Australasian Meat Industry Employees' Union, Newcastle & Northern Branch v Australian Independent Contractors Agency and another

LEGAL REPRESENTATIVES: RESPONDENT Counsel Mr C Jessup for AICA Solicitor Mr H Lee for Sunnybrand Chickens

JUDGMENT: - 33 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: HARRISON DP Thursday, 19 August 2004

Matter No IRC 4677 of 2003 Notification under s 130 by The Australasian Meat Industry Employees' Union, Newcastle and Northern Branch of a dispute with Australian Independent Contractors Agency and another re breach of award

1 The proceedings in this matter ensue from a dispute between the Australasian Meat Industry Employees' Union, Newcastle and Northern Branch ("the Union") and Sunnybrand Chickens (SBC), (Matter No IRC 3601 of 2003), notified by the Union on 1 July 2003.

2 Matter No IRC 3601 of 2003 was subject to proceedings before the Commission as presently constituted subsequent to unsuccessful conciliation before Mr Commissioner Ritchie and the exercise of right pursuant to s173 of the Industrial Relations Act 1996 ("the Act").

3 During the course of conciliation in these proceedings the Union filed a Notice of Motion with an Affidavit of Urgency on 28 August 2003. Due to the unavailability of the Commission as presently constituted the matter was reallocated to Haylen J who heard the application for Orders pursuant to the Notice of Motion in part.

4 In proceedings on 22 September 2003 before his Honour Haylen J this matter (Matter No IRC 4677 of 2003) was joined with Matter no IRC 3601 of 2003 and Orders and Directions were made. The proceedings in both matters were returned to the Commission as presently constituted for conclusion. 5 Proceedings continued in respect to the issues particularised in IRC 3601 of 2003 resulting in a decision published on 27 October 2003 ([2003] NSWIRComm 361) ("SBC No 1"), which brought proceedings in that matter to conclusion.

6 The issues in dispute in this matter were then subject to unsuccessful conciliation. Directions issued and arbitration proceedings took place, concluding on 17 March 2004.

7 The arbitration proceedings were conducted in Byron Bay and included an inspection of the SBC Byron Bay processing plant and a chicken boning facility operated by SBC at Bangalow.

8 Mr M Stroppiana appeared on behalf of the Union with Ms K Evans. Mr C Jessup of counsel appeared with Mr J Young for AICA. Mr H Lee, solicitor of New Workplace Relations, appeared on behalf of SBC with Ms R Holloway.

9 Mr Stroppiana brought evidence from Ms K Evans, Secretary of the Union; Mr Paul Brown, Assistant Secretary of the Union; Ms K Radnidge, Organiser of the Union; Mr Gary Monley, and Mr Warren Knight, former employees of SBC now working as contract boners with AICA

10 Mr Jessup tendered part of an affidavit by Mr Corey Wendle filed by the Union and not called. There was no objection to the tender (exhibit 35).

11 Mr Lee relied upon the earlier evidence of Mrs Holloway, Assistant General Manager of SBC, who was not recalled. Mr Lee also tendered correspondence between Mrs Holloway and Ms Evans.

12 The notification giving rise to these proceedings describes the industrial matters in dispute in the following terms: i) The Australian Independent Contractors Agency is engaging workers under terms and conditions which breach the Poultry Industry Preparation (State) Award;

ii) The AICA maintains these workers are independent contractors however the Union maintains they are employees;

iii) These workers are being trained to replace members of the Union employed at Sunnybrand Chickens, Byron Bay.

13 In directions issued to bring the matter to arbitration the Union was required to specify the remedy sought. In response to those directions the Union sought an award be made to cover SBC and AICA in terms similar to the Poultry Industry (State) Award 325 IG 87 ("the Award"). There was consensus between the parties that the threshold issue for determination was that expressed in item (ii) of the notification, i.e. whether the workers were independent contractors or employees.

THE EVIDENCE 14 The evidence of Ms Evans was by affidavit (exhibit 8) and orally. Ms Evans detailed various disputes with SBC dealing with the proportion of casual employees engaged and the intention to contract out boning work from the year 2001.

15 Ms Evans deposed that the Union became aware in late August 2001 of plans by SBC to introduce independent contractors. This resulted in a notification of dispute by the Union pursuant to s 130 of the Act heard by Murphy C (IRC 6043 of 2001). It is put that this dispute was resolved by a withdrawal of plans by SBC to introduce contractors.

16 Ms Evans' evidence is that the issue arose again in early 2003 and was subject to various correspondence from the Union to SBC, much of which Ms Evans deposed SBC did not respond to. Meetings took place between Ms Evans, Ms Radnidge and Mrs Holloway in respect to the contracting issues in June 2003.

17 Ms Evans deposed that Mrs Holloway informed them that due to the cost impact of more generous superannuation payments to staff, increased worker's compensation premiums, and the requirement for additional space which could not be achieved at Byron Bay due to environmental considerations and local government restrictions, chicken boning would be removed to additional facilities at Bangalow.

18 Ms Evans, supported by the evidence of Ms Radnidge, deposed that offers of assistance to review worker's compensation premiums within the structure of the Workcover industry reference group were not taken up by SBC. Ms Evans deposed that she was later advised by Ms Radlich that SBC were pursuing arrangements with AICA which again placed the parties in dispute.

19 Ms Evans, supported by Ms Radnidge, deposed that the Union had never agreed to contracting out of boning work, though had been supportive of a transfer from Byron Bay to Bangalow of employees covered by the Award.

20 Ms Evans deposed that she instructed Mr Paul Brown, Assistant Secretary of the Union, to investigate suspected breaches of occupational health and safety matters at the Bangalow site.

21 Mr Brown undertook the safety inspection of the Bangalow site as instructed on 25 September 2003.

22 Mr Brown's evidence details a visit to the Bangalow site on 25 September 2003, accompanied by Mr Vierow and Mr Green, inspectors from Workcover Authority of NSW.

23 Mr Brown deposed he had some difficulty identifying the person and legal entity responsible for the facility. Mr Brown deposed that Mr Alex Saris identified himself as the Assistant Production Manager for SBC at Byron Bay, a role he combined with that of Occupational Health and Safety representative and Chairperson of the Occupational Health and Safety Committee. Mr Brown deposed that he informed Mr Saris of the conflict of interest in those roles.

24 Mr Brown's evidence is that Mr Saris denied any authority for the Bangalow premises and attended only to participate in the safety inspection on behalf of SBC.

25 Mr Brown deposed that the safety inspection was frustrated by the absence of any person/s with management responsibility at the Bangalow facility.

26 Mr Brown's evidence is that he was told that a Mr Dillon was in charge though he was away that day due to illness in the family, and a Mr Neville was substituting for him. Mr Brown's evidence is that Mr Neville informed him that this was the first occasion on which he had been in charge and questioned his own adequacy to answer any questions raised. Mr Brown deposed that neither Mr Saris or Mr Neville could provide a copy of evacuation plans, risk assessment, or workers compensation policy covering the premises, the work carried out there or the workers involved.

27 A Mr Wynen was identified as a representative of AICA whom Mr Brown deposed was at the premises at the time of his arrival and again later but made no contact or discourse with him.

28 Subsequent to the inspection Mr Brown forwarded correspondence to Mrs Holloway, dated 29 September 2003 (exhibit 13), setting out seven particular safety concerns identified during the course of the inspection.

29 A further safety inspection was undertaken by Mr Brown on 8 October 2003 in the company of Mr Troy Dillon. Mr Brown addressed correspondence to Mrs Holloway on 9 October 2003 (exhibit 14) confirming that the seven particular safety issues raised "had been addressed and eliminated". The correspondence concludes: "I thank you for the companies [sic] prompt action on fixing these issues and will follow up contact with Mr Alex Saris on the progress on eliminating the slip hazard on the Waste Room Floor."

30 Mr Monley's affidavit (exhibit 5) was sworn on 30 October 2003 and filed on 30 January 2004.

31 The evidence of Mr Monley is that he has had 15 years experience as a poultry boner, having worked at Bartters, Nerang Poultry, Steggles, and Lenards Poultry prior to being engaged at SBC on 2 May 1999. Mr Monley's evidence is that his experience with Lenard's Poultry, and in particular the poultry cuts required by them, enabled him to assist the set up of the Lenards' boning line for SBC. Mr Monley deposed that he has a Butcher/boner's certificate as a result of tuition at Tighes Hill Technical College in Newcastle, and had a certificate issued by Lenard's Chickens certifying his experience in the boning requirements of that organisation.

32 Mr Monley's evidence is that he was employed as a casual boner at SBC until 8 August 2003 when he left to commence work under contract with AICA.

33 Mr Monley described discussions between himself, Mrs Holloway and representatives of AICA in mid 2003 in which he deposed he was informed that boning work would be transferred to the Bangalow facility, where it would be done under contract and that permanent boners would get preference to that work remaining at the Byron Bay facility.

34 Mr Monley's evidence is that he was informed by Mrs Holloway that nobody spoke to the AICA representative on his first visit and that it was unlikely that he would return. Mr Monley's evidence is that he requested the AICA representative return and some 15 to 20 others expressed their interest in further discussions. Mr Monley deposed that Mr Simon Carruth, Factory Manager at the Byron Bay plant, took he and others on an inspection of the Bangalow premises and about one week later Mr Wynen, AICA representative, attended Byron Bay, and presented him and others whom had expressed interest with contract packages.

35 Mr Monley deposed that there was a discussion between himself and Mr Wynen concerning pay rates and the size of bird to be boned. His evidence is that Mr Wynen informed him that the rates had been set between himself and Mrs Holloway, and that any issue in respect to those rates and the available product for boning should be taken up with SBC. Mr Monley deposed that he considered the information provided to him by Mr Wynen and met with him approximately one week later when he completed arrangements to cease work for SBC by tendering his written resignation and establishing himself as a contractor.

36 Mr Monley deposed that when he commenced with SBC he used his own knife and steel but at the time he commenced at Bangalow the knife had been replaced by SBC but he retained his steel. Mr Monley deposed that Mrs Holloway gave permission for him to take the knife, his apron, mesh glove and boots, supplied by SBC at Byron Bay, with him to Bangalow. Mr Monley deposed that all other equipment was provided by SBC, he used the same clothes and is still able to buy chicken from SBC at "staff discount" but is required to pay cash, not on account.

37 Mr Monley described the method of working and the recording of the weight of chicken boned by him, and production reports provided to him at Bangalow. Mr Monley's evidence is that the production reports are provided to AICA who pay him weekly at the established per kilogram of product boned. Mr Monley deposed that there had been three or four occasions prior to the swearing of his affidavit on 30 October 2003 when he had cause to complain about the product being give to him to bone.

38 In his oral evidence given on 16 March 2004 Mr Monley described several robust discussions between himself and SBC management in respect to the size of birds provided to him at the Bangalow facility. Mr Monley deposed that he was informed at the time that bird sizes were down due to drought and feed restrictions and that he was required to bone the product available. Mr Monley's oral evidence is that this situation was rectified in early 2004 and that he was content with the product provided to him for boning, and the earnings available to him therefrom. Mr Monley deposed that he found particular satisfaction in pursuing his career as a chicken boner in the present circumstances as an independent contractor.

39 Mr Monley deposed that he operates his business in the name of "Gary's Poultry Services" and arranges for his own sickness and accident insurance with the assistance of AICA; and does not take out any superannuation which he regards as "a waste of money". Mr Monley deposed that he was free to come and go from the Bangalow facility as he chose, the only proviso being that he inform the supervisor of his intention, noting that he did not require permission if he chose to leave for any reason.

40 Mr Monley's oral evidence is that he had resolved the differences between himself and SBC over the boning of whole birds which had arisen in late February, early March 2004. Mr Monley's evidence is that he had been requested by Mr Saris to bone whole birds, which he agreed to subject to it being worth his while. There was negotiation which settled on 63 cents per bird. Mr Monley deposed that he met his undertaking that he would bone them at that rate, advising Mr Saris not to send any more as he was not prepared to continue whole birds at that rate.

41 Mr Monley deposed that since commencing at Bangalow he has not undertaken chicken boning at any other plant in the area, though was aware of a chicken boning facility at Nerang and the ongoing operations of Lenard's Chickens, a specialty chicken retailer, should he desire alternate or additional work.

42 Mr Monley deposed that he provided his own equipment, which he valued at up to $400 and was required to operate a motor vehicle as he was not permitted to use public transport when conveying his knives to and from his place of work.

43 In response to questions by Mr Jessup, Mr Monley deposed that at the time of inspection carried out by the Commission on 15 March 2004, he was present and working as a boner at Bangalow. Mr Monley deposed that there were eight former SBC employees who commenced at Bangalow with him, and that there had been a number of trainees introduced to chicken boning at the Bangalow plant who had not been formerly employed by SBC. Mr Monley's evidence is that there had been some turnover of labour and that there were very few former SBC employees left.

44 Mr Monley's evidence is that on the date of inspection there were a small number of AICA contract boners, and a larger number of employees of a group he identified as "99'ers". It was established that the organisation is known as "Poultry 99", whose employees bone chicken for SBC at the Bangalow facility and at a Brisbane facility for distribution to the Brisbane metropolitan area.

45 Mr Knight deposed that he was employed by SBC in early 2002 as a process worker, remaining in that position until November 2002 when he commenced training as a boner. By 2003 Mr Knight was engaged as a casual boner, paid at Level 5 of the Award.

46 Mr Knight's affidavit (exhibit 24), sworn on 11 February 2004 and filed on 25 February 2004, describes the discussion and consultation with the Union, AICA and SBC concerning the opportunity to work as a contract boner at Bangalow. Mr Knight's evidence is that he accepted the work as a contractor and signed on with AICA. Mr Knight deposed that he subsequently attended a meeting held by Mr Davis, then Assistant State Secretary of the Union, and Ms Radnidge on 1 August 2003, and subsequently revoked his arrangement with AICA and withdrew his resignation from SBC. Mr Knight's withdrawal of his resignation was accepted and he continued to work at Byron Bay as a chicken boner.

47 Mr Knight deposed that in early September 2003 he became aware that boning work at Byron Bay would be of progressively limited availability for casual employees, and that he would be required to return to his process worker position. Mr Knight's evidence is that a Mr Michael Cox and Ms Sabrina Sturzaker were also required to return to process worker duties and had left their employment with SBC as a consequence. Mr Knight deposed that he subsequently discovered that Mr Cox and Ms Sturzaker had gone to Bangalow the same day they left Byron Bay and immediately started work as contract chicken boners. Mr Knight deposed that the next day he contacted AICA and commenced boning chicken as a contractor at Bangalow immediately.

48 Mr Knight's evidence describes the method of working at Bangalow, in particular the tally system and applicable rates. His evidence is that, so far as he is aware, all product boned is supplied by SBC who also oversee quality assurance.

49 Mr Knight described an event wherein Mrs Holloway visited the Bangalow facility and requested boners to work longer hours. His evidence is that Mr Colin Timbs, another contract boner, rejected Mrs Holloway's overtures, informing her that they were free to decide when they would start and finish. Mr Knight deposed that Mr Timbs had a disagreement with Mr Wynen a few days later and ceased working at the Bangalow facility.

50 In his oral evidence, given on 16 March 2004, Mr Knight confirmed the deposition made in his affidavit (exhibit 24). He confirmed the evidence of Mr Monley that a number of trainees had commenced at Bangalow since September 2003, most of whom had failed to qualify as boners and left the facility.

51 In examination in chief and cross examination Mr Knight revealed that he had no formal training but had acquired his skills as a boner at a retail butchery in Mullumbimby. Mr Knight achieved a high level of skill and expressed satisfaction with his arrangement at the Bangalow facility.

52 Mr Knight has a registered business name ("I slice and dice") and enjoys the ability to set his own earnings targets. His evidence is that he usually sets out to make $200 per day, but if he has additional expenses, such as motor vehicle registration, he will set a higher target in order to meet the expenses and ceases work when his objective is met.

53 Mr Knight was given an AICA information package in similar terms to that provided to Mr Monley. It is uncertain on the evidence in these proceedings whether Mr Knight formally re-established his relationship with AICA subsequent to the earlier revocation. In cross examination Mr Knight deposed that he was persuaded to revoke his arrangement with AICA as he felt compelled to do so as part of the group gathered to discuss the matter.

54 Both Messrs Knight and Monley were provided with the same information from AICA concerning their contract arrangements. The package provided to Mr Knight (exhibit 27), includes a seven page document entitled ODCO Contractors Briefing Sheets on Occupational Health and Safety, Equal Opportunity, Discrimination, Harassment. This document, as well as detailing safety and other obligations, sets out the relationship between AICA and the contractor in the following terms: As an Odco contractor there are important differences to being an employee in the areas of sexual, racial and other discrimination and equal opportunity. This briefing sheet explains those important differences and your responsibilities.

AUSTRALIAN INDEPENDENT CONTRACTORS AGENCY PTY LTD (AICA) is an agency supplying independent contractors under the principles of the "Odco" Judgements. This means that AICA does not control • You. • The businesses where you may work. • The employees of the businesses where you may work. • Other contractors. AICA is an administrator of labour contracts - your daily labour contracts. AICA is an ethical administrator of these daily labour contracts and cannot and will not knowingly be involved in situations where the law is breached. AICA will not and cannot • Offer you work if you commit an act of discrimination or harassment. • Retain as a client any business that engages, condones or allows to continue acts of discrimination or harassment of any sort. AICA is an equal opportunity operator where selection of people for offers of work is based purely on • Your performance as a contractor. • Your availability. • Your skills suitability for the work available. AICA has large numbers of people working who are from diverse cultural, ethnic, religious and other backgrounds.

Your actions as an Odco Contractor. As an Odco contractor you have legal rights and responsibilities which you must exercise. You have a legal • Right to accept or reject the daily offer of work when/if it is made. • Responsibility to not commit any act of discrimination or harassment.

If you discriminate or harass you can and may be held personally liable to pay compensation.

What to do if you feel harassment or discrimination: AICA is uniquely placed as an agency which has a contractual relationship with both you and the client where you are working to discuss these issues and help resolve them. AICA is committed to doing so. You should 1. Ask the person/s committing the act to stop. 2. Inform the supervisor where you are working of the situation. 3. Contact AICA to inform us of the situation. 4. If you feel uncomfortable, ask a fellow worker or friend to report on your behalf. AICA will act on your inquiry or report, conduct an immediate investigation and will take appropriate action. AICA will be sensitive to the inquiry and to the situation.

Your failure to take these steps puts you at risk of being subject to continued harassment or discrimination by the individuals responsible. Do not take that risk.

55 The package of documents also includes a document titled The Contractors Guide, a list of advantages and disadvantages of working as a contractor, information for accountants, liability protection insurance, income protection program, information of application for superannuation, a public liability insurance application, and the agreement to contract. The agreement to contract is in the following terms: CONDITIONS OF CONTRACT

I acknowledge and agree that there is no relationship of employer/ employee with AUSTRALIAN INDEPENDENT CONTRACTORS AGENCY PTY LTD (AICA) and that AICA does not guarantee me any work. I am self-employed and, as such, I am not bound to accept any work through AICA.

I hereby agree to work for an agreed amount per hour for actual on-site hours, or job price to be agreed.

I Instruct AICA to make deductions under the PAYG system of taxation.

I hereby agree that I have no claims on AICA in respect of Holiday Pay, Long Service Leave, Sick Pay, or any similar payment.

I hereby agree that AICA has no responsibility or liability to me, except that I am guaranteed to be paid for actual on-site hours worked or agreed job price for work done.

It is agreed that I must carry out all work that I agree to do through the Agency of AICA in a proper manner and AICA is hereby guaranteed against faulty work. All work must be made good. Further, I agree to cover the work (where necessary) for Public Liability, Accident Insurance, Long Service, and Holiday Pay, and have no claims on AICA in respect of the above.

I hereby agree to supply my own equipment, including safety equipment, where necessary to perform the work, and that I have no claim on AICA in respect of the above.

56 At the conclusion of oral evidence Mr Jessup tendered a document titled PAYG Bulletin No 3 (exhibit 36) issued by the Australian Tax Office on 27 August 2000 titled Pay As You Go Withholding and Labour Hire Firms which sets out taxation consequences where an individual worker is an independent contractor.

57 Mr Lee tendered correspondence dated 20 February 2004 (exhibit 39) from Mrs Holloway which details arrangements to Ms Evans for voluntary redundancy between SBC and the Union, to take effect from 27 February 2004. These arrangements include a buy out of the tally system of pay which returned the limited boning operations remaining at Byron Bay to Award rates only. Exhibit 38 is correspondence from Ms Evans to Mrs Holloway accepting those arrangements and advising that an overwhelming number of employees had voted accordingly. Exhibit 38 notes that those arrangements are accepted on the basis that they are without prejudice to the instant proceedings. Exhibit 37 is correspondence dated 17 March 2004 from Mrs Holloway to Ms Evans informing her that of 23 employees eligible to accept the offer, 11 had accepted and two were to make an election on return from annual leave.

58 Mr Stroppiana submitted that it was beyond question that the persons engaged at Bangalow were carrying out work within the scope of the Award and in accordance with classification 5 thereof.

59 Mr Stroppiana put that this focused the question of whether they were in fact employees or contractors. Mr Stroppiana acknowledge the legitimacy of SBC's motivation to establish the Bangalow facility, putting that no issue was taken with the need for additional space or the right of management to minimise costs or to contract out part of their business.

60 Mr Stroppiana put that whilst an employer is entitled to address these matters, the question remains as to the actual nature of the contracting out and if a contracting out arrangements had been achieved or whether the present circumstances merely disguised employees as contractors.

61 Mr Stroppiana submitted that the evidence of Mr Brown confirmed that the Bangalow boning facility is within SBC operations, being a site under the control of SBC for all commercial, operational and occupational health and safety purposes. There is no argument SBC holds the lease for the premises. Mr Stroppiana referred to the lease document (exhibit 9) which he noted at item 17 thereto determines the permitted use as a food processing factory. Mr Stroppiana submitted that there is no legal distinction between the Byron Bay premises and the Bangalow facility so far as occupational use and control of the facility is concerned.

62 Mr Stroppiana submitted that the safety inspections conducted by Mr Brown in the company of SBC management and the remedy of issues identified by SBC management further supported the response and involvement of SBC at the Bangalow facility. Mr Stroppiana submitted that both the Bangalow and Byron Bay facilities are controlled by the same company for the same purpose of poultry processing.

63 Mr Stroppiana submitted that the Odco system of contracting, whilst well recognised and accepted in the building industry, had no place in the poultry industry.

64 Mr Stroppiana submitted that the unique characteristics of the building industry which supported the Odco system are not found in the poultry industry, which is characterised by single site, long term operations as compared to the multi-site, short term engagements in the building industry. Mr Stroppiana put that there is a site and contractual mobility in the building industry which does not exist in the poultry industry.

65 Mr Stoppiana put that the skills utilised by boners and other workers in the poultry industry are not skills which are readily transferable or which permit them to find other employment, other than at another poultry processing plant.

66 Mr Stroppiana submitted that, contrary to the "advantages" of contracting work set out in the guide provided to Mr Monley by AICA (exhibit 17), continuity of work is achieved with different clients as opposed to a single client; Mr Monley had only been offered work at the Bangalow site; and that the closes other plant he could recall was at Nerang in Queensland.

67 Mr Stroppiana referred to the introduction of trainees pursuant to Odco arrangements at the Bangalow plant and questioned the ability of a trainee to be an independent contractor. Mr Stroppiana highlighted the absurdity of trainees as independent contractors by reference to correspondence from AICA to Mrs Holloway setting out the rates for Level 1 boners, entry level and former trainee positions as "Orientation Contract Level 1" (exhibit 33).

68 Mr Stroppiana submitted that the evidence of Mr Monley reveals that he was forced into contracting arrangements by the prospect of losing work and earnings as a casual boner at Byron Bay. Mr Stroppiana submitted that there was no real change in Mr Monley's employment. He moved from being a casual boner employed at Byron Bay under the direction of SBC management, earning a base wage and tally linked to production, to working at Bangalow under the direction of SBC management on a piece work arrangement paid on the basis of total product achieved.

69 Mr Stroppiana put that the circumstances of Mr Knight were similar, with the added complexity that he had revoked his contract arrangements and had not, so far as the evidence in the proceedings, executed a replacement arrangement.

70 Mr Stroppiana referred to Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16, a decision of the High Court of Australia in which considered the distinction between independent contractor and employee. Mr Stroppiana relied upon the comments of Mason J at page 24 in respect to the control test and the relevant features thereof.

71 Mr Stroppiana submitted that SBC controlled the workers at Bangalow and Byron Bay in the same manner and that application of the control test at Bangalow results in a conclusion that the persons there engaged are indeed employees. Mr Stroppiana put that SBC management at Bangalow elects the work, informs the boners of production requirements, and of the specific cuts in any one day.

72 Mr Stroppiana referred to the evidences of Messrs Monley and Knight that SBC management had reprimanded boners at Bangalow in respect to timekeeping and early departure, and that Mrs Holloway had attended the plant to advise boners they should work longer hours. Mr Stroppiana put that these elements are evidence of the exercise of the control characteristics of an employer/employee relationship.

73 Mr Stroppiana further submitted that requirements communicated to boners at Bangalow by notice on the notice board of their obligations to occupational health and safety, quality of product, compliance with SBC drug and alcohol policy, and quality control undertaken by SBC are further indicators of the control supporting a finding of an employer/employee relationship.

74 Mr Stroppiana submitted that advice from AICA to boners at Bangalow to the effect that "Contractors who assist production including willing acceptance of deboning smaller size birds will always be offered more work" is at odds with the notion of an independent contractor.

75 Mr Stroppiana further analysed Stevens in which his Honour Mason J identified further factors in assessing the distinction between contractor and employee. Mr Stroppiana put that the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work, provision of holidays, deduction of income tax, and the ability to delegate work were all relevant factors.

76 Mr Stroppiana put that the equipment that boners at Bangalow are required to supply and maintain is minimal compared to that provided by SBC; that SBC dictate the hours of work and method of remuneration and that there was no capacity for an individual boner at Bangalow to delegate or pass on his work assignment to another person to perform on his behalf.

77 Mr Stroppiana further put that an indicia of independent contracting identified in Stevens is the operation of a business, a determining factor of which is the development of goodwill. Mr Stroppiana put that the boners at Bangalow could in no way be regarded as operating a business that developed any form of marketable goodwill in the commercial sense.

78 Mr Stroppiana referred to Hollis v Vabu Pty Ltd t/as Crisis Couriers (2001) 106 IR 80, a further decision of the High Court of Australia. Mr Stroppiana relied upon the joint judgment of Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ at page 93 wherein their Honours said: "In classifying the bicycle couriers as independent contractors, the Court of Appeal fell into the error of making too much of the circumstances that the bicycle couriers owned their own bicycles, bore the expense of running them and supplied many of their own accessories. Due to a practical matter, the bicycle couriers were not running their own business or enterprise, or did they have independence in the conduct of their operations. A different conclusion might for example be appropriate where the involvement in capital equipment was more significant, and greater skill and training were required to operate it."

79 Mr Stroppiana relied upon the judgment in Hollis to support his submission that it is intuitively unsound to regard chicken deboners as running their own business, which he put required little capital equipment, minimal training and was at all times contracted to SBC.

80 Mr Stroppiana undertook an analysis of the judgment of the Federal Court of Australia, Wilcox, Burchett and Ryan JJ, in Building Workers' Industrial Union of Australia and Others v Odco Pty Ltd 99 ALR 735, an appeal against a decision of Woodward J. In doing so Mr Stroppiana was obliged to concede that the judgment in Odco is and remains good authority when, in his submission, it is applied to appropriate work situations.

81 Mr Stroppiana referred to p 748 of Odco where their Honours, having considered Willett v Boote (1860) 6 H&N 26; 158 ER 11, held that payment of wages by an intermediary is not fatal to the existence of a contract of employment between a worker and a putative employer. In the joint judgment in Odco it was held that the essential enquiry is whether the presumptive employer remains liable to pay the worker if, for any reason, the intermediary fails to do so. Their Honours held that: "We can discern no term of any contract between the builder and the worker n the present case which imposes any such liability on the builder in the event of Troubleshooters' failing to make an appropriate payment to the worker. "

82 The court went on to say: "An alternative analysis for which the appellants contended was that Troubleshooters was the agent of the builder in engaging the services of the worker and brought about a contract of employment between its presumptive principal and the worker. The chief objection to this analysis arises from the evidence that it was Troubleshooters which fixed, and adjusted from time to time, the remuneration to which each worker was entitled. That was apparently done without reference to the builder who was only concerned to know the gross amount which he was obliged to pay Troubleshooters in respect of workers made available by it."

83 The Court declined to accept an argument that a contract of employment was created between the builder and the worker as the intermediary acted as presumptive agent of the builder on the basis that Toubleshooters was obliged to pay remuneration to the worker whether it was paid by the builder or not.

84 Mr Stroppiana conceded that there was little evidence available in these proceedings of the commercial obligation between SBC, AICA and the workers. Mr Stroppiana put that the relevant evidence, which he conceded is not strong on the point, is Mr Monley's direct negotiation with SBC over the size of birds and rate of remuneration for boning whole birds.

85 Mr Stroppiana noted that, unlike the Odco circumstances, when the builder was not concerned with the rate for work but the total cost, the evidence in this matter is that SBC is directly involved in setting the rates for the work to be done.

86 Mr Stroppiana referred to exhibit 34, correspondence from AICA to SBC dealing with rates of pay for public holidays. In this correspondence Mr Wynen for AICA informs Mrs Holloway that he had sought and gained permission from Mr Mark Fitzgerald, the General Manager of SBC, to pay particular rates in respect to a public holiday falling prior to October 9 2003, the date of exhibit 34.

87 Mr Stroppiana submitted that this represents further evidence of the involvement of SBC in the setting of rates of remuneration, which he put is a substantial departure from the circumstances of Odco.

88 Mr Stroppiana put that there are further distinguishing factors which lead to a conclusion that the Odco arrangements are not directly relevant to the SBC Bangalow operation.

89 Mr Stroppiana reiterated the differing history of contracting in the building industry compared to the poultry industry; the fact that existing employees were converted to contractors. Mr Stroppiana emphasised that, while there was no suggestion of coercion or criticism of the workers who took up the opportunity, the arrangements could not be said to be truly "arm length" transactions. Mr Stroppiana further submitted that there was economic duress in that a choice not to become a contractor would result in a loss of income.

90 Mr Stroppiana referred to a decision of the Federal Court of Australia in Damevski and Giudice [2003] FCAFC 252 of 12 December 2004, which he put involved an Odco arrangement similar in many respects to the present situation, in that the terms of contracting agreements and information kits were, for all purposes, identical.

91 Mr Damevski was an employee of Endoxos Pty Ltd, which carried on a cleaning business in the Australian Capital Territory. Endoxos entered into arrangements with an entity identified as MLC to convert all employees to contractors in the ODCO manner. Mr Damevski was informed that his employment would be coming to an end, he signed documentation acknowledging the introduction of the contracting system; he signed a letter of resignation from Endoxos, but did not sign on to be a contractor. Mr Damevski brought proceedings for relief from unfair dismissal which required a determination for purposes of jurisdiction as to whether he was an employee or contractor. The Federal Court held that Mr Damevski was an employee and entitled to access the unfair dismissal jurisdiction.

92 In a majority reasoning, Wilcox and Marshall JJ held that the conduct of the parties gave rise to a contract of employment. Merkel J held that the intermediary, MLC, had acted as an agent for Endoxos thus creating the employer/employee relationship.

93 Mr Stroppiana refers to paras 50 and 51 of the judgment of Marshall J, which whom Wilcox J agreed: 50. Mr Damevski was not a "bona fide" independent contractor who did "not wish to be bound by the constraints of the wages system". MLC did not perform the role described in the information pack, apart from performing the administrative role of paying Mr Damevski's wages. The evidence was that Mr Damevski worked solely for Endoxos pursuant to an arrangement where he would be paid by MLC, who would in turn look to Endoxos for reimbursement of such payments plus an administration fee.

51. In retaining its right on and from 19 August 2001 to direct and control the performance of work by Mr Damevski, and to terminate Mr Damevski's services, Endoxos did so on its own behalf and not as an "agent of MLC". Equally, considering the entire factual matrix, it could not be said that MLC was Mr Damevski's employer. Rather, MLC acted as an agent for Endoxos in paying Mr Damevski, on Endoxos' behalf. This was the only role it performed." 94 The conclusions of the Court are found at paras 100 to 102 in the following terms: 100 The Commission, both at first instance and at Full Bench level, erred in concluding that Mr Damevski and Endoxos were not in a legal relationship. Looking objectively at what occurred after 19 August 2001, it is plain that Mr Damevski entered into a new contractual relationship with Endoxos where he started afresh, in the context of his rights to accrued annual leave entitlements, and whereby the work he performed for Endoxos resulted in MLC paying him his wages as a consequence of an arrangement between MLC and Endoxos. 101 Although Endoxos had an intention to remove costs related to its role as an employer (such as increases in public liability insurance premiums), through its actions it also displayed an intention to establish a contractual relationship with Mr Damevski after his "resignation" on 19 August 2001 Endoxos directed Mr Damevski to worksites, called Mr Damevski to its offices for further instructions when necessary, gave Mr Damevski attire and equipment to enable him to perform work, and received pay slips from him. Mr Damevski also showed an intention to re-enter the legal relationship with Endoxos, by once again taking up the role he held with Endoxos before 19 August 2001.

102 The facts of this case also reveal that the contractual relationship that existed between Mr Damevski and Endoxos was one of employee and employer. As previously pointed out, the only difference between the relationship before and after 19 August 2001 was that MLC was given the role of paymaster. The latest pronouncement of the High Court on the issue of the existence a contract of employment or an independent contractual relationship demonstrates that when one seeks to characterise a contractual relationship dealing with work, one looks to the reality of the situation and eschews unrealistic descriptions of employees as independent contractors when the facts of a case disclose the contrary: see Hollis v Vabu Pty Limited (2001) 207 CLR 21 at [47] to [57].

95 It was further held in Damevski that there were no indicators that Mr Damevski was carrying out his own business enterprise and to suggest that he was defied reality. The Court held that the only function carried out by MLC was that of paymaster.

96 Mr Stroppiana submitted that it is open on the evidence to find that the workers concerned were employees of SBC or AICA on the basis that they:

· work under the direction of SBC · work on an SBC site · skills used are limited to the poultry industry · have minimal capital investments and business expenses.

97 Mr Stroppiana submitted that the findings contended for were equally available in respect to workers who had not previously worked for SBC as they now had the same arrangements and worked in the same manner as Mr Monley and Mr Knight.

98 Mr Stroppiana emphasised that the application brought by the Union was not an attack on any of the individuals who had elected to become independent contractors, but was brought to ensure the integrity of industrial regulation by award. Mr Stroppiana put that the award provides fundamental safety net terms and conditions of employment and should not be lightly disregarded. Mr Stroppiana acknowledged that on the evidence of Messrs Monley and Knight they are both earning substantially in excess of the minimum terms of the award, which he put did not dissuade or mitigate against a rigorous enforcement of the safety net terms and conditions of awards.

99 Mr Jessup distinguished the operations of SBC at Byron Bay, where he put SBC carry on the full range of chicken processing operations, and at Bangalow, which he described as a free standing chicken boning operation.

100 Mr Jessup put that the people working at Bangalow fall into different categories. The first outlined by Mr Jessup is the Superintendent employed by SBC, the second category is the boners contracted to AICA and supplied through that agency to SBC; and the third is the boners provided by a third party identified as "Ninety Nine". The latter took no part in the present proceedings nor were they roped in by the Union, and accordingly nothing is known of their employment or contractual arrangements. The implication is that SBC have what might be regarded as a conventional subcontracting arrangement with the employer of those persons.

101 Mr Jessup noted that the Union seek a finding that the workers contracted to AICA are employees not independent contractors, without specifying whether they are employees of AICA or SBC. Mr Jessup put that this is indicative of the complexity of the matter to the effect that the case advanced is not so obvious that the Union is able to indicate in particular terms how it should be decided.

102 Mr Jessup further distinguished between the persons contracted to AICA, identifying those that had previously worked for SBC, which he put was now reduced to Mr Monley and Mr Knight; others who had never before worked for SBC and were supplied by AICA with butchering or boning skills and undertook the required training; and a third group contracted to AICA with no previous skills who are required to be trained.

103 Mr Jessup submitted that it is not possible to infer conclusions from the circumstances of Mr Monley and Mr Knight, in particular the argument of economic duress advanced by the Union to other workers who responded to a job advertisement for reasons not disclosed in these proceedings.

104 Mr Jessup referred to the newspaper advertisement, exhibit ?, which he submitted emphasised the advantages of self-employment and the monetary rewards available.

105 Mr Jessup submitted that on the evidence it is only possible to make a determination in respect to Messrs Monley and Knight and that it would be unsafe to extend any such determination to persons in different circumstances. Mr Jessup submitted that the only exception would be where the method of engagement and documentary regime applied satisfy a determination that all persons so engaged are independent contractors, then all others could be so regarded.

106 Mr Jessup put that all workers at Bangalow are contracted in the same style and manner whether they had transferred from Byron Bay or had responded to the newspaper advertisement.

107 Mr Jessup argued that the workers at the Bangalow plant are not subject to the same control and management as those boning chicken at Bryon Bay.

108 Mr Jessup submitted that both Mr Knight and Mr Monley entered the contract with the benefit of full information and did so freely. Mr Jessup put that this is emphasised by Mr Knight withdrawing from the contract and subsequently returning to it on reconsideration. Mr Jessup put that Mr Knight effectively reactivated his contract with AICA by seeking and accepting work at Bangalow on those terms, and that any failure to execute new documentation does not alter the material fact of a contract established by conduct and mutual recognition.

109 Mr Jessup relied upon the judgement at first instance by Woodward J and the findings of the Federal Court on appeal in Odco that the contract is formed at the time the worker accepts an assignment, not when the worker reports to the client and is given instruction of the tasks required. The learned trial judge found that the arrangements which he discussed brought into existence two separate contracts, one between Troubleshooters and its builder client, and the other between Troubleshooters and the worker. Of those contracts, his Honour observed: "The contract between Troubleshooters and its workers is, I believe, similar to that between Troubleshooters and its builder clients. That is to say, each contract is for a specific day's work to be undertaken for a specified builder. That period can, of course, be extended if the builder so requests and the worker expressly or tacitly consents. The agreement is, in each case, concluded when the offer of work is made, usually over the telephone, by the applicant, and the worker indicates his willingness to take the position. He thereby agrees to attend at the time and place indicated, to report to the person nominated, and to work as required for up to eight hours on that day. Eight hours is the standard working day in the industry. If the builder indicates a continuing requirement for his work, the man may accept or reject each subsequent day's work as he pleases. Troubleshooters, for its part, undertakes to pay the worker for any work which he performs and then reports to Troubleshooters. The detailed conditions of the contract between Troubleshooters and the worker are made up of the contents of the 'agreement to contract' which was signed at the time that Troubleshooters registered him as a person willing, from time to time, to accept work from the company. Also included in the contract would be any relevant discussions which took place over the telephone at the time the particular engagement was offered and accepted. Matters discussed at the time of the original interview between the worker and a representative of Troubleshooters could also be relevant"

110 Mr Jessup put that the relevant contract is that between the worker and AICA and that there is no relevant contract between the worker and SBC. Mr Jessup noted that neither SBC nor the workers regarded themselves to be in a contractual relationship, which he put distinguishes the present matter from Damevski where the Court relied heavily on undertakings from the employer that "nothing would change". Mr Jessup put that the former SBC employees were made fully aware of the change in relationship and that an employment arrangement could not be imported for those with no prior employment with SBC.

111 Mr Jessup refuted the argument advanced by Mr Stroppiana that rates of remuneration set in communication between AICA and SBC are not indicative of an agency relationship between AICA and the workers who were employed by SBC.

112 Mr Jessup put that the rates so determined were not pay rates payable to the workers but commercial rates charged to SBC by AICA, attracting the addition of Goods and Services Tax (GST).

113 Mr Jessup submitted that a further and strong indicator that the relationship is between the worker and AICA arises from analysis of the right of recovery of monies due. Mr Jessup submitted AICA could not escape a claim for recovery under the contract by arguing that SBC were the principals in the arrangement.

114 Mr Jessup then analysed the contract between the worker and AICA, which he put is clearly stated by both parties as one of independent contracting and supported by the reality and actions of the party. Mr Jessup noted that in the documentation and in practice AICA does not guarantee work, and that the worker is free to accept or reject work offered.

115 Mr Jessup put that this is reinforced by the evidence of Mr Knight that he had on one occasion left the Bangalow plant and refused to work any more on the day, due to his dissatisfaction with the size of birds for boning and resultant remuneration.

116 Mr Jessup noted that the contract between AICA and the worker requires the worker to carry out all work in a proper manner and guarantee AICA against faulty work, and that "all work must be made good". The contract between AICA and the worker also requires the worker to take cover when necessary for public liability insurance; and that holiday pay and long service leave are the responsibility of the contractor; all of which Mr Jessup puts are indicators of an independent contractor arrangement not employer/employee relationship.

117 Mr Jessup put that the contract requires the worker to provide their own equipment, including safety equipment. Mr Jessup noted that AICA has not supplied any equipment to the workers, which he contends is consistent with the contract and the fact that AICA is not a poultry processor and accordingly does not hold or obtain any relevant equipment. Mr Jessup conceded that the equipment required and business expenses are modest, submitting that such criteria should not disqualify people from carrying on their own business where they so desired. Mr Jessup put that the intention of the parties is a significant factor in determining the relationship between them.

118 Mr Jessup relied upon Odco at p 126 where the Court says: The application of the other criteria to the features of the relationship between Troubleshooters and its workers is, we consider, inconclusive except in respect of those criteria which reflect the intention of the parties to the relationship. Standing alone, the mode of remuneration being payment at an agreed hourly rate is equally applicable, on the evidence, to persons who are concededly subcontractors as to casual employees picked up for a day or part of a day. However, the agreement that Troubleshooters workers are not to receive annual leave or sick leave or any payment referable to those entitlements and that no deduction of income tax is to be made from their remuneration signifies a mutual intention that they are not to be regarded as employees. That intention is consistent with the acknowledgment by the worker in the standard form "Conditions of Contract" with Troubleshooters that "there is no relationship of Employer-Employee with Troubleshooters ... I ... am self-employed and, as such, I am not bound to accept any work through Troubleshooters". As to such a provision, the Privy Council in Australian Mutual Provident Society v Allan (1978) 52 ALJR 407 said (at 409): "Clearly cl 3, which, if it stood alone, would be conclusive in favour of the Society, cannot receive effect according to its terms if they contradict the effect of the agreement as a whole. Nevertheless, their Lordships attach importance to cl 3, and they consider that the following statement by Lord Denning MR in Massey v Crown Life Insurance Co [1978] 1 WLR 676; [1978] 2 All ER 576 correctly states the way in which it can properly be used: 'The law, as I see it, is this: if the true relationship of the parties is that of master and servant under a contract of service, the parties cannot alter the truth of that relationship by putting a different label upon it ... On the other hand, if their relationship is ambiguous and is capable of being one or the other [that is, either service or agency], then the parties can remove that ambiguity, by the very agreement itself which they make with one another. The agreement itself then becomes the best material from which to gather the true legal relationship between them.' In the present case, where there is no reason to think that the clause is a sham, or that it is not a genuine statement of the parties' intentions, it must be given its proper weight in relation to other clauses in the agreement."

119 Mr Jessup submitted that in every detail the character of the relationship between the worker and AICA is one of independent contractor.

120 Mr Jessup put that it is made clear in the contract and in practice that AICA is an agency which does not control the workers in any way. Mr Jessup put that it would be against reality and quite artificial to regard AICA as anything other than an agency supplying works under the Odco system of independent contracting. Mr Jessup noted that AICA had never employed any of the workers and that the relationship would not be regarded as one where AICA as an employer "lends" employees to SBC as another employer.

121 Mr Jessup distinguished the present circumstances from those in Hollis v Vabu where he put there were only two parties, resulting in only two alternatives, ie employee or contractor. In the present case there is a tripartite arrangement.

122 Mr Jessup refuted the arguments advanced by Mr Stroppiana on the criteria employed in Hollis v Vabu. Mr Jessup put that on the Vabu tests the AICA workers are reinforced as independent contractors. Mr Jessup put that unlike bicycle couriers, chicken boners have unique and specialised skills, control their own work flow and finances.

123 Mr Jessup submitted that remuneration and hours of work and style of remuneration were not indicative of an employer/employee relationship. Mr Jessup noted that in the Odco judgement payment was on an hourly rate and work took place when the site "opened". In the present case remuneration is for work performed with no connection to time taken and that work is done when the plant is "open", the opening time determined by the arrival of product for boning. The amount of time worked, breaks taken, product boned and consequent remuneration earned are then within the discretion of the worker as an independent contractor.

124 Mr Jessup submitted that the control test is of little assistance in this matter as it was to Woodward J and the Federal Court on appeal in Odco. At p90 of his judgement Woodward J noted that, on the evidence before him, he found no difference in the control exercised in respect to Odco contractors, for whom independent contracting status was not at issues, and employees.

125 Mr Jessup submitted that the similarity of control over AICA contractors and the subcontract workers observed at Bangalow is in the same circumstances as observed by the Court in Odco at p 124 in the following terms: So far as control is concerned, the workers are free to work when they please. The only requirement is that they keep Troubleshooters informed of their availability if they want work, or if they are ceasing to work at a site where Troubleshooters labour is still required. The elements of stability and continuity, which are such a central part of every contract of service extending over a period of time, are not present. Troubleshooters exercises absolutely no control over the way in which work is carried out. It merely passes on to the worker the time and place at which a builder wishes him to report. If the worker does not like the sound of the particular job - perhaps because of its location - he is under no obligation to accept that engagement. I have no doubt that, in acting as an agency finding work for persons in the building trade, Troubleshooters creates a relationship, between it and the men who use its services, of principal contracting parties and not of employer and employee.

126 Mr Jessup submitted that the classification of trainee does not require an employer/employee relationship. Mr Jessup put that a trainee may work at a site to obtain skills, be paid, receive no payment or indeed pay for the acquisition of skills obtained in the training phase.

127 Mr Lee adopted and supported the submissions of Mr Jessup, emphasising that there is no contract between SBC and Messrs Knight or Monley.

CONSIDERATION 128 The approach described by Marshall J in Damevski at para 102 is a useful and appropriate starting point. His Honour said: "..... The latest pronouncement of the High Court on the issue of the existence of a contract of employment or an independent contractual relationship demonstrates that when one seeks to characterise a contractual relationship dealing with work, one looks to the reality of the situation and eschews unrealistic descriptions of employees as independent contractors when the facts of a case disclose the contrary". 129 It is necessary to examine each of the relevant facts and the circumstances as a whole.

130 The evidence of Ms Evans reveals a lengthy, if inconclusive, period of consultation and discourse between the parties in respect to the establishment of chicken boning operations at Bangalow. These discussions involved the removal of chicken boning work from Byron Bay to Bangalow, which is not at issue.

131 The evidence of Mr Brown is that where safety matters were raised the issues were attended to by SBC to his satisfaction despite some uncertainty as to management personnel.

132 The evidence of Messrs Monley and Knight is that after some initial dissatisfaction with earnings as a result of small or undersize chickens for boning, they are both enthusiastic supporters and participants in the contracting model.

133 The issue descents to the one framed by Mr Stroppiana in his submission: Does the Odco model fit in the poultry industry?

134 That the Odco form of contracting is a legitimate means of engaging labour is not challenged.

135 Mr Stroppiana seeks to make distinction between the building industry and the activities of chicken boning which on analysis is not sustained. The circumstances of chicken boners contracted to SBC through AICA are distinguishable from Damevski. In that case employees were told that on transfer of their employment to the contracting entity "nothing would change". It was held in Damevski that this understanding had been met and that the workers remained employees.

136 In the present case former SBC workers Messrs Monley and Knight deposed that they were fully informed of all of the changes to their working arrangement. Their evidence is that these changes were made.

137 It cannot be argued that persons recruited directly by AICA with no prior relationship with SBC could continue to be employees.

138 There is no evidence of the engagement anyone other than Mr Monley and Mr Knight, however, it is safe to conclude that persons properly engaged in the Odco system of employment do not become employees of SBC.

139 On the evidence before me I conclude that both Mr Monley and Mr Knight are bona fide independent contractors. They clearly intend to be, conduct themselves in that manner, and are treated as independent contractors by AICA and SBC.

140 The arrangements entered into by Mr Monley and Mr Knight do not in any way threaten the integrity of the award system.

141 I acknowledge the submissions of Mr Jessup that AICA is not a poulterer and could not have an award made binding them to poultry processing. This is a secondary consideration overridden by the absence of employee/employer relationship between Mr Monley and Mr Knight and the respondents to these proceedings.

143 Matter No IRC 4677 of 2003 is so concluded. oo0oo

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