every day of the week, and I accept his evidence, in response to a question from me, that had he indicated that he was unavailable, he would have not been given any more work. The method of payment of the wages, or remuneration to the applicant, is another factor which assists in determining the nature of the relationship. The applicant's evidence was that he was paid regularly on a Monday and that every week, for the weeks that he was employed, apart from the time when he was off work with an injury, in respect of which he received no payment, he was paid with a cash cheque every Monday morning. His evidence was that that cheque was always $500 except for one week when he had not worked on one day and in that week his pay cheque was $400. The applicant gave evidence that he did not submit any invoice or claim for payment to generate payment of those cheques to him. The respondent's evidence was an assertion that invoices were submitted and an assertion that the payments were not in amounts as regular as was indicated by the evidence of the applicant. Again, it was within the respondent's power to bring evidence before me to contradict that of the applicant or to indicate to me exactly what the arrangements were for the payment of remuneration, and the respondent has not done that. I accept therefore, that the applicant was paid regularly on a Monday morning the sum of $500 per week and that payment to him was not dependent upon the submission of invoices. A further piece of evidence which tends to support the view that this was really an employment relationship, is the Employment Separation Certificate which is Exhibit B. It is completed by Mr Newham's wife on behalf of the respondent and it indicates, quite clearly, that Mr Clarke was an employee. It is the usual form of certificate used by the Department of Social Security and it indicates that the employment was terminated due to shortage of work. Mr Newham had no knowledge of the issue of this certificate until today. The applicant gave evidence that he asked Mrs Newham for something to satisfy the Department of Social Security so that he could obtain benefits from the department and this is what he was given. If the situation was not an employment situation, then it was open to the respondent to produce some other documentation to let the Department know exactly what the arrangement had been up to that date and the respondent did not choose to do so at that time. And the final and the most telling factor in my mind as to the evidence as to what the arrangement really was, comes from the evidence of Mr Newham himself. It was put to Mr Newham in cross-examination that the purpose of the contract was to avoid his obligations as an employer and he agreed with that proposition. I put to him that, following on from that, the purpose was to avoid all that flows from that relationship and he answered that question in the affirmative. Taking all of these matters into account, there is overwhelming evidence, in my view, that this relationship was a relationship of employer and employee and that the applicant was an employee within the meaning of the Act, and has therefore the right to bring an application under section 170EA. Turning to the question of whether or not there was a termination at the initiative of the employer, the facts are that on 2 November, the applicant arrived at work at about 7.00am. His evidence was that the latest he arrived to work in the morning was at 7.10am and I accept that that was so. Mr Newham's evidence was that he had indicated to the applicant the day before that he would be required to work at Young on 2 November, and that the applicant was required to leave Canberra at 7.00am. Mr Newham attempted to retract that statement as to the starting time for 2 November later in this evidence, but I find that in his evidence-in-chief, he said that the applicant was required to leave Canberra by 7.00am to start work in Young at 9.00am. The applicant's evidence is that he was not told the day before, and that when he arrived at work at 7.00am on the morning of 2 November, he was then informed for the first time that he had to go to Young and that he told Mr Newham that it was not appropriate for him to go away from Canberra that day because he had a commitment of a personal nature at 7.00pm that evening, and that going to Young may mean that he would be late back and miss that commitment. I accept the applicant's version of what happened on the morning of 2 November, and that is that when the applicant indicated that he was not prepared to go to Young that day, he and Mr Newham exchanged some words, resulting in Mr Newham's removing materials from the applicant's vehicle and saying words to the applicant to the effect that he could go, with such an air of finality that it was reasonable for the applicant to presume that he was no longer welcome in the employment relationship with Mr Newham or the respondent. In those circumstances, I find that there was a termination at the initiative of the employer. I note that the respondent argues that there has never been anything done or said to bring the contract to an end. I note the terms of the Separation Certificate, and I also note that the respondent did nothing, if it was in any doubt as to what the relationship was after 2 November by way of any attempt to clarify with the applicant the fact that in its mind, the contract was still on foot. I find that that termination was not for a valid reason and that the applicant is therefore entitled to a remedy. The amendments to Section 170 EE of the Act, which came into effect in January this year, apply to this case. I have considered whether, in all the circumstances of the case, I should decline to make an order and I have decided that it is appropriate in the circumstances of this case for an order to be made. I have some difficulty in quantifying the terms of any compensation which should be payable. It is common ground between the parties that reinstatement is not practicable and, given the history of the matter and the attitude of Mr Newham, I certainly do not have any difficulty in concurring with the parties' submission that reinstatement is impracticable. I have to do my best, therefore, to calculate compensation on the evidence before me and there is a significant dearth of evidence in that regard. The applicant has become re-employed and it would appear that he has been re-employed for about the last three weeks on a full-time basis with the Jewel Supermarket in Queanbeyan, where he is earning $300 per week. I have not been told whether that is a gross or a net amount. The amount that he was earning with the respondent was $500 per week gross. The applicant also told me that between some time after Christmas 1995 and becoming employed full time at Jewels he worked part-time at Jewels for sometimes one day a week and sometimes a day and a half a week, and when he worked for a day a week he earned $70. The amount of compensation which I can calculate is therefore $7,000, a figure which I consider, in my discretion, to be appropriate given the evidence. I note that there was no payment in lieu of notice made pursuant to Section 170DB. The applicant was employed for not more than a year and I propose to order the payment of one week's pay in lieu of notice pursuant to the provisions 170DB(2). I propose to also request the Registrar of the Court to send a copy of these reasons to the Commissioner for Taxation and to the Commissioner for Superannuation. I certify that this and the preceding ten (10) pages are a true copy of the Reasons for Judgment of Judicial Registrar Linkenbagh Stephen Williams Associate Date: 29 March 1995 Solicitor for the Applicant: Mr P Bevan Baker Deane and Nutt Representative of the Respondent: Mr J Londos Master Builders Association