Reid v Mccormack Civil Construction Pty Ltd [1996] IRCA 154

DECISION NO: 154/96 CATCHWORDS INDUSTRIAL LAW - employee or independent contractor. Industrial Relations Court 1988, S. 170 DC, S. 170DE. Re Porter: Re Transport Workers Union of Australia 34 IR 179. Humberstone -v- Nothern Timber Mills (1949) 79 CLR 389. Zuijs -v- Wirth Brothers P/L (1955) 93 CLR 561. IAN MICHAEL REID -V- McCORMACK CIVIL CONSTRUCTION PTY LTD No. TI 1299 of 1995 COURT: WALKER JR PLACE: HOBART DATE: 6TH FEBRUARY 1996 INDUSTRIAL RELATIONS COURT OF AUSTRALIA NEW SOUTH WALES REGISTRY No. TI 1299 of 1995 BETWEEN: IAN MICHAEL REID Applicant AND: McCORMICK CIVIL CONSTRUCTION PTY LTD Respondent CORAM: WALKER JR PLACE: HOBART DATE: 6TH FEBRUARY 1996 REASONS FOR JUDGMENT Division 3 of Part VIA of the Industrial Relations Act is expressed to apply to "employees", however there is no definition of "employee" in the Act other than to say that it includes those "whose usual occupation is that of employee". The respondents defence to this claim for unlawful termination is that the applicant was an independent contractor and therefore has no jurisdiction to bring a claim in this court. In order to determine whether a worker is an employee it is necessary to consider all the circumstances of the employment relationship. In Re Porter: Re Transport Workers Union of Australia 34 IR 179 at page 179, Justice Gray was of the opinion that, " A court determining whether a particular relationship is that of employment or of some other kind can therefore only resort to the process of balancing all of the factors, or as they are called in Stevens and other cases the "indicia". In truth, the result may be a matter of impression. It is unfortunate that this is so. It should not be necessary for people to obtain a decision of a court in order to know the true nature of their relationship. Unfortunate or not, that is the case. Although the parties are free, as a matter of law, to choose the nature of the contract which they will make between themselves, their own characterisation of that contract will not be conclusive. A court will always look at all of the terms of the contract, to determine its true essence, and will not be bound by the express choice of the parties as to the label to be attached to it. As Mr Black put it in the present case, the parties cannot create something which has every feature of a rooster, but call it a duck and insist that everybody else recognise it as a duck." THE INTENTIONS OF THE PARTIES In the present case, the applicant, Ian Michael Reid gave evidence that he approached Mr McCormick in October of 1993 as he was looking for a full time position in the company as a plant operator and filled out an employment application form. Mr McCormick, the applicant said, he was not sure whether there was a position available. However the next day Mr McCormick rang him and arranged a meeting to discuss an offer for work as a plant operator. When asked by counsel as to the conversation the applicant answered, "Ian McCormick offered me a casual basis as a plant operator. I expressed my concern as I was wanting a full-time position. He then offered me a position of no less than 38 hours per week on a fixed rate, which included holidays, sick pay and that that I had to provide myself out of that rate" He was then asked if there was any discussion as to whether he was to be engaged as an independent contractor and he answered that there was no mention of it. The evidence of Mr McCormick and Mr Slott is at odds with the applicant, as to the date and of the contractual agreement and in the circumstances this is understandable as the conversations concerning the arrangements were in 1993. Exhibit No.1, the employment application form is dated the 1st November 1993 and a scribbled note on the bottom of the form says, "started work 10/11/93". This evidence is not consistent with the pay slips, exhibit "R2" which indicate the applicant was paid for 31.50 hours for the week ending 10/11/93, however the evidence given indicates there is even more confusion between the parties as to their intentions. The applicant on the one hand is emphatic that there was no mention of his employment being on the basis of a sub contractor while Mr McCormick evidence is that the applicant specifically requested that he be employed as a sub contractor. When asked what was said between them Mr McCormick replied, "He certainly told me he had his own vehicle. He had a phone. He could take advantage of certain write - offs against some of this stuff and that he'd been an employee for some considerable time before, he wasn't necessarily happy with the situation and wanted to have a go at a sub-contract." Mr McCormick also gave evidence that the applicant requested to work extra hours and there had been an agreement between the parties that the applicant would arrange his own insurance, superannuation and pay prescribed payment system tax. This was not disputed by the applicant. Taking into account the evidence from both sides as to the intentions of the parties it is clear from the respondents side that the reason the applicant wanted to be employed on the basis of a sub-contractor was that he would be able to achieve certain taxation benefits. On the other hand the applicants evidence was that he has not submitted a taxation return since 1982. Further to this is the fact that the respondent supplied a vehicle for the use of the applicant and although the applicant had his own telephone the respondent supplied its own communication equipment and this was used by the applicant. As to any other benefits the applicant could have claimed as a tax deduction, for example his tools, it would seem that these would hardly amount to any real taxation benefit as the respondent owned and supplied all the plant to be operated and carried out their own maintenance and repairs. The majority of the applicants pay slips refer to the applicant as a, "Subcontract Plant Operator", however there is no mention in the application for employment form (exhibit No.1.) as to a sub-contract. Also in the daily site report book, (exhibit No.4.), commencing the 16 August 1995 and concluding on the 24 October 1995 there is provision in the document for recording the various types of workers engaged on site. It is interesting to note that under the heading of "sub-contractors" there is only one day where there is an entry for a sub-contractor and that person is Mr Wally Slott. On all days the applicant has recorded his own hours, as "supervisor". Further to this is the fact that the applicants hours of work are generally the same as the other workers on site with an occasional extra hour added for book work. This evidence certainly conflicts with the evidence of the respondents that the applicant would be working extra hours as a sub-contractor. DEGREE OF CONTROL BY EMPLOYER The ultimate question as to whether a person is acting as an employee or working on his own behalf may be indicated in ways which are not always the same and which do not always have the same significance however it would appear that the degree of control by the employer over the employee in such areas as the mode of work, the place where work is to be performed, the time when the work is to be performed, the designation of the actual work to be undertaken, and the way in which the work is to be carried out is to be considered in the process of the determination. In Humberstone v. Northern Timber Mills (1949) 79 CLR 389 at 404, Dixon J said that, "The question is not whether in practice the work was in fact done subject to a direction and control exercised by an actual supervision or whether an actual supervision was possible but whether ultimate authority over the man in the performance of his work resided in the employer so that he was subject to the latter's order and directions............The essence of a contract of service is the supply of the work and the skill of a man." The applicant in the present case was a plant operator, a driver and operator of graders, bulldozers and like equipment which were the property of the respondent. Mr McCormick gave evidence as to the contract of employment as follows, "That we would find work for Ian on various sites and that his hours would, basically, tie in with the rest of our personnel." When asked, how were work directions given, Mr McCormick replied, "Oh, work direction was given - okay. He was - he would be given a specific undertaking to be done by the works foreman, either, look, we need that trench through there to-day and it would be left to Ian's device as to excavate the trench, or there's a road to be formed out or a dam to be done. He was told, you know, we need that dam dug and left it to Ian. or to, either, if the road needs to be formed out and the levels would be supplied and Ian would carry out that work." It is clear from this evidence that the applicant was subject to a degree of control by the respondent. He was told where he was to work, on what machine he was to carry out the work and what task he was to undertake. He worked the same hours as the other employees although he was allowed to work some extra time if it was safe. Exhibit 4 indicates however, many such hours were involved with book work and not on the machines. As to the argument that the applicant was left to his own devices in carrying out his work because he exercised a degree of skill in its operation was an argument that was also put forward in Zuijs v. Wirth Brothers Pty.Ltd. (1955) 93 CLR 561 in the High Court and rejected when it was pointed out that the mere fact that a person exercised a degree of skill in the performance of his duties did not necessarily preclude him from being an employee. In their joint judgment Dixon CJ Williams, Webb, and Taylor JJ said at page 571, "The duties to be performed may depend so much on special skill or knowledge or they may be so clearly identified or the necessity of the employee acting on his own responsibility may be so evident, that little room for direction or command in detail may exist. But that is not the point. What matters is lawful authority to command so far as there is scope for it. And there must always be some room for it, if only in incidental or collateral matters. Even if Mr Phillip Wirth could not interfere in the actual technique of the acrobatics and in the character of the act, no reason appears why the appellant should not be subject to his directions in all other respects." The applicant in the present case gave evidence that at one stage of his employment with the respondent he was required to work in the yard at Jackson street Hobart. When asked by counsel if this was a frequent occurrence, the applicant replied, "I went back into the yard at Jackson Street to help out with any errands the workshop may want or help with the workshop...........I would help out with anything that may have to be done to the machinery or they would send me on errands to run round and pick up parts or in one particular case I was actually helping one of the welders construct a new workshop." This evidence was corroborated by Mr Slott in his evidence where he said, ".....After the conversation that we had with Ian and he said, well, he's prepared to do anything , that time we were in between a couple of jobs, we were building a workshop next to the existing workshop." This evidence by its self gives a strong indication that the applicant was an employee rather than an independent contractor. This admission that the applicant was prepared to do anything places the applicant squarely in the position of a subordinate who is subject to the ultimate control and authority of the employer. OTHER INDICATORS It was argued by the respondent that the applicant took leave whenever he liked however the evidence of the applicant was that he had to request and apply for any leave that he sought. From the evidence it was clear that over the Christmas period the respondent did close down its operations and during this period the applicant was not paid. There was also a period from about the 7 June 1995 to the 20 June 1995 where the applicant did not work due to a slack period and did not receive pay however the evidence regarding these circumstances does not have much sway either way. The payment of tax by way of the prescribed payment system is of a neutral nature and has little bearing with regard to this application as does the provision of the applicant of his own insurance when the overall view is taken. Generally the applicant worked much the same hours as other employees and was paid in the same manner on the same day. There was argument that the applicant was not solely employed by the respondent because he had hired some equipment from the respondent but this hire was only for a week end and was for the applicants personal use according to the applicant and there was no evidence to the contrary. Mr McCormick agreed that other employees hired the equipment as well. Although for a time the applicant made use of his own vehicle he was subsequently supplied with one for his use at work. In fact he was supplied with all equipment for the undertaking of his work by the respondent with the exception of some personal items he used from time to time. EMPLOYEE OR INDEPENDENT CONTRACTOR Whatever the intentions of the parties were at the time of entering into a contract in October of 1993, I am satisfied that taking into account all the facts and circumstances of the employment the relationship established between the parties was one of employer and employee rather than that of an independent contractor. The factors that bring me to this conclusion are as follows; · the applicant worked exclusively for the respondent during the two years of his employment, · he carried out other duties other than that of plant operator during his employment, · he attended at the place of work determined by the employer on a regular basis at a regular time, · he was expected to be on time and was docked payment when there was any discrepancy with his time sheets, · his hours of work were similar to other employees, · the respondent supplied the equipment for the applicant to use, · there was control of the applicant as to the nature of the work, when the work was to be performed, where it was to be performed and on occasions how it was to be performed, · the applicant did not delegate any of his work. THE REASONS FOR TERMINATION On the 25 October 1995 Mr Slott told the applicant that his services were no longer required. When pressed for a reason for this the applicant said Mr Slott informed him that he was not getting value for money, that the applicant had been drinking on the job, that work was not getting done on the site, that he was continually late for work and that he was not getting on with the other workmen. On the 7 November the applicant received a letter from the respondent stating that his contract was terminated as a result of completion of work at the site on the 24 October 1995. Mr McCormick conceded under cross-examination that he had no particular problem with the applicant's work when he had appointed him as foreman at the New Norfolk site in August 1995 and that the decision to terminate him had been prompted by something that happened between August 1995 and October 1995. Mr McCormick also agreed that there were three reasons for termination, a run-in with a truck driver, a report from a supervisor at New Norfolk and the fact that the contract was coming to an end. The applicant gave evidence that the so called run-in with the truck driver was just a misunderstanding concerning something that was said over the radio and the problem had been sorted out. Mr McCormick was asked in cross-examination about the incident and he replied, "To be fair, it would have-things seemed to have settled down on the site as far as -over that discontent ,yes." As far as the report from the supervisor is concerned, the allegations were never put to the applicant to allow him to respond in fact when the applicant asked Mr Slott what the complaints were Mr Slott in his own evidence said, "Well, for starters, we had Steven Minehan, the truck driver, I said the other allegations that I wasn't prepared to speak any further on." When the applicant asked Mr Slott to give him details about the allegation that he was drinking on the job, Mr Slott said he refused to tell the applicant because he did not know. As to the reason given that the job was coming to an end there is no need for comment. The reasons given for termination of the applicants employment are clearly not for a valid reason and clearly in breach of the requirements of Section 170 DC of the Industrial Relations Act 1988. REMEDY Counsel for the applicant submitted that the applicant should be re-instated to the position he held prior to his termination however, taking into account all the circumstances of this case I am satisfied that such an order would be impracticable. In assessing compensation I am mindful that the applicant is a qualified and experienced plant operator and no doubt a person who would have every chance of obtaining employment within his field without much difficulty. In taking into consideration all of the circumstances of this case I find that the appropriate amount of compensation to be eight weeks pay calculated on the basis of $800.00 per week gross and amounting to $6,400.00, and I do so order. ------------------------- I certify that this and the preceding ten (10) pages are a true copy of the reasons for decision of Judicial Registrar Walker Date: 29 April 1996