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[2008] AIRC 466
procedural. Application granted. Findings made that: (1) the practitioners are part-time employees; (2) the minimum salary was fixed at the CMBS-derived rate at time of employment; (3) the rolled up rate is...
The Australian Industrial Relations Commission decided that medical practitioners at Wodonga Regional Health Service were employees, not independent contractors, despite previously being called 'Visiting Medical Officers'. The Commission looked at what the parties actually did—signing employment contracts, voting for the collective agreement, paying tax as employees, and receiving superannuation—rather than just what they were called. The Commission also ruled that the doctors' pay rates should increase according to general public hospital wage increases, not according to changes in the Medicare schedule (CMBS) rates. This meant the hospital had to recalculate the doctors' pay to ensure they received the correct increases without 'double dipping' from both sources.
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2 cited instruments linked from this judgment.
s.170LW - prereform Act - Appl'n for settlement of dispute (certified agreement)
Australian Salaried Medical Officers Federation
Australian Medical Association (Victoria) Limited
AMA, ASMOF - WODONGA REGIONAL HEALTH SERVICE MEDICAL SPECIALIST AND GENERAL PRACTITIONER AGREEMENT 2005
Alleged dispute concerning various clauses of the agreement.
[1] The Australian Medical Association (AMA) and the Australian Medical Salaried Officers' Federation (ASMOF) has made application to have a dispute resolution process conducted in relation to AMA, ASMOF - Wodonga Regional Health Service Medical Specialist and General Practitioner Agreement 2005 (the Agreement).
[2] There are essentially two matters which form the controversy between the parties. The first is whether or not relevant medical practitioners are employees and covered by the Agreement and then secondly, the nature of remuneration increases for those medical practitioners.
[3] When the matter came on for hearing, Mr A Lewis appeared for the AMA and ASMOF. Mr D Wenban appeared for Wodonga Regional Health Service (WRHS).
[4] Mr Wenban, in his submission, put that the persons involved in the controversy were not employees. This is a matter which requires analysis prior to examining the matter which is said to arise under the agreement. If this is the case then the matter ends without going to the terms of the Agreement.
[5] It is appropriate to set out the factual matrix in relation to the employment or otherwise of these medical practitioners.
BACKGROUND IN RELATION TO "EMPLOYMENT RELATIONSHIP"
[6] In late 2004 and in 2005, the AMA on behalf of a number of doctors, including those who had specialist practice at the WRHS, conducted negotiations over the formation of a collective agreement.
[7] At the time consideration was being given to an arrangement which would have involved both the Wodonga and Albury Hospitals. Whilst it forms part of the history to the matter it is not particularly relevant to the matter which now requires a decision.
[8] On or about 18 November 2005 the Chief Executive Officer of the WRHS wrote to those who were described as Visiting Medical Officers offering employment.
"I am pleased to offer you employment as a medical practitioner with Wodonga Regional Health Service (WRHS) for a fixed term 1 December 2005 until 30 November 2008. You are being offered employment on a part-time basis for less than 38 hours per week.
Your terms and conditions of employment are contained in this letter and the AMA, ASMOF - Wodonga Regional Service Medical Specialist and General Practitioner Agreement 2005 (AMA Agreement)." [1]
[10] At the end of the letter the following is set out which required the signature of the person to whom the letter was directed:
"By signing this letter, I understand that I am an employee of WRHS and understand that this letter, its schedule and the AMA Agreement constitute a binding contract of employment." [2]
[11] By letter dated 19 January 2006 Solicitors for WRHS wrote to Commissioner Cribb, who had been allocated the file for the purpose of certification of the Agreement, [3] outlining the fact that negotiations had been conducted over many months and that Agreement had been reached.
"It is the intention of the parties that both full time and part time Practitioners will be employed by WRHS pursuant to the Agreement." [4]
[13] What appeared to be of major concern to the WRHS was the concept of the term "rolled up rate" contained in the Agreement. This, no doubt, was directed to the no-disadvantage test and also making clear the meaning of the Agreement.
[14] The Commissioner, on 20 January 2006, found that the Agreement complied with the Workplace Relations Act 1996 (the Act) and it was certified.
[15] On 21 December 2005 Dr A Watson, the CEO of WRHS at that time, signed the Statutory Declaration outlining that the total number of employees was 24 of whom 22 were part time. The date upon which a valid majority approved the agreement was said to be 20 December.
[16] WRHS is now heard to be saying that whether or not an employment relationship exists is a matter of fact and how the parties characterise it is but one element. It argues that an employment relationship does not exist.
[17] The previous CEO of WRHS, Dr Andrew Watson gave evidence. His evidence was:
[18] Dr Tim Shanahan's evidence was that he participated in the negotiations which led to the certified agreement. Further, he stated that he was offered a contract of employment which he accepted. His evidence was that he also voted to have a collective employment agreement. Dr Shanahan tendered a letter from his accountant advising that monies received were declared as salary and wages in accordance with s.6-1(l) of the Income Tax Assessment Act 1997 (Cth).
[19] Evidence was also given by Dr Tracy Merriman. Dr Merriman's evidence was that at the time of the negotiations she was happy to be self employed because of the autonomy she enjoyed. However, given the terms of the proposed certified agreement she:
[20] Dr Merriman presented a letter from her account which expressed the following opinion:
"Given the above it is our opinion that Dr Merriman is an employee of WRHS for the following reasons:
1. RHS exercise sufficient control of who Dr Merriman sees on their behalf;
2. While WRHS do not normally exercise control of Dr Merriman's working hours they retain the right to;
3. Dr Merriman is unable to delegate the work required of her;
4. More than 50% of the work performed by Dr Merriman is for labour;
5. The hospital, not Dr Merriman is liable for the cost to rectify any defect in the work performed;
6. The hospital have been paying superannuation on Dr Merriman's behalf as a salary sacrifice arrangement; and
7. Dr Merriman is seen as a representative of the hospital when attending to the patients allocated by the hospital. [7]
[21] The final witness was Dr Phillip Steele. Dr Steele expressed a reluctance to give evidence however he felt it was important to put his unhappiness with the view taken by WRHS about payments under the agreement. It was the evidence of Dr Steele that he decided to become an employee to:
[22] It was the evidence of Dr Steele that he agreed to negotiate a collective agreement; was offered a contract of employment which he accepted and then voted for the acceptance of the collective agreement as a part of the formal process.
[23] WRHS called Mr L Butler to give evidence on its behalf. Mr Butler was a consultant engaged to conduct the negotiations for a certified agreement with the doctors. Mr Butler's evidence included a view that the process was a mechanism for visiting medical practitioners to get the benefits of being employees. [9]
[24] Other aspects of Mr Butler's evidence did not call into question the evidence of Dr Watson who was, at the time, instructing as the employer.
[25] Notwithstanding a rather unambiguous history, WRHS argue that whether or not an employment relationship exists is a matter of law and that the parties can not alter the true nature of the relationship by putting a different label on it. This is true but the conduct of the parties, as opposed to their statements, is clearly a relevant fact.
[26] From the conduct of the parties it can not be seriously in doubt that the AMA, ASMOF and WRHS entered into negotiations with a view to reaching a collective certified agreement covering persons who were previously referred to as Visiting Medical Officers. It appears to be beyond doubt that all parties sought to create an employment relationship. The action taken by WRHS and the doctors [10] was entirely consistent with creating an employment relationship.
[29] In essence, that is the foundation upon which the WRHS case is erected.
[30] Reference was made to another matter before a Full Bench where an application was made by the ACT Visiting Medical Officers Association (Medical Officers Case) [13] to be registered as an association of employees. In that matter consideration had to be given to the status of Visiting Medical Officers in public hospitals in the ACT, to determine if they were employees or independent contractors.
[31] The Full Bench concluded that they were independent contractors and therefore the application was dismissed.
[32] In making submissions on this matter, WRHS still categorise the persons as Visiting Medical Officers and not part-time employees. The work of the specialists is said not to have changed and this is why the nomenclature is adopted. Such an approach can be misleading because these specialists were engaged as part-time employees.
[33] In any event it is worth examining the Decision by the Full Bench in the Medical Officers Case to see if there is anything fatal to the submission of AMA that these persons are employees.
[34] The evidence before that Full Bench was that the doctors could delegate work, did not have PAYG tax deducted and were not provide with holiday or sick leave. The reverse is true in the case of the specific doctors at WRHS. Evidence has been led that PAYG tax has been withheld; superannuation has been paid as salary sacrifice; work is not able to be delegated; the previous practice of charging GST was discontinued; and a rolled-up rate is paid and a payslip provided.
[35] The agreement defines the term rolled-up rate as follows:
"Rolled up rate means payment for all overtime, allowances, on call, recall, loadings, superannuation and private practice income as outlined in clause 28.2 and any other benefits provided for in this Agreement unless an entitlement is specifically excluded for an individual Practitioner by WRHS in writing, except that WRHS may not exclude the allowances outlined in the following clauses from the rolled up rate:
[36] Clause 28 of the Agreement specifically refers to the right to private practice:
"All Practitioners may elect to operate their own private practice as follows:
28.2 through WRHS on a trust fund basis to admit Private and Compensable Patients to WRHS provided WRHS consents to the specific proposal of the Practitioner arrangement in writing and the hours worked by the Practitioner are adjusted to reflect the arrangement."
[37] The existence of a right to private practice is supportive of the formation of a contract of employment which permits a practice that might otherwise be inconsistent with an employment relationship. It is not the case that the two forms of relationships are mutually exclusive particularly against the background of the fact that the contracts of employment are said to be part-time.
[38] The issue of control of the work was raised by WHRS and it submitted that the requisite control did not exist for an employment relationship to exist. However the decision in the Medical Officers Case highlighted the fact that it is not the actual exercise of control but rather whether there is lawful authority to exercise it. [14]
[39] Indeed in the case of professionals, care must be taken not to overstate the concept of control. [15] The Medical Officers Case was alive to this in that it concluded in that case that the control was ambiguous. The bench stated:
"Certainly, the level of control retained by the hospitals meant that the indicia pointed both ways. Considering the totality of the relationship between the parties and taking the Respondent's case at its highest, the result was ambiguous. In those circumstances, the parties removed doubt about the proper characterisation of their relationship by expressly providing in the contracts that the contracts did not give rise to a relationship of employment. [16]
[40] If I were to take the case of WHRS at it highest and assume that it gave rise to an ambiguous result then the contract entered into, together with the formation of the certified agreement, would mean that the matter would be resolved in favour of finding that these persons are employees.
[41] There are more factors in this case which point to the formation and existence of a contract of employment than existed in the Medical Officers Case. Indeed the Medical Officers Case, in my view, adds weight to the submissions of the AMA.
[42] Against the background of this combination of factors I find that the persons under consideration are part time employees.
[43] Having found that an employment relationship exists I now turn to the terms of the Agreement as it applies to the adjustment of the rolled up rate.
[44] For part time practitioners the wage paid is determined by clause 23.2 which provides:
"The level and method of pay for a part time practitioner is for agreement between WRHS and the part time practitioner."
[45] A note of caution; in examining this matter I am not determining the appropriateness or otherwise of the terms of the agreement in relation to the legislative requirements for certification, but simply deciding the proper operation of the instrument certified.
[46] The adjustment to the rolled up rate is dealt with in clause 23.3.2 and it states:
"The Rolled up rate will be increased in accordance with any indexation approved by the Department of Human Services in respect of public hospitals."
[47] Perhaps a good starting point is the basis upon which the part time practitioners agreed to the level and method of pay. When the part time practitioners commenced employment they agreed to continue the practice established when they were contractors. Clause 16.1.17 discloses how the level of remuneration would be determined:
"Provide WRHS with a monthly statement including such data concerning the Service delivered (and CMBS item numbers and RVG units and per diem payments claimed and other information that can provide a description of the measure of work undertaken by a practitioner), details of each public patient concerned, location or service provided and the date on which the Service was provided and the nature of that Service."
[48] The Commonwealth Medical Benefits Schedule (CMBS) details the type of professional attendances which are then given an item number. The nature and complexity of professional attendances are itemised because different professional attendances will result in a particular payment.
[49] The specialists who are the subject of this application, before they were employees, were contractors and provided accounts to WRHS (with GST). Their remuneration was regulated by these services. When they became employees it was agreed that they would not sustain any loss and therefore the practice continued of the practitioners providing details of each professional attendance referable to the CMBS and then being paid on that basis.
[50] I essence, the minimum part time salary for these practitioners was determined by the work they performed as provided for under the CMBS. It is clear that at the commencement of the employment relationship that was the minimum salary fixed by agreement in accordance with clause 23.2. I find that this was expressly agreed because of the conduct of the parties and what was clearly sought to be achieved. That is; those practitioners would not be paid less for converting to employees.
[51] The next issue is how those minimum part-time salaries would be adjusted. There are two contentions. The first is that they are adjusted by any changes to the CMBS rate which occurs 1 November each year. WRHS argues that the adjustment to the rate paid to practitioners should follow the CMBS adjustments as these practitioners essentially operate on a fee for service basis.
[52] AMA and ASMOF argue that the relevant clause in the Agreement means that the rate paid should be adjusted by the rates contained in the Heads of Agreement (HOA) reached between the AMA, ASMOF, the Department of Human Services (DHS) and the Victorian Hospitals Industrial Association (VHIA).
[53] It might be argued that support for the position advanced by WRHS may be found by examining the definition of the CMBS in the Agreement which states: CMBS means the Commonwealth Medical Benefits Schedule as amended from time to time (the emphasis is mine), and the duties and obligations of the practitioner (clause 16.1.17 referred to earlier) which mandate that the practitioner shall provide a monthly statement derived from the CMBS schedule. Indeed WRHS had already adjusted the payments to specialists based upon the changes to the CMBS rate. This is what has led to the controversy. If the rates alters from time to time it might be said that this exhausts any further adjustments.
[54] However, the rolled up rate was specifically created for these practitioners and clause 23.3.2 deals with how that is adjusted.
[55] To me the expression is clear. Indexation approved by DHS in respect of public hospitals cannot be a reference to adjustments to the CMBS rate. There was a valiant effort to strain the language of the clause by Mr Wenburn but I am not persuaded. Even a brief sojourn into public hospital wage and salary negotiations will allow for a clear understanding of the intent behind the clause. It follows that I find that the across the board salary increases provided for in the HOA are those by which the rolled up rate is adjusted.
[56] This raises another point. There can be no double dipping. That is; a practitioner can not benefit from the alterations to the CMBS rate and the changes comprehended by the Agreement which imparts provisions of the HOA.
[57] In my view the confusion has arisen by referring to these persons as fee for service practitioners. [17] In truth they are part time employees who have had their rate fixed based upon a previous practice so that there could be a transfer to employment without loss of earnings.[18] That rate was identified and then frozen as the rolled up salary paid to part time employees of WRHS. Its subsequent adjustment does not relate to changes in the CMBS rate but the percentage change for across the board increases identified in the HOA. I state, lest it be said otherwise, that I am construing the Agreement not the HOA.
[58] The parties should confer and recalculate the rates to ensure that there is no double dipping and that the rolled up rate applying at the time of employment is only adjusted by the terms of the Agreement which imparts increases described in the HOA.
1. I find that the practitioners who are the subject of this application are part time employees of WHRS.
2. I find that the minimum salary fixed for these practitioners was the rate they were charging under the CMBS schedule at the time they became employees and that this rate became the rolled up rate for a part time employee.
3. I find that the rolled up rate for part time employees is adjusted by the across the board wage increase provided for by the Agreement which imports adjustments described in the HOA.
4. I find that part time practitioners should not get increases from adjustments to the CMBS rate from the time they were employed.
A Lewis for Australian Salaried Medical Officers Federation and the Australian Medical Association (Victoria) Limited.
D Wenban on behalf of Wodonga Regional Health Service.
Printed by authority of the Commonwealth Government Printer
[6] Exhibit L1 Statement of Dr Watson.
[10] For example, no longer raising invoices and charging GST. Records were keep of time but this was of a different character.
[13] ASMOF v. ACT Health Care Service [PR 958666]
[15] Zuijs v Wirth Bros Pty Ltd [1955] HCA 73; (1955) 93 CLR 561.
[17] I also note that it was said that DHS had a policy of not having a fee for service approach in a certified agreement.
[18] Again I highlight the caution I expressed in paragraph 45 of this decision
Australian Salaried Medical Officers Federation and Australian Medical Association (Victoria) Limited
Wodonga Regional Health Service [2008] AIRC 466;
(2001) 207 CLR 21
(1955) 93 CLR 561
Application granted. Findings made that: (1) the practitioners are part-time employees; (2) the minimum salary was fixed at the CMBS-derived rate at time of employment; (3) the rolled up rate is adjusted by across-the-board wage increases described in the Heads of Agreement, not CMBS adjustments; (4) no double dipping permitted. Parties directed to confer and recalculate rates accordingly.