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[2011] TASSC 49
Supreme Court of Tasmania
2011-09-09
Evans J
Original judgment source is linked above.
CITATION: Tasmanian Contracting Services Pty Ltd v Young [2011] TASSC 49
PARTIES: TASMANIAN CONTRACTING SERVICES PTY LTD
APPEALED FROM: Y v Tasmanian Contracting Services [2011] TASWRCT 16
Workers' Compensation - Entitlement to compensation - Persons entitled to compensation - Who is a "worker" or "employee" - Contract of service - General principles - Effect of agreement between parties.
Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16; Hollis v Vabu Pty Ltd [2001] HCA 44; [2001] 207 CLR 21; Protective Security Pty Ltd v Bedelph [2004] TASSC 128; (2004) 13 Tas R 354, applied.
Forstaff and Ors v The Chief Commissioner of State Revenue [2004] NSWSC 573; Construction Industry Training Board v Labour Force Ltd [1970] 3 All ER 220; Re Odco Pty Ltd v Building Workers' Industrial Union of Australia (1989) FCA 336; Odco Pty Ltd v Accident Compensation Commission [1990] VicRp 16; [1990] VR 178; Accident Compensation Commission v Odco Pty Ltd [1990] HCA 43; (1990) 95 ALR 641; Building Workers' Industrial Union of Australia and Ors v Odco Pty Ltd [1991] FCA 87; (1991) 99 ALR 735; Personnel Contracting Pty Ltd t/a Tricord Personnel v The Construction Forestry Mining and Energy Union of Workers [2004] WASCA 312; Johnson v MNG Investments t/as Australian Temporary Fencing [2011] ACTSC 124; Country Metropolitan Agency Contracting Services Pty Ltd v Slater [2003] SAWCT 57, referred to.
Judgment Number: [2011] TASSC 49
TASMANIAN CONTRACTING SERVICES PTY LTD v ANTHONY YOUNG
1 On 23 September 2010, the respondent was injured whilst working at premises of Kemp and Denning Ltd, from which that company trades as K & D Bricks and Pavers. I will refer to this entity as K & D. The respondent contends that at the time he was injured he was a worker within the meaning of that term as used in the Workers Rehabilitation and Compensation Act 1988, acting in the course of his employment with the appellant, Tasmanian Contracting Services Pty Ltd ("TCS"). TCS deny employing the respondent, and that issue was determined against TCS by the Workers Rehabilitation and Compensation Tribunal, constituted by Chief Commissioner Carey. TCS has appealed that decision.
2 The Workers Rehabilitation and Compensation Act, s3(1), relevantly includes the following:
"3 Interpretation
(1) In this Act, unless the contrary intention appears -
...
'employer' means the person with whom a worker has entered into a contract of service ...;
(a) any person who has entered into, or works under, a contract of service ... with an employer, whether by way of manual labour, clerical work or otherwise, and whether the contract is express or implied, or is oral or in writing;
3 The phrase "any person who has entered into or works under, a contract of service" in the definition of "worker" can be traced back to the definition of "workman" in the Workmen's Compensation Act 1906 (UK), s13, as can the phrase "the person with whom a worker [the workman] has entered into a contract of service" in the definition of "employer".
4 Phrases such as these have been adopted in numerous statutes in Australia that deal with workers compensation or address employment relationships. Over the years the meaning of the term "contract of service" has been the subject of many decisions. Nonetheless, the sort of relationship which amounts to a "contract of service" remains largely undefined as a legal concept except in terms of various criteria, the relevance of which may vary according to the circumstances; Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 at 35. In result, in considering that term, there is no real scope for the application of the principle that as the Act is intended to benefit workers, all things being equal, its terms should be interpreted favourably to workers.
5 A determination as to whether a person was working under a contract of service, that is, a determination as to "the legal character of the relationship created by the contract" (Marshall v Whittaker's Building Supply Co [1963] HCA 26; (1963) 109 CLR 210, Windeyer J at 218) requires the consideration of all of the facts in relation to the total relationship involving the parties; Federal Commissioner of Taxation v Barrett [1973] HCA 49; (1973) 129 CLR 395 at 401 and Stevens v Brodribb Sawmilling Co Pty Ltd (supra) at 29.
6 The question for determination has commonly been expressed to be whether the person was working as an employee under a contract of service or as an independent contractor under a contract for services. However, as explained by McDougall J in Forstaff Pty Ltd v Chief Commissioner of State Revenue [2004] NSWSC 573 at pars[70] - [80] the real question is not whether the person was an employee or an independent contractor, but whether the person was an employee. To approach the question on the basis of a dichotomy between the relationship of an employer and an employee, and that of a principal and an independent contractor distracts from the core question. See also Construction Industry Training Board v Labour Force Ltd [1970] 3 All ER 220, Cooke J at 224, agreed with by Parker CJ and Fisher J. In the case under consideration the question for determination is, was the respondent working under a contract of service with TCS?
7 It is well established that the test for establishing whether a contract of service exists involves many factors. In this regard I adopt the following passage from the decision of Crawford J (as he then was), agreed with by Blow J in Protective Security Pty Ltd v Bedelph [2004] TASSC 128; (2004) 13 Tas R 354 at pars[31] - [34]:
"A prominent factor in determining the nature of the relationship between a person who engages another to perform work and the person so engaged is the degree of control which the former is entitled to exercise over the latter, not merely in regard to what the latter will do, but also in regard to how it is to be done. But the existence of control, whilst significant, is not the sole criterion by which to gauge the matter. It is merely one of a number of indicia. 'Other relevant matters include, but are not limited to, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and provision of holidays, the deduction of income tax and the delegation of work by the putative employee'. Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 at 24. It is the totality of the relationship between the parties which must be considered. Op cit at 29. Criteria 'suggesting a contract of service rather than a contract for services include the right to have a particular person do the work, the right to suspend or dismiss the person engaged, the right to the exclusive services of the person engaged and the right to dictate the place of work, hours of work and the like. Those which indicate a contract for services include work involving a profession, trade or distinct calling on the part of the person engaged, the provision of him by his own place of work or of his own equipment, the creation by him of goodwill or saleable assets in the course of his work, the payment by him from his remuneration of business expenses of any significant proportion and the payment to him of the remuneration without deduction for income tax. None of these leads to any necessary inference, however, and the actual terms and terminology of the contract will always be of considerable importance.' Op cit at 36 - 37. However, having regard to a variety of criteria 'is not without its difficulties because not all of the accepted criteria provide a relevant test in all circumstances and none is conclusive. Moreover, the relationship itself remains largely undefined as a legal concept except in terms of the various criteria, the relevance of which may vary according to the circumstances.' Op cit at 35. 'Any attempt to list the relevant matters, however incompletely, may mislead because they can be no more than a guide to the existence of the relationship of master and servant. The ultimate question will always be whether a person is acting as the servant of another or on his own behalf and the answer to that question may be indicated in ways which are not always the same and which do not always have the same significance.' Op cit at 37.
It is obvious that the signed agreement between the parties required careful consideration because it expressly provided that the deceased was an independent contractor and it denied the existence of a relationship of master and servant. It was couched generally on that basis and many of its terms were consistent with that. The Tribunal determined that it was not persuaded that the deceased was performing his duties consequent upon a contract of service so as to be a worker within the meaning of the Act, largely because of what the agreement provided, although at the same time it found that the material provisions of the agreement to that effect were supported by other circumstances.
The learned judge referred to a number of authorities concerning the influence that an express agreement may have on the question that arose in this case. In Ferguson v John Dawson & Partners (Contractors) Ltd [1976] EWCA Civ 7; [1976] 1 WLR 1213 it was made clear by Megaw LJ at 1222 - 1223, upon reference to authorities, that the nature of the relationship is determined by the law and not by the label which parties choose to put on it, and it is not necessary to go so far as to find the contractual document containing the label to be a sham. The expression of the parties' intention will be a relevant factor, but is certainly not a conclusive factor, in deciding what is the true nature of the contract. In Global Plant Ltd v Secretary of State for Social Services [1972] 1 QB 139, Lord Widgery said at 152: 'One must not overlook that the intention of the parties was that the relationship should be that of an independent contractor, and although the parties cannot by intention make a transaction into something which it is not, yet it is recognised that such intention is a factor for consideration in these cases.' That principle was applied at first instance in this State in Johns Perry Hayward Pty Ltd v Greaves A72/1990 at 17 - 18 and Thompson v Cooee Point Abattoirs Pty Ltd [2002] TASSC 41; (2002) 10 Tas R 412 at 419.
That circumstances other than the express provisions of the written agreement should be considered in this case, is also supported by what was said by Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ in Hollis v Vabu Pty Ltd [2001] HCA 44; (2001) 207 CLR 21 at 33: 'It should be added that the relationship between the parties, for the purposes of this litigation, is to be found not merely from these contractual terms. The system which was operated thereunder and the work practices imposed by Vabu go to establishing "the totality of the relationship" between the parties; it is this which is to be considered. Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 at 29'."
8 The fact that the sort of relationship which amounts to a "contract of service" remains largely undefined as a legal concept except in terms of various criteria of no fixed relevance, makes it difficult to determine whether a particular relationship or a particular occupation gives rise to a contract of service. This reality, and the recognition that those engaged in a variety of occupations are not in employment, resulted in the insertion of deeming provisions in workers compensation legislation and the like, which deem that persons providing or performing particular work or involved in particular relationships are in an employment relationship. For example, the Workers Rehabilitation and Compensation Act has, or has had, deeming provisions in relation to salespersons, trainees, luxury hire car drivers, taxi drivers, jockeys, fire fighters, ambulance workers and police volunteers. In 2004 s4E was inserted into that Act. It allows for relationships to be prescribed as a relationship between a worker and an employer. Section 6B is to much the same effect but relates to persons of a prescribed class. In addition to some of these provisions the Workers Compensation Act 1958 (Vic) contained deeming provisions in relation to aspects of mining, tree falling, shearing, boxing, wrestling and entertaining.
9 Notwithstanding the difficulty in some circumstances of establishing whether or not a contract of service exists, the common law and, more particularly, legislation, has imposed a number of potentially onerous requirements on employers. They include vicarious liability in respect of an employee, obligations with regard to workers compensation, payroll tax, PAYE income tax deductions, Superannuation Guarantee contributions, award rates of pay, holidays, annual leave, sick leave, long service leave, and obligations in relation to and arising from the termination of the engagement of an employee. Because of obligations such as these, for many years some of those involved in engaging or providing the services of others have done what they can to avoid creating an employment relationship.
10 The source of the documents that underpins the relationship between the respondent TCS and K & D is Odco Contracting Systems Australia Pty Ltd. Similar documents have been the subject of decisions to which I will refer. A number of the decisions have directly involved companies connected to Odco. The document that initiated the relationship between the respondent and TCS is relevantly as follows:
"Contractors Name ANTHONY YOUNG
AGREEMENT TO CONTRACT
CONDITIONS OF CONTRACT
1 I acknowledge and agree that there is no relationship of employer / employee with Tasmanian Contracting Services Pty Ltd (TCS) and that TCS does not guarantee me any work. I am self-employed and, as such, I am not bound to accept any work through TCS.
2 I hereby agree to work for an agreed amount per hour for actual on-site hours, or job price to be agreed.
3 I instruct TCS to make deductions under the PAYG system of taxation.
4 I hereby agree that I have no claims on TCS in respect of Holiday Pay, Long Service Leave, Sick Pay, or any similar payment.
5 I hereby agree that TCS 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.
6 It is agreed that I must carry out all work that I agree to do through the agency of TCS in a proper manner and TCS 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 TCS in respect of the above.
7 I hereby agree to supply my own equipment, including safety equipment, where necessary to perform the work, and that I have no claim on TCS in respect of the above.
SIGNED: [Signature] DATE: 20/2/08
For and on behalf of: TASMANIAN CONTRACTING SERVICES PTY LTD
The ODCO®Contracting System"
11 Another document of some significance is a booklet issued in the name of TCS entitled "Odco Independent Contracting System Information Guide for Odco Contractors". It is comprised of 15 pages and contains detailed information in relation to many matters, including the following:
•
Working as an Odco contractor is very different to being an employee.
•
We refer to you as an Odco contractor because that is the name of the legal case the system is founded on. It established that workers using Odco contracting were independent contractors and not employees.
•
There are only two contracts. One contract is between you, the contractor, and TCS, the agency, and the other is between the agency and the client. There is no contract whatsoever between the contractor and the client.
•
As an Odco contractor you are not an employee so you are not governed by award conditions.
•
We provide the interface between you, the contractor, and the business where you work, the client.
•
Odco contractors are not employed by the agency or by the client. You are a bona fide, self-employment, independent contractor.
•
You are engaged as an Odco contractor and you offer your services to the agency on a voluntary basis.
•
You can work or not work as you choose.
•
When you are offered work by the agency you are free to accept, reject or renegotiate the offer.
•
As an Odco contractor you are free to pursue other income as you choose. You are not exclusively contracted to TCS and you do not provide your services exclusively to any one business.
•
Odco contracts are daily hire.
•
The agency assists by administering the contracts between the agency and the client and the agency and you, the contractor.
•
You have a business relationship with the clients where you work. Those clients direct you as to what work to do each day but not how to do it.
•
As an Odco contractor, you have a flexibility in your working life that is different to being an employee.
•
You have the right to source other work and income at any time. You are not tied exclusively to us or the client business where you may work. All we ask is that you communicate with us in this regard.
•
You negotiate your pay rate with the agency - you do not negotiate directly with the business where you are working.
•
The level of work available through TCS is variable. As our business supplies contractors on an as needs basis we rely on demand by our clients.
•
If you have accepted a work offer and for any reason you are unable to attend, it is essential that you call and advise us of the problem as soon as possible. Similarly, if you are running late you must let us know. We can then advise the client and make the necessary arrangements.
•
As an Odco contractor you will always be paid better than the minimum rate applicable to the work offered. Amounts to cover standard employee benefits such a holiday pay and personal leave are included in your rate. Remember that as an Odco contractor, you should always discuss your rate with us - not with the client where you are working.
•
Odco contractors who are individuals or sole traders will receive superannuation contributions pursuant to the provisions of the Superannuation Guarantee Administration Act.
•
Odco contractors must invoice the agency for their services.
•
We have a legal obligation to pay you and always will - regardless of whether we are paid by the business where you are working. This is part of our contract with you.
•
As an Odco contractor, you must provide a standard set of equipment necessary for the performance of your profession or trade.
•
As part of your contract with us it is essential that you are covered in respect of public liability. We have arranged a blanket policy which carries a total cover of $10 million per incident per contract which covers you only whilst working through the agency.
•
Tasmanian legislation requires all independent contractors to be covered by accident insurance. TCS can arrange such insurance for you. Contractors must have appropriate accident insurance at all times whilst working through TCS.
•
Income protection insurance is available from TCS if required.
•
We are required to comply with the labour hire provisions under the new taxation system. These provisions regarding withholding of PAYG tax may be different to other or previous arrangements.
•
All individuals, working under labour hire arrangements will have income tax withheld under PAYG. Under a special arrangement with the Australian Taxation Office we are able to offer the alternative of having your contractor remuneration taxed at a flat rate of tax or as per the PAYG tax tables.
•
You are free to be a member of a union and work as an Odco contractor.
12 The key document in terms of the relationship between TCS and K & D is relevantly as follows:
"HIRING AGREEMENT
Tasmanian Contracting Services Pty Ltd is a service company that operates a licensed agency contracting system ...
The contractors we supply to you are yours to direct, and the onus of inspection and satisfaction is yours. If, for any reason, you are unhappy with the contractor, simply send the person off site and inform us of your dissatisfaction. Our service MUST supply good personnel to ensure your continued usage. We therefore ask for feedback from you as to the contractors' performance.
We refer you to our Conditions of Hire ..., which are binding on you upon the signing of this agreement.
If you wish to avail yourself of your services, now or in the future, please complete the section below and return this Agreement to us, so that we can initiate action to establish an account ready for your convenience, thereby avoiding any delay of supply when it is required.
...............................................
CLIENT NAME: KEMP & DENNING T/A K & D BRICKS & PAVERS
I have read and understand all Conditions and Special Conditions of Hire ... and wish to establish an account with TASMANIAN CONTRACTING SERVICES.
SIGNED: [Signature] DATE: 25/6/[2004]
For and on behalf of: K & D BRICKS & PAVERS
POSITION: MANAGER
CONDITIONS OF HIRE:
i) Minimum hire:
ii) Tools: basic tools of trade are included in our rates.
iii) Work done out of normal hours is negotiable - eg overtime, weekends, public holidays, afternoon/night shift and country jobs.
iv) A safe workplace is to be provided.
PAYMENT TERMS AND CONDITIONS: You are invoiced per site per week (or fortnight) for all contractors on that site. Your invoices will be faxed to you on Monday of each week. Payment will be by cheque.
RATES: Our rates include an administration charge plus all statutory obligations for the contractors that the agency is legally responsible for. You, the client, are free from such liabilities as income tax deductions, workers compensation, payroll tax and superannuation and are ensured that contractors have sickness and accident insurance & property & public liability insurance.
TAXATION: We administer PAYG tax for the contractors we supply to your business. PAYG tax is withheld at the appropriate rate and forwarded to the ATO as required.
DISSATISFACTION: If you are not satisfied with any contractor's performance, simply notify us and send the contractor off site immediately. You will be charged for hours on site or units delivered only. You are not liable to make any other payment for the services supplied. The contractors supplied are not your employees and are not ours; they are bona fide independent contractors.
###############################################################
The ODCO® Contracting System"
13 The sole director of TCS is Michael Flynn. His affidavit in relation to the operations of TCS was put into evidence before the Tribunal by the worker respondent. In consequence Mr Flynn was not cross-examined and it is necessary to glean most of the information in relation to the operations of TCS from his affidavit and the documents put into evidence. Mr Flynn says that Odco is a system of labour engagement licensed to various operators throughout Australia by Odco Contracting Systems Australia Pty Ltd. TCS is a licensed Odco contractor agency. In the 1990s Mr Flynn established a joint venture in Tasmania with an Odco contract agency based in New South Wales. That venture was terminated in 2004. TCS took over its clients and contractors and has since provided a system of contractor engagement to businesses in Tasmania. A large proportion of the contractors engaged through TCS are individuals looking for work or individuals who are referred by licensed Federal Government Job Network agencies. Others are individuals sent to TCS by business clients for consideration and placements at their sites. During the period when the respondent was placed at K & D by TCS, it had up to twelve men working as contractors at K & D's Giblin Street premises.
14 When the respondent was placed at K & D he was 26 years of age. Save for an uncompleted apprenticeship period as a painter, all his employment had been of a casual nature as a labourer or factory hand performing unskilled work. In early 2008 the respondent telephoned K & D and enquired about employment. He was told that they did not do anything about employment and advised to contact TCS. He telephoned TCS and was told that no work was then available but that TCS would get back to him if the position changed. About 7 weeks later TCS telephoned him and advised that work was available. The respondent went into TCS and, in his words, filled out the necessary paperwork.
15 Before the paperwork was completed he was interviewed by an employee of TCS. As explained by Mr Flynn, that interview was to assess the respondent's suitability for the work that was available. The respondent was provided with information regarding Odco contracting arrangements, including his independent contractor status when working under the system, and the insurance arrangements. He was provided with a general occupational health and safety and equal opportunity and anti-discrimination briefing. Following this he was offered the Agreement to Contract set out in par[10]. .
16 Upon signing that agreement and other associated documents, the respondent was provided with a Contract Pack which detailed his status as an independent contractor, his obligations, TCS's obligations and all insurance details. Within about a fortnight he was provided with copies of all relevant documents, together with further information in relation to their agreement.
17 The respondent was not misled about the nature of the arrangements he had entered into. He knew that he was a contractor and not a permanent employee. He was well aware that as a contractor he was not covered by workers compensation. He explained that it was because of this that he, on numerous occasions, unsuccessfully approached K & D to take him on as a full-time employee. K & D declined on the basis of uncertainty about the future of the area of the business in which the respondent was engaged. He mentioned that a minor incidental benefit of becoming a full-time employee would have been that as a full-time employee he would have become entitled to a discount when purchasing items from K & D. As a contractor he was not entitled to a discount. He realised that he had no sick, recreation or long service leave entitlements. By way of deductions taken from his earnings, he was paying for a personal accident and sickness policy of insurance arranged for him by TCS as well as for a public liability cover. He was aware that the personal accident and sickness policy included a fourteen day excess period. He understood that as a contractor he had to supply his own work equipment, that being safety boots, appropriate clothing, gloves and eye protection if he wanted it. He knew that TCS was not obliged to provide him with work, as he was self-employed, and knew that if he was offered work by TCS that he did not want he could refuse it.
18 The following factors point to the relationship between TCS and the respondent being other than that of an employer and an employee:
•
Their belief that it was not an employment relationship.
•
Their written agreement that it was not an employment relationship.
•
No sick leave entitlement.
•
No long service leave entitlement.
•
No entitlement to holidays or holiday pay.
•
Their agreement that PAYG tax deductions could be taken from his earnings. This system relates to contractors and differs from PAYE tax deductions, the system which applies to employees.
•
The arrangement by which TCS deducted and passed on 9 per cent of his earnings to his superannuation fund. This arrangement was inconsistent with him being an employee, but consistent with him being a contractor.
•
His acknowledgement that he was not covered by workers compensation.
•
His personal accident and sickness policy of insurance, his public liability cover, and his payment for the same.
•
The absence of any obligation on TCS to find and supply work for him.
•
His entitlement to do work other than that offered by TCS.
•
Their agreement that he was not bound to do any work through TCS.
•
The fact that he was at no time paid a weekly wage, nor was he entitled to the same. He was paid for hours worked or alternatively for a full day, provided the work was done inside the stipulated 7.6 hours' quota for a day's work.
•
TCS had no direct control over him as to how and when he performed work for K & D. His day-to-day control and supervision rested with K & D. The respondent recognised that the production manager at K & D was "the man in power" and "my boss".
•
Apart from one occasion when a TCS employee visited the K & D site to warn the respondent over a dispute he had had with another TCS contractor, the only times when a representative of TCS came to the site were to hand out payslips and "just say how's it going on that's about it".
19 The penultimate dot point above was a finding of the Chief Commissioner. Counsel for the respondent in substance disputes that finding. To that end counsel relies on the second paragraph of the Hiring Agreement between TCS and K & D which provides that: "The contractors we supply to you are yours to direct ...". This agreement is set out in par[12] above. I am not persuaded that this term in the agreement between TCS and K & D does anything more than require that TCS not interfere with such directions as K & D chooses to give to a contractor. There is no term to the effect that the respondent will do whatever he is directed to do in the agreement between him and TCS. If there was it would be in conflict with the first term of their agreement which is to the effect that the respondent is not an employee but self-employed and is not bound to accept any work. See the comments of Woodward J in Re Odco Pty Ltd v Building Workers' Industrial Union of Australia (1989) FCA 336 at pars[177] and [178]. Note that whilst what his Honour there says relates to the same words in the Hiring Agreement, his comments are made in the context of his assessment of the contractual relationship between Troubleshooters and the builder, not Troubleshooters and the worker. My view is that there is no basis, let alone necessity, for implying a term that the respondent will do whatever he is directed to do into the agreement between him and TCS. .In this regard I should say that I respectfully disagree with the views expressed by McCusker DPJ in Country Metropolitan Agency Contracting Services Pty Ltd v Slater [2003] SAWCT 57 at pars[49] and [50]. I agree with the Chief Commissioner's finding that TCS had no direct control over the respondent as to how and when he performed his work with K & D, and his day-to-day control and supervision rested with K & D.
20 The following are what the Chief Commissioner referred to in his decision as "facts which are suggestive of a worker/employer relationship":
"• The worker had no autonomy of how he performed his work. The work was all done in accordance with instructions given by and the supervision provided by others.
•
The worker was to a degree controlled by TCS on numerous issues contained in the TCS documents, such as occupational health and safety, behaviour, anti-discrimination, and responsibilities owed to TCS and to the client.
•
Although there may have been some flexibility as to hours, in the main the worker was required to commence work at certain times in order to fit the production schedule of K & D ... and was required to work until the quota was completed or the fixed hours per day (7.6). When he was moved to work in the production line there was a more consistent start and finish time imposed to which the worker was, I infer, obliged to conform to.
•
I infer that the worker was obliged to meet K& D's ...work schedule and output and did not have independence to attend as and when he wished. In this regard the worker stated that the worker was not working for himself and referred to Mr Phil Oakley (Production Manager) as his boss.
•
The worker did not negotiate his remuneration and on his evidence did not consider that he had the right to do so. His level of remuneration appears to have been set by TCS.
•
The nature of the worker's work was unskilled. It is difficult to equate this situation to one where the worker was selling his skill or expertise on the open market.
•
TCS could exercise a form of discipline over the worker. The documentation proscribed acts of discrimination or harassment or the consuming and use of alcohol or illegal drugs or being under the influence of same at the workplace. Various occupational health and safety requirements were also mandated as between TCS and the worker and certain activities were expressly forbidden, for example jokes or horse play.
•
Very little equipment was in fact provided by the worker for the performance of his duties.
•
The worker in no way had the trappings of conducting his own business. He had no ABN, he did not seek work from other areas, he was not a business entity, he was not developing any capital benefit or goodwill and there is no evidence that he conducted his financial affairs so as to deduct business expenses from his remuneration."
21 Other findings of the Chief Commissioner that bear on his decision include:
•
"[T]he worker's involvement in entering the arrangement with TCS was simply as the method required for him to gain the employment that he sought. ... [T]he worker's main intent out of all of the process he went through was merely to get a 'job'."
•
"He was given no choice but to proceed in that manner should he wish to gain employment ... He did not consider that he had any bargaining position, he did not negotiate any of the terms of the agreement, he did not negotiate his rate of pay or his terms of hire. ... He merely worked at a job and received payment for it."
•
"The worker in practice did not operate as a contractor. He did not offer his services elsewhere, he did not obtain work elsewhere. He merely went to work, did what work he was required to do and left when he was authorised to do so."
•
"It was clearly the worker's belief, and it was also provided in the documentation, that he was obliged to notify TCS should he not be able to attend on a work day. He was also clearly of the belief that he could not delegate his work to someone ...".
22 Sound as the penultimate finding of the Chief Commissioner noted above is, I am dubious that this is a factor that should be given much weight. Connelly v Wells (1994) 55 IR 73 dealt with an issue as to whether the injured party had entered into or was working under a contract of service with the other party as his employer, pursuant to the Workers Compensation Act 1987 (NSW). Gleeson CJ at 74 said:
"Where the relationship between two persons is founded in contract, the character of the relationship depends upon the meaning and effect of the contract. In the absence of a suggestion that a contract was varied after it was originally made, its meaning and effect must be determined as at the time it was entered into. If the contract is in writing, then the court which is considering the nature of the relationship between the parties is directed to an examination of the terms of the written agreement in the light of the circumstances surrounding its making. (Narich Pty Ltd v Commissioner of Pay-Roll Tax (1983) 2 NSWLR 597 at 601)."
23 Consistent with the above passage, the fact that the respondent in this case did not offer his services elsewhere and did not obtain work elsewhere has no bearing on his contractual relationship with TCS. By their contractual relationship he was entitled to do so. Nonetheless, for the purposes of establishing whether the respondent was working under a contract of service with TCS, the totality of their relationship is to be found not merely from the terms of their contract. The system which operated thereunder and the work practices imposed by TCS go to establishing the totality of the relationship between the parties; it is this which is to be considered; Stevens v Brodribb Sawmilling Co Pty Ltd, (supra) at 29 and Hollis v Vabu Pty Ltd, (supra) par[24]. What must be focused on is the totality of the relationship between the parties. I find it difficult to see how the unilateral action or inaction of a party to the relationship outside of the relationship has any significant bearing on it. If it did the answer to the question "is the person working under a contract of service?" would be ambulatory. If the question was addressed at a time before the person chose to obtain work elsewhere, there would be an increased likelihood of a finding of employment, but if addressed after the person had obtained work elsewhere, there would be an increased likelihood of a finding that the person was not employed. To my mind the contractual entitlement of the respondent to work elsewhere is of greater significance than his exercise of that right.
24 Before turning to some decisions that bear on relationships that involve Odco documents and the like, I mention that in the list quoted in par[20] above of "facts which are suggestive of a worker/employer relationship", the Chief Commissioner has blurred the distinction between TCS and K & D. The first, third and fourth dot points relate to K & D's control over the respondent, not that of TCS. The issue before the Chief Commissioner related to the relationship between the respondent and TCS, that is, was the respondent working under a contract of service with TCS.
25 The genesis of the Odco documents may be the 1973 decision in Construction Industry Training Board v Labour Force Ltd (supra). The relationship which came under scrutiny in that case involved an entity that supplied labourers to the construction industry. The arrangements between those involved, that is, the entity that supplied the labourer, the labourer and the member of the construction industry that provided the work performed by the labourer, was quite similar to that which applies pursuant to Odco documents. In that case it was held by the Court of Appeal that there was no contract of any kind, let alone a contract of service, between the labourer and the member of the construction industry, and that there was no contract of service between the labourer and the entity that supplied the labourer to the construction industry.
26 The first authorities to which I will refer that involve Odco documents are a series of decisions culminating in the High Court's decision in Accident Compensation Commission v Odco Pty Ltd [1990] HCA 43; (1990) 95 ALR 641. These decisions relate to the provisions of the Accident Compensation Act 1985 (Vic). Odco Pty Ltd, trading as Troubleshooters Available ("Troubleshooters"), was providing the services of tradesmen to builders. The issue was whether Troubleshooters was deemed to be an employer of the tradesmen under that Act and was, in consequence, liable to pay a levy pursuant to it. The Act's definition of "employer" was orthodox insofar as it included a person "for whom a worker works; or with whom a worker agrees to perform work", but also extended to "a person who is deemed to be an employer under this Act". Similarly, the definition of "worker" was orthodox insofar as it included a person "who performs work for an employer; or agrees with an employer to perform work", but was extended to a person "who is deemed to be a worker under this Act".
27 In the judgment of the Court of Appeal in Odco Pty Ltd v Accident Compensation Commission [1990] VicRp 16; [1990] VR 178 at 181, it is noted that at first instance before Gray J the Commission did not contend that the tradesmen were workers under a contract of service. The Commission's case was advanced on the basis that Troubleshooters and the tradesmen were covered by deeming provisions in the Act. Nonetheless, as noted by the Court of Appeal, Gray J had held that whatever the nature of the relationship between Troubleshooters and the tradesmen was, it did not amount to a contract of service, as it lacked the element of control that must be present in some form or degree in every contract of service. The Court of Appeal said that the conclusion of Gray J in that regard was clearly correct and observed that as this aspect of the decision was not challenged before the Full Court, it would not be the subject of any further consideration.
28 Similarly, before the High Court it was not suggested that there was a contract of service between Troubleshooters and the tradesmen. The issue put in contention by the Commission at first instance, before the Court of Appeal and before the High Court, was whether provisions in the Act that extended the meaning of the terms "employer" and "worker" applied to deem Troubleshooters to be the employer of the tradesmen. One of the individuals who was the subject of these decisions was a labourer. At 647 of the High Court's unanimous decision, it held that the labourer was deemed to be an employee of Troubleshooters under a provision of the Act which bears some similarity to the Workers Rehabilitation and Compensation Act (Tas), s4B(1), which deems contractors covered by its terms to be employees. That subsection was not mentioned in the Tribunal's decision or in argument before this Court. I assume that this is because, by reason of s4B(2), it did not apply. That subsection provides that if a contractor to whom subs(1) applies takes out his own personal accident insurance, the contractor is taken not to be a worker for the period during which the insurance remains valid. (For a deeming provision that would appear to be squarely aimed at Odco type arrangements see the Workers Compensation Act 1951 (ACT), s12.) So, save insofar as the High Court's decision proceeded on the implicit assumption that a labourer engaged pursuant to the Odco documents in the circumstances there under consideration was not engaged under a contract of service, it does not touch on that issue.
29 Nonetheless, the High Court's decision at 646 - 647 does assist in distilling the nature of the agreement between the parties to an Odco arrangement. The Agreement to Contract set out in that case at 643 is in substantially the same terms as the Agreement to Contract set out in par[10] of these reasons, save that:
•
it includes an express provision that Troubleshooters is not liable for workers compensation. Provisions to that effect are elsewhere in the documents in the current case;
•
it forbids Troubleshooters from making deductions in respect of income taxation, whilst the respondent's agreement with TCS instructs it to make deductions under the PAYG system of taxation; and
•
it includes a provision obliging the contractor to belong to a trade union. In the Information Guide the respondent was informed that he was free to be a member of a union.
30 Paraphrasing what the High Court said and relating it to the case under consideration, it can be said that once a labourer accepts an offer of work and attends at a client's site, he remains at the site working for as long as that client requires, or for as long as the labourer wishes. TCS does not exercise, and is not able to exercise, any control whatsoever over what the labourer does at the site or how he does it. The only contact TCS has with the labourer is in obtaining information of what work he has done. The client contacts TCS every week to advise the details of hours and sites worked for the client during the previous seven days, and this information is verified by the labourer. From this information, invoices are raised by TCS to the relevant client.
31 The conclusion to be drawn from the material is that the labourer enters into a contract with TCS by accepting the offer of work. The fact that the labourer is evidently free to withdraw from the site at any time because he objects to work, or to work further on the grounds of safety or for some other reason, is by no means inconsistent with the entry of a contract with TCS on acceptance of the offer of work. There had been no suggestion that the labourer's right to withdraw his services rendered the contract between him and TCS illusory.
32 When the labourer accepts the offer of work, a contract comes into existence in the terms set out in the document headed "Agreement to Contract" which the labourer has previously signed. That document contains the terms which govern the contractual relationship which then arises. It is significant that cl 6 of the document contains a promise by the labourer to "carry out all work that I agree to do through the agency of TCS in a proper manner". This clause also contains a "guarantee" against faulty work. In this context the words "work that I agree to do" contemplate the reaching of an agreement between the labourer and TCS with respect to the work to be carried out.
33 So far as the client is concerned, it enters into a contract with TCS whereby it agrees to pay TCS an amount which will enable TCS to pay remuneration to the labourer. On the acceptance by the labourer of the offer by TCS of work, an agreement arises between TCS and the labourer constituted by the offer and acceptance and the terms set out in the document entitled "Agreement to Contract". The agreement is one whereby the labourer agrees with TCS to perform work for the benefit of TCS in the sense that the work is done for the purposes of TCS's business, and enables TCS to derive remuneration from the relevant client which will enable TCS to pay the labourer for his services. This distillation of what the High Court said about the nature of the agreement between the parties to an Odco arrangement is pertinent to the determination of the case in question
34 Building Workers' Industrial Union of Australia v Odco Pty Ltd [1991] FCA 87; (1991) 99 ALR 735 is a decision of the Full Court of the Federal Court that arose from steps taken by the Building Workers' Industrial Union of Australia to discourage clients of Troubleshooters. One of the main questions agitated in the proceedings was whether Troubleshooters' men sent to work at building sites were employees of either the builder or Troubleshooters. This issue was regarded as important by the union because of its bearing upon the application of award provisions to those men. At first instance Woodward J determined that the men were not employees, but independent contractors to Troubleshooters. The Agreement to Contract between Troubleshooters and the men sent to work at building sites is set out at 739. It is essentially the same as the Agreement to Contract that is the subject of the High Court's decision in Accident Compensation Commission v Odco Pty Ltd. In the course of their decisions from 742 - 745, the members of the Full Court explain why they conclude that there is no contract of employment between the men sent to building sites and the builder. The Full Court also found that the relationship between Troubleshooters and the workers who used it services was not that of employer and employee. With regard to the issue of control, they said at 754:
"As we understand the facts found by Woodward J, it could not truly be said that, even after acceptance of an offer from Troubleshooters of work at a particular site on a given day, the worker was subject to Troubleshooters' control or directions. It seems to have been accepted by counsel for the appellants in the course of argument that Troubleshooters had no power to direct or require one of its workers to rectify allegedly defective work. Rather, it was indicated, Troubleshooters confined itself to a role of mediating between the builder and the worker when allegations of that kind were made.
It is easier to impute the requisite degree of control, in the sense of the right to exercise it, to a putative employer who maintains a body of workers paid by the week, whom he lends or 'charges out' by the day or part of a day to contractors or others requiring particular work to be done. ... In our view there was no reservation of a power in Troubleshooters to require one of its workers to move from one site to another, or to work beyond the initial agreed day, sufficient to permit the imputation of a right to control that worker which would satisfy the test enunciated by Mason J in Stevens v Brodribb, supra."
35 In Personnel Contracting Pty Ltd t/a Tricord Personnel v The Construction Forestry Mining and Energy Union of Workers [2004] WASCA 312, the Western Australian Industrial Appeal Court dealt with a trilateral relationship involving two workers where, as explained in par[84] of that decision, the contractual arrangement between those involved was similar to, but by no means identical to, those that prevail under Odco documents. It was held by a majority of the court that the relationship between the worker and the entity that supplied the worker to the provider of the work to be performed was not one of employee and employer. In so concluding Steytler J said at pars[40] - [41]:
"40 There can be no doubt that the intention of the parties, as it appears from each contract, was to categorise the relationship as one of principal and independent contractor and not as one of employer and employee. While, as the cases make plain, that, of itself, cannot be determinative, this is, in my respectful opinion, a case in which the 'label' put upon their relationship by the parties does not contradict the effect of the agreement as a whole and in which the other indicia to which I have referred (and which have been referred to in the judgments of Em Heenan J and Simmonds J) do not point clearly in any one direction. Rather, they seem to me to be ambiguous or uncertain as regards the true relationship of the parties, many of the provisions referred to by Em Heenan J being, in my respectful opinion, of potential application to both employees and independent contractors (as, for example, those requiring the worker to undertake the work in a timely, professional manner, to undertake it to a high standard of workmanship, to comply with work safety laws and regulations, to follow safe working practices and to report difficulties encountered in the performance of the work to the appellant).
41 In such a case, and in circumstances in which ... there is, in my respectful opinion, little to suggest that the label applied by the parties is a sham (and a good deal to suggest that it is not), it seems to me that the evident intention of the parties should be given effect and that the relationship between them should, in each case, be found to be that which they have been at some pains to describe, namely, that of independent contractor and principal and not that of employer and employee."
36 Simmonds J reached a similar conclusion. At pars[145] - [147] he said:
"145 ... I do not believe it is possible to put the [the provision in the contract characterising the individuals signing them as 'independent contractors'] aside on the basis it is a 'sham'. Rather, this is, ... a case where there are indications pointing in both directions, none of which is determinative. In this situation, the correct approach appears to be as the Privy Council put it in AMP ((supra) at 389), quoting with approval from the judgment of Lord Denning MR in Massey v Crown Life Insurance Co [1977] EWCA Civ 12; [1978] 2 All ER 576:
'If their relationship is ambiguous and is capable of being one way or the other [ie, 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'.
146 To a similar effect, as is noted in Odco ((supra) at 756), are Wilson and Dawson JJ in Stevens ((supra) at 37):
'None of this leads to any necessary inference however, and the actual terms and terminology of the contract will always be of considerable importance.'
147 This does not mean that the clause in the Contractor's Agreement which labelled the parties' relationship is then simply given effect to, without further analysis. The possibility must also be considered (as I have indicated) that that language is overborne by other language (including most importantly the rights and duties that language gives rise to) in the Agreement. ...".
37 In Johnson v MNG Investments t/as Australian Temporary Fencing [2011] ACTSC 124, Odco documents were the basis for the relationship relevantly in issue, par[14]. The Agreement to Contract between the plaintiff worker and Contracting Innovations is set out at par[20] in the decision. It mirrors the Agreement to Contract in this case between the respondent and TCS. In that case MNG was the entity that provided the work the plaintiff was performing. In the course of concluding that the plaintiff was not an employee of Contracting Innovations, Master Harper said:
82 It is apparent in the present case that Contracting Innovations used documentation which was intended to cast the plaintiff as an independent contractor which it would provide as a labour hire company to MNG as a host employer, but on the basis that the plaintiff would not become an employee of MNG. The intention of those who drafted the documentation for Contracting Innovations was to do away with any relationship of employment with the plaintiff at all, principally as I see it in order to avoid the expense of workers' compensation insurance. There were of course other advantages to MNG, particularly in reduced administrative work.
83 When one goes behind the documentation and looks at the reality, the relationship between the plaintiff and Contracting Innovations satisfies barely any of the indicia of employment. Contracting Innovations did not seek to exercise any control over the manner, place or hours of the plaintiff's work, nor would MNG have accepted any attempt to exercise such control. Contracting Innovations did not in any practical sense have the right to suspend or dismiss the plaintiff, except on request by MNG.
84 ... I am satisfied that Contracting Innovations had set themselves up with documentation from which they appeared to be a labour hire company providing independent contractors on the Odco model. I am satisfied that this was not the reality. I am in no doubt that there was no relationship at any time of employer and employee between the plaintiff and Contracting Innovations. I am far from satisfied that the plaintiff was an independent contractor to Contracting Innovations in the sense in which that relationship is generally understood in the workforce context. It seems to me that the effect of the agreement the plaintiff signed ... with Contracting Innovations did not go beyond an acknowledgement that Contracting Innovations would be paying him and deducting his tax. It would never have occurred to the plaintiff that he might have any right to compensation from Contracting Innovations itself if he were injured on the job. Ironically, his expressed agreement in his contract that that company had no responsibility or liability to him other than in relation to payment for work done reflected the reality of the situation.
38 A contrary decision was reached in relation to a relationship based on Odco documents in Country Metropolitan Agency Contracting Services Pty Ltd v Slater [2003] SAWCT 57. In that case an issue was whether the labourer, a tomato picker, was an employer of the grower or the appellant, the entity that supplied her services to the grower. The Agreement to Contract between the appellant and the labourer worker is at par[5] of the decision. It is consistent with the Agreement to Contract in this case between the respondent and TCS. The three members of the Workers Compensation Tribunal (SA) held that the labourer was an employee of the appellant.
39 In the reasons for decision that are the subject of this appeal, the Chief Commissioner adopted the following passage from this decision:
"36 Finally the learned Deputy President referred to the decision of Woodward J in Odco Pty Ltd v Building Workers Industrial Union of Australia (unreported Federal Court of Australia No 483, 24 August 1989) at par 265 - 9. He distinguished that case, one which concerned the construction industry, and concluded in the following terms (par 52 of his reasons for decision):-
'52 Apart from the description of independent contractor there is nothing about the applicant's enterprise that points in that direction. She was not a free-lance tomato picker plying the skills of her trade on her terms. When it is all said and done she was an unskilled labourer looking for work, who took what work was on offer, on such terms as were offered, and when she did so, she was treated as you would expect an unskilled labourer to be treated, told when she could start, when she could finish, what work she was to perform and how she was to perform it'."
40 With regard to the other decisions in relation to Odco documents that I have dealt with in the course of these reasons, insofar as the Chief Commissioner expressly referred to them, he said the following:
"Cases decided in other jurisdictions that involved the ODCO contracting system were relied upon as authority in upholding the express terms of this documentation in application to factual situations said to be similar to the present case. (Personal Contracting Pty Ltd v CFMEU (supra) Accident Compensation Commissioner v ODCO Pty Ltd (1990) HCA 43, Building Workers Industrial Union of Australia v ODCO Pty Ltd (1991) 199 ALR 735). However it is the factual circumstances that are important and in those cases my impression was that the persons engaged were persons having particular experience or trade skills, especially within the building industry and they performed their duties at a number of work sites. In this case the worker was engaged and provided work at one site and had been there since February 2008. He had no particular skills. Although he agreed that he had signed relevant documents and those documents asserted that there was a contractor relationship and he understood from what he was told and what was in those documents that he was a contractor, I consider that in all the circumstances this was merely a label."
41 Later in his decision the Chief Commissioner returned to the mere label question and said: "Having stood back and having the common sense to look at the worker's relationship with TCS I concluded that the term 'contractor' was but a label".
42 With respect, I am not prepared to dismiss the documents in question so readily. There is no suggestion that the agreement between the respondent and TCS or any of the related documents were a sham. Neither before the Tribunal nor on this appeal was a contention to this effect advanced on behalf of the respondent. To a very substantial degree that which was done by the parties reflected the terms of their agreement and the related documents. That the respondent's strong preference was to be employed by K & D does not mean that the documentation in relation to his agreement with TCS does not genuinely reflect his agreement with TCS or provide a basis for construing his relationship with TCS as one of employment.
43 The answer to the ultimate question of whether the respondent was working under a contract of service is to be assessed by looking at the totality of the relationship, taking into account all relevant factors.
"This is not a mechanical exercise of running through items on a check list to see whether they are present in, or absent from, a given situation. The object of the exercise is to paint a picture from the accumulation of detail. The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of evaluation of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another." Hall (Inspector of Taxes) v Lorimer [1992] 1 WLR 939 Mummery J at 944, Green v Victorian Workcover Authority [1997] 1 VR 364, Tadgell JA at 375, Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue (unreported, Court of Appeal, Victoria, 24 October 1997) at 9 and Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue [2005] VSC 136 Harper J par[10].
44 In my view the necessary result of this assessment is a finding that the respondent had not entered into, or was not working under, a contract of service with TCS within the meaning of the Workers Rehabilitation and Compensation Act. Accordingly the Chief Commissioner's decision to the contrary is an error of law: Protective Security Pty Ltd v Bedelph (supra) at pars[28] and [75] - [78]; Hope v Bathurst City Council [1980] HCA 16; (1980) 144 CLR 1 at 7 and Marshall v Whittaker's Building Supply Co (supra) at 213.
45 The appeal is allowed and the order that the respondent is a worker within the meaning of that term in the Workers Rehabilitation and Compensation Act who was employed at all material times by TCS is set aside and substituted by an order that the respondent had not entered into or was not working under a contract of service with TCS.
Tasmanian Contracting Services Pty Ltd
Young [2011] TASSC 49
(1986) 160 CLR 16
(2004) 13 Tas R 354
(1990) 95 ALR 641
(1991) 99 ALR 735
(1963) 109 CLR 210
(1973) 129 CLR 395
(2002) 10 Tas R 412
(2001) 207 CLR 21
(1994) 55 IR 73
(1983) 2 NSWLR 597
(1991) 199 ALR 735
(1980) 144 CLR 1