Printed with the authority of the Australian Industrial Relations Commission Dec 1279/99 C Print S0354

Workplace Relations Act 1996

s.170CE application for relief in respect of termination of employment

[1] This matter arises from an application lodged pursuant to s170CE(1) of the Workplace Relations Act 1996 (the Act) by Mr C Tzanes (the applicant) for relief in respect of the termination of his employment by Kenoss Contractors Pty Limited (the respondent). An objection to the jurisdiction of the Commission was made by the respondent on the ground that the applicant was not an employee but an independent contractor and therefore excluded from the termination of employment provisions of the Act.

[2] At the hearing of the jurisdictional objection the applicant was represented, with leave, by Mr Williams and Mr Wilson was granted leave to represent the respondent.

[3] A statement of the evidence of the applicant was tendered (Exhibit T1) and in addition he gave oral evidence.

[4] According to the applicant he was employed by Mr Brendas, a principal of the respondent, in about January 1998. He had enquired directly of Mr Brendas as to the availability of work and was instructed to collect a truck from the respondent's compound the next day and commence. He had been paid $15 per hour but had not discussed any other terms of his employment.

[5] During the course of his employment with the respondent the applicant drove a truck owned by the respondent carting gravel, earth etc. in accordance with instructions given to him by Mr Brendas or other employees of the respondent. Usually he phoned the supervisor to ascertain his instructions either the previous day or on the morning of a workday. The applicant stated that on occasions when he was ill and unable to work another employee would generally collect the truck he drove and drive it in his absence. It was the applicant's evidence that he was not permitted to find somebody else to carry out his duties for him.

[6] The applicant was paid on production of a time sheet. His pay slip indicated that he was paid an hourly rate of "$14 plus one"

[7] So far as taxation was concerned, the applicant stated that the matter was not mentioned until sometime after he commenced employment, at which time he was told that the company would pay half the required tax and he would have to pay the other half. The applicant denied ever being told about the Prescribed Payments System (PPS) of taxation until about a fortnight after he was employed when Mr Brendas said "Going to pay me either the award of (sic) PPS, that's all." (Transcript page 8, line 17).

[8] The applicant normally worked in excess of 40 hours per week with intermittent days off. He was not paid for the days he did not work but was paid on those days he worked on the mechanics of the vehicle. He did a number of minor repairs to the vehicle but major repairs were done elsewhere and paid for by the respondent.

[9] The applicant denied ever having told Mr Brendas that he had his own insurances and stated that he had never had such insurance. He also denied ever having claimed to be a sub-contractor, stating that he had always worked in accordance with instructions given to him by the respondent. According to the applicant he had performed work for other companies but always at the direction of the respondent. On such occasions he was given a docket by the other firm setting out the time worked and loads carried, which he delivered to the respondent. He was not paid any additional amounts on those occasions. During the period of his employment by the respondent the applicant claimed that he had had no other paid work.

[10] The applicant agreed that he had gone to Wollongong (to do volunteer work) on one occasion when the truck was with the mechanic being repaired but denied ever having told Mr Brendas that he had been in Melbourne when he been unable to be contacted.

[11] The applicant also claimed to have contacted Mr Brendas on a number of occasions in the final week of his employment, and a telephone bill was tendered purporting to establish that the applicant made calls to Mr Brendas' mobile telephone.

[12] The applicant's evidence was that he was called to a meeting with Mr Brendas following his return from Wollongong, and told that as he had not worked on the previous days he should return the truck to the respondent's yard in Hume and park it. The applicant understood this to mean that his employment was being terminated. He did not work for the respondent after that date. Although Mr Brendas had told him at the time that he was "taking the truck off the run" the applicant had, on the next day, seen the truck driven by another driver.

[13] Under cross-examination the applicant agreed that he read English "Good enough". He agreed that although his statement of evidence indicated that he had not had a discussion about PPS tax until 18 months after his employment had commenced, his oral evidence was that this conversation took place about two weeks after he was employed.

[14] The applicant agreed that he had worked for the respondent on a previous occasion. He denied having told Mr Brendas that he wanted to be paid $14 per hour and to be on PPS. He reiterated that when Mr Brendas had mentioned PPS about two weeks after he commenced his employment he had asked him "what's this?" He denied that he had wanted to be paid through the PPS system from the beginning of his employment but admitted signing a PPS taxation form, claiming that he had not known what it was.

[15] The applicant acknowledged that he was currently employed and received benefits such as sick pay and holiday pay, benefits which he did not receive in his employment with the respondent. He also agreed that he was not paid any penalty payment for working on public holidays. The applicant did not receive any sick pay when absent due to a stroke suffered while working for the respondent in Wagga Wagga.

[16] The applicant had come to Australia in 1980, and had been employed in other positions since that time which had attracted such benefits as sick pay, holiday pay and superannuation. It was his evidence that he had asked about these matters while employed by the respondent but had not received any answer. He had received papers relating to superannuation while employed by a transport company for approximately 10 years, but had never queried not receiving such documents from the respondent.

[17] According to the applicant he would fax his time sheets through to the respondent and would receive a pay slip each week. The pay slip referred to both "subcontractor" and "employee".

[18] The applicant denied having the freedom to accept other work if the respondent had no work for him, given that the respondent owned the truck he drove and paid for the tyres and the diesel. He also denied ever seeking out work for the truck on his own behalf.

[19] It was the applicant's evidence that he had used his own tools to do minor mechanical work on the truck and his phone to call the company to find out his instructions for work. He also installed a CB radio in the truck using a loan provided by Mr Brendas. The CB was used to communicate with other drivers of the respondent according to the applicant, and not to seek out work independently for the vehicle on his own account.

[20] The applicant claimed that only he and other employees of the respondent drove the truck. He denied having been given time to seek other work for the truck or having been made to rectify, at his own expense, any mistakes he made while working.

[21] The applicant denied ever having claimed to be a subcontractor on the date of the termination of his employment.

[22] The applicant also gave evidence that his sister-in-law prepared his taxation returns but that he did not recall whether those returns referred to the PPS system.

[23] Mr Spiros Brendas, General Manager and Director of the respondent gave evidence in support of the claim that the applicant was a contractor.

[24] Mr Brendas' written evidence (Exhibit B1) attested to a number of matters including the following statements:

4. Kenoss currently employs four plant operators, five labourers and four office staff under various Federal awards and three non-award foremen.

5. Kenoss engages other persons under contracts for service on an as-needs basis including seven operators and four drivers. These persons refer to themselves, and Kenoss refers to them as "subcontractors", not "employees".

6. The contracts for service which Kenoss enters into with its subcontractors are oral. The services provided by the subcontractors include the operation of a range of earthmoving, plant, truck and site equipment together with routine maintenance and servicing of the plant, trucks and equipment.

13. The normal arrangements for Kenoss's subcontractor drivers upon each engagement were that there would be discussion between them and either one of Kenoss's foremen, Peter Masters (another subcontractor driver to Kenoss) or Mr Brendas about the availability and scheduling of work with Kenoss's various clients. Kenoss's personnel and the subcontractors (including the applicant) generally worked out amongst themselves what needed to be done and which subcontractor was to provide which service.

14. The services the applicant provided to Kenoss included the driving and operating of its tip trucks and service truck. Specific services the applicant performed included carting sand from a quarry in Hall, carting gravel from a quarry in Queanbeyan, taking recycling material to the airport and carting top soil to various sites for Kenoss's own jobs, contractors or clients. The applicant had full control over the performance of his on-site work (both scheduled and unscheduled) and in respect of his dealings with other contractors to Kenoss and Kenoss's clients and was not supervised by Kenoss in this regard. How the applicant carried out the work was up to him. The applicant also drove Kenoss's fuel cart when there was no work for the trucks and, at times, would drop off the truck on a site after the truck and plant had finished for the day and take the fuel truck and fuel up to the plant.

15. The applicant generally took Kenoss's truck home at the completion of work performed by him.

16. The applicant performed maintenance and mechanical repair work on Kenoss's trucks and provided and used his own tools on doing so.

17. The applicant also used his own mobile phone and paid his own mobile phone account in the performance of his contracted work for Kenoss.

18. The applicant also told Mr Brendas that he wanted by (sic) buy a CB and aerial in order to assist him to perform his work but could not afford to do so. Mr Brendas and the applicant agreed that Kenoss would purchase the CB and aerial and that the applicant would pay Kenoss back. The applicant purchased a CB and aerial on or about 20 February 1998 for $386.00.

19. Either Mr Brendas or Mr Masters would telephone the applicant when Kenoss wanted to engage the applicant to provide services. On other occasions, the applicant would telephone Mr Brendas or Mr Masters and ask them if the respondent required his services.

20. The applicant could refuse or decline to perform work for Kenoss at any time for any reason. On the occasions he did refuse or decline to perform work for Kenoss, arrangements would be made for him to return the truck to Kenoss's premises. Sometimes the applicant would contact Mr Brendas or someone else on behalf of the Kenoss (sic) when he was unavailable to perform work. On other occasions, the applicant would not make any contact at all and sometimes the truck would just be left at his home without making the effort to return it to Kenoss's premises.

23. In addition to hourly payments for work performed, Kenoss also paid the applicant an additional hour's payment to go to quarries and other places to find work for the truck. If there was no work he was not paid (other than the one hour's additional payment) regardless of how long he spent looking for work for the truck.

27. Sometimes the applicant would perform services for an entity unrelated to Kenoss. That entity would give the applicant a docket to forward to Kenoss. Kenoss would then pay the applicant for the hours he performed services for the other entity and then bill the other entity for the services provided by the applicant to that entity.

28. As indicated at paragraph 23 above, the applicant sometimes found the work that he performed for Kenoss himself without any prior reference to or direction from Kenoss (Mr Brendas estimates 25 to 30 per cent of the time).

29. The applicant started and finished work at various times depending on the work he was engaged to perform for Kenoss. The applicant was sometimes engaged to perform work for Kenoss on Saturdays and/or Sundays. Sometimes the applicant was not engaged by Kenoss to perform work on a particular day because that day coincided an industry or site RDO.

30. If Kenoss requested the applicant to perform work but the applicant declined the request because he was ill, the applicant was not paid any sick pay and he did not request any sick pay.

31. The applicant was not paid by Kenoss for any day he did not perform services by reason of that day being an industry or site rostered day off (RDO) or a public holiday and he did not request any payment for such days.

32. The applicant was not paid any annual or other form of leave by Kenoss and he did not request such leave (paid or otherwise).

33. The applicant was paid at the same hourly rate for worked (sic) performed regardless of whether or not the day was a normal weekday, a Saturday, Sunday or Public Holiday, and the applicant did not request different rates of pay for different types of days.

34. Kenoss did not make any employer superannuation contributions on behalf of the applicant or provide him with any other employment-related benefit and the applicant did not request that it did so.

35. Every year Kenoss obtains a workers compensation policy covering all subcontractors (not named).

36. The applicant was able to delegate any work offered to him by Kenoss to any other subcontractor driver of Kenoss without reference to Mr Brendas or any other officer or employee of Kenoss if, for some reason, he was not able or did not want to accept a particular engagement.

37. Kenoss usually paid the applicant by cheque made out to "Cash-Christos Tzanes". No payment was made to the applicant by Kenoss without the applicant first submitting an invoice for the work he had performed. Initially, the applicant submitted invoices on a fortnightly basis but later on, at his request, the parties agreed that he could submit invoices weekly. Arrangements were made from 14 January 1998 to pay the applicant by electronic funds transfer to his account at the Advance Bank, Weston Creek.

[25] Mr Brendas also gave oral evidence. He stated that the PPS document (Exhibit B2) purporting to show that the applicant was subject to the PPS system of taxation had been prepared by an accountant formerly employed by the respondent.

[26] According to Mr Brendas he employed the applicant following a conversation with him at a shop in Hume, not at a site in Conder as claimed by the applicant. He denied that his memory of the conversation was faulty but agreed that the statement he had prepared for the proceedings had had to be changed to correct some mistakes, which he attributed to language difficulties.

[27] Under cross-examination Mr Brendas said, referring to the conversation which resulted in the applicant's employment:

"...I ask what he wants and he said to me, "I want $14 an hour. I want one hour to looking for work and preparing for the truck and I want to be subcontractor and I will have my own insurance". That was when I am talking to him, he talked to me." (Transcript Page 54, lines 5-8).

[28] It was the evidence of Mr Brendas that the applicant had told him that he wanted to be a subcontractor at the time he was employed. Mr Brendas agreed that the applicant would telephone for instructions as to where he was to work and would be directed by an employee of the company. Further, he agreed that the respondent owned the truck driven by the applicant and was responsible for the major repairs to it. He claimed that the applicant was paid for the hours he worked as evidenced by his time sheets and that he had had an arrangement to be paid an extra hour each day. "He had an arrangement with me to get one hour extra, book in extra by self, That's what I am going to get". ( Transcript Page 56, lines 26-27).

[29] Mr Brendas agreed that he had provided accommodation in Wagga for the applicant when he was working there.

[30] It was also the evidence of Mr Brendas that the applicant told him all the time "I'm sub-contractor" and also told him on the date he left his employ "I am a sub-contractor, I do what I like, I am leaving" (Transcript Page 58, lines 15 & 19).

[31] According to Mr Brendas the applicant worked when he wished:

"No?---No, it's up to him to come to work when he wants. I mean, if he - if it's a Sunday or a rostered day he'd say, "I'm not working tomorrow". A lot of the time he say, "I'm not working this weekend". What happened with the subcontractors, when it's good weather they're working, when it's not good weather they're not working. To make good money, he would - Chris make very good money with the company. He was working any day he wants, come in. If the company had work on at weekends or somebody wants - a lot of people they're ringing up and they say, "I want to do excavation on the weekend and I need a couple of trucks", and the foreman or myself or himself find the work and say, "Chris, this weekend there's work for the trucks. In Jerrabomberra they want to cut that soil from there, excavation for the block". And there working any time they want." (Transcript page 60, lines 19-31).

[32] Mr Brendas denied ever having told the applicant that he intended to take the truck "off the run" claiming that "I never using that word. I don't know what it means". The truck had been in use ever since the applicant had left.

[33] Mr Paul Tzifas, a friend of Mr Brendas, was called to give evidence of the applicant's comments at the time he left the employ of the respondent. He claimed that he had heard the applicant tell an employee that he was a subcontractor and could stop working any time he wanted. The conversation he heard had been conducted in Greek. When asked to repeat the conversation in that language the following translation was given, "I work like/as contract" The word contract was spoken in English.

[34] Under cross-examination Mr Tzifas stated that he knew the applicant before the date of the conversation he had heard, and reiterated that he had heard the applicant tell another person, Con Dritsas, that he could stop working anytime he wanted to stop.

[35] Mr Williams, on behalf of the applicant, referred to a number of authorities which dealt with the distinction between employees and contractors. He submitted that all aspects of the employment or engagement should be taken into account, as no one aspect could be determinative. Given that there was some disparity between the evidence of the applicant and the witnesses called on behalf of the respondent, he submitted that in cases of conflict the evidence of the applicant should be preferred.

[36] It was noted that there was no written contract of employment and the previous relationship between the applicant and the respondent was one of employer and employee. The applicant had never operated as a subcontractor in any other position and did not have a registered business. It was submitted that a person in the applicant's position at the time he was employed, desperate and unemployed, would not have demanded a wage of $14 per hour together with a consultancy fee of $1 per hour. In addition, the applicant had never possessed any business cards despite the claim by Mr Brendas that he had indicated that he would get them. It was for these reasons that the evidence of the applicant about the conversation at the time of his employment was to be preferred over that of Mr Brendas.

[37] Further, it was submitted, a number of other facts brought out in the evidence supported the applicant's claim to have been an employee:

* The applicant was given instructions, on a daily basis, as to the work he was to perform by another Kenoss employee, usually a supervisor.

* If the truck was unavailable or there was no work for that vehicle the applicant would drive other machinery owned by the respondent.

* Although tax was deducted in accordance with the PPS system and the applicant had signed a document allowing for that to occur it was not clear that the applicant understood what the PPS system was.

* The respondent supplied the truck driven by the applicant and was responsible for all major repairs to that vehicle.

* the respondent was responsible for all expenses associated with the employee working away from his home base.

* the applicant worked "consistent hours over a consistent period".

* the applicant filled out time sheets rather than presenting invoices for work performed.

* the pay slips provided to the applicant while headed "subcontractors" referred to "employee" several times in the body of the document.

* the applicant derived no "goodwill" from the work he performed for the respondent.

[38] In relation to the claim that there was no actual termination it was submitted for the applicant that it was clear from the respondent's direction that the applicant should return the truck to the Hume Depot together with the keys that the applicant's services were no longer required. This was supported by the respondent's advice that he was "taking the truck off the run".

[39] Although Mr Tzifas had given evidence that the applicant had stated that he was a subcontractor and could do as he liked, it was submitted that adverse implications could be drawn from the fact that the respondent had not called the principal in the alleged conversation with the applicant but only Mr Tzifas who merely claimed to have overheard the remark.

[40] Finally, the applicant's representative referred to the decision in Jackson v Monadelphous Engineering Associates Pty Ltd [unreported IRCA 17 October 1997] which set out the indicia relied upon for determining the status of the employment relationship and which, it was claimed, supported in every respect the applicant's claim to have been an employee.

[41] It was the submission of the respondent that the applicant was not an employee but an independent contactor and, therefore, unable to make application under the relevant provisions of the Act which were available only to employees. In support of this submission the respondent relied on a number of authorities including Stevens v Brodribb Sawmilling Co. Pty Ltd [1986] HCA 1; (1986) 160 CLR 16. In Brodribb it was noted that while a prominent factor in determining the nature of a relationship between a person who engages another person to perform work is the degree of control it is the totality of the relationship between the parties which must be considered.

[42] Having referred to the decisions in Gurran v Tarbook Pty Ltd (Unreported IRCA 13 September 1996) and Monadelphous, the respondent's representative examined the facts of the application in the light of those decisions.

[43] It was noted that no written contract existed between the parties and that there was conflicting evidence as to the arrangement made by the parties and the manner in which the work was performed. It was submitted that the evidence given by the respondent was to be preferred to that of the applicant as that evidence was considered and consistent.

[44] Indicia which supported the respondent's claim that the applicant was not an employee were:

* neither paid sick leave nor annual leave were provided to the applicant.

* tax was deducted from the payments made to the applicant in accordance with the PPS scheme.

* no penalty payments were made for work performed on public holidays.

* the applicant provided materials for the repair of the truck he drove.

* the applicant was free to delegate his work to other persons.

* the applicant was instructed as to where he was required to perform work by representatives of the respondent but was not subject to further direction about the manner of the performance of the work by those representatives.

* the applicant worked only when work was available and the hours he worked varied considerably from week to week.

* the applicant was free to accept or refuse work offered by the respondent and did not work hours set by a particular award.

* the applicant, at his own expense, installed a CB radio in the truck to assist him in carrying out his work.

[45] In addition to these matters it was noted that a plethora of independent drivers operated in the industry in which the applicant and respondent were engaged. Further it was submitted that it was clear from the evidence of Mr Tzifas that the applicant considered himself to be an independent contractor and made statements to that effect.

[46] A recent decision of a Full Bench of the Commission has set out the principles which are relevant to determining an employment relationship Treloar and Bearings Incorporated (Australia) Pty Ltd [Print R4924]. Pages 10-17 of that decision examine the relevant authorities and, despite raising a number of criticisms of aspects of the decision, determines that there is an obligation to follow the most recent leading authority, Brodribb, noting that "[t]his requires us to have regard to a variety of criteria including the right to control and matters of economic reality including the level of economic dependence of one party upon another".

[47] Although there was no written contract between the applicant and the respondent in this matter, there was evidence concerning the arrangement reached between the applicant and Mr Brendas at the time the applicant asked for employment in January 1998. The evidence of Mr Brendas, in this regard, was corroborated by the circumstances under which the applicant actually worked.

[48] The applicant was not a novice to the industry in which the respondent operated. He had previously been employed by the respondent and had also worked as an employee driver for another company for about 10 years. I have no doubt that the applicant understood the arrangements concerning tax and appreciated that he had no entitlement to sick pay or holiday pay.

[49] I am more inclined to believe the evidence of Mr Brendas concerning this arrangement, given the inconsistency of the applicant's evidence about when he discovered the PPS tax arrangements. The applicant gave no credible explanation for the additional dollar per hour he was paid, while Mr Brendas' explanation was quite credible.

[50] The fact that the applicant carried out repairs and maintenance on the truck (albeit minor) and had fitted the truck with a CB radio (which he agreed had been intended to be at his expense) is more consistent with his status being that of independent contractor than employee.

[51] I accept the evidence of Mr Brendas that the applicant was able to decide when he would be available to work. Much of the evidence concerning the final week the applicant was "employed" by the respondent supported the conclusion that the applicant considered that he was not subject to the control of the respondent in this regard.

[52] So far as the day to day control exercised by the employer over the manner in which the applicant performed his work is concerned, I consider that on the evidence this is consistent with either form of employment relationship. The nature of the work performed would require little direct control. Employee drivers and contract drivers are difficult to distinguish between solely by reference to this test.

[53] Although the indicia of the relationship are not overwhelmingly supportive of either an employee or a contractor, on all the facts of this case, I find that the relationship between the respondent and the applicant in this matter was not one of employer and employee. I found the evidence of Mr Brendas concerning the intentions of the parties more convincing than that of the applicant. Although the parties' intentions do not determine the relationship, when taken together with the preponderance of the evidence in support of the applicant being an independent contractor, I find that the applicant was not an employee for the purposes of making an application under s170CE of the Act.

[54] The application is dismissed for want of jurisdiction.

Termination of employment - unfair dismissal - jurisdiction - whether independent contractor - although indica of relationship not overwhelmingly supportive of either employee or contractor, on all facts of case, relationship found to be not one of employer and employee - applicant not employee pursuant to s.170CE - application dismissed.

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