The conduct and functions of the respective parties as indicative or otherwise of the existence of an employment relationship between the applicants and CAO - an overview of authority and its operation here as put forward by CAO
132 CAO's alternative case was that in any event, there was no employment relationship between itself and either of the applicants, irrespective of the existence of any contractual relationship between itself and either of the applicants.
133 There is a body of authority bearing on the foregoing subject to which I have already made reference starting at [26] of these reasons, for instance Stevens, Hollis and Damevski. Attention was drawn by CAO also to ACT Visiting Medical Officers Association v Australian Industrial Relations Commission (2006)153 IR 228 and BHP Billiton Iron Ore Pty Ltd v Construction, Forestry, Mining and Energy Union of Workers (2006) 151 IR 361, which will shortly be discussed. The majority of those decisions were made in the broader context of determining whether a particular worker was an employee or else an independent contractor of the beneficiary of his or her work.
134 The effect and operation of that line of authority may be outlined as follows:
(i) the totality of the relationship is to be considered; thus in Stevens, the following appears in the reasons for judgment of Mason J (as he then was) at 24:
'But the existence of control, whilst significant, is not the sole criterion by which to gauge whether a relationship is one of employment. The approach of this Court has been to regard it merely as one of a number of indicia which must be considered in the determination of that question. 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 for holidays, the deduction of income tax and the delegation of work by the putative employee.'
To that dictum may be added what I have earlier cited at [26] of my reasons from the joint judgment of Wilson and Dawson JJ in Stevens;
(ii) in the most recent of the foregoing five authorities above recorded (ACT Visiting Medical Officers), a Full Federal Court comprising Wilcox J, myself and Stone J in a joint judgment applied the principles emerging from analogous authority for the purpose of characterising relevantly the visiting medical officers engaged by public hospital authorities to provide medical services to public patients; the Full Court observed the practical realities inherent in the circumstance that in the course of their treatment of patients undertaken at the hospitals, the visiting medical doctors 'moved seamlessly between patients in the two groups', being both private and public patients, as an integral part of the businesses that each of those doctors individually carried on;
(iii) in BHP Billiton the person at the centre of the dispute had been employed by BHP Billitonand its precursors as a locomotive driver until he was made redundant in 1999; in 2001 he applied successfully for employment with a labour hire company then supplying contract drivers to BHP Billiton; from that time to 2004, and while directly employed by the labour hire company but working at BHP Billiton, he applied for advertised direct employee position with BHP Billiton on four separate occasions but was unsuccessful each time; the Union alleged that BHP Billiton had unreasonably refused to employ him, and that he was in any event jointly in the employ of entities inclusive of BHP Billiton; declaratory relief was sought to that latter effect, as was also an order in any event that such person be employed by BHP Billiton on an award; in the course of decision-making the Industrial Appeal Court of Western Australia was required to consider the Union's case that the person concerned was an employee of BHP Billiton according to ordinary concepts; the Union submitted that the correct approach to deciding the question as to the existence or otherwise of an employment relationship was to have regard to the totality of the relationship, citing inter alia in that context Hollis and Stevens. At [114] in the reasons for judgment of Le Miere J, with whose reasons Wheeler J agreed and Pullin J at least substantially agreed, it was observed as follows:
'In Hollis v Vabu and Stevens v Brodribb Sawmilling Co Pty Ltd the High Court set out the common law principles for distinguishing between an employee and a contractor. These principles do not embody a definition of employment as such. They rely instead on a test which involves the consideration of a number of established factors or indicia, some of which are characteristic of a contract of service and others of which suggest a non-employment relationship. The task of the court which must assess the employment status of a worker is to consider the parties' relationship in light of each of these indicia and to determine, on balance, into which legal category the relationship falls. The exercise is not a mechanical one. Rather it is a matter of obtaining the overall picture from the accumulation of detail.'
135 CAO submitted that the operation relevantly of the reasons for the respective decisions in Stevens, Hollis, Damevski, ACT Visiting Medical Officers and BHP Billiton, somewhat repetitively as in the preceding paragraph, as follows:
(i) the totality of the relationship in issue between the parties is to be considered;
(ii) the measure of control exercised by a putative employer over a worker is a prominent factor but not the sole criterion; and
(iii) other factors include the manner in which work is performed, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and entitlements to leave, the deduction of income tax, the delegation of work by the putative employee, the presentation to the public of the putative employee as an emanation of the putative employer, the supply of a uniform and the description by the parties of their relationship in the contract the subject of consideration.
136 CAO emphasised that the importance of those factors will vary with the circumstances, no single factor being normally determinative, and that a balancing exercise is to be undertaken in relation to all of the relevant factors (ACT Visiting Medical Officers at [19]-[20], [27] and [30] and BHP Billiton at [114]). CAO pointed out additionally that the fact that a party is benefited by the activities of a person is not a sufficient indication that the person is an employee, pointing thereby to Hollis at [40], where in the joint judgment of Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ, the following observation was made:
'Thus, by itself, the circumstance that the business enterprise of a party said to be an employer is benefited by the activities of the person in question cannot be a sufficient indication that this person is an employee.'
137 Specifically as to the importance of the notion of control, the focus of that expression was said by CAO to reside in the right of the putative employer to exercise the same with focus on 'ultimate authority' over the employee as to the apparent origin of the judicial use of that latter expression. CAO invoked the observations made by the South Australian Full Court in Mason & Cox Pty Ltd v McCann (1999) 74 SASR at [29], where Doyle CJ (with whose reasons Mullighan J agreed) said that emphasis is upon '… the importance of the legal right to control rather than the practical fact of control', being an emphasis attributed to the following dictum of Dixon J (as he then was) in Humberstone v Northern Timber Mills (1949) 79 CLR 389 at 404:
'The question is not whether in practice the work was in fact done subject to a direction and control exercised by an actual supervision or whether an actual supervision was possible but whether ultimate authority over the man in the performance of his work resided in the employer so that he was subject to the latter's order and directions.'
138 Attention was then returned by CAO to what I have extracted above at [139] from the dictum of Mason J (as he then was) in Stevens, and additionally to what preceded the same by the way of following observations of his Honour at [24]:
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 can exercise over the latter. It has been held, however, that the importance of control lies not so much in its actual exercise, although clearly that is relevant, as in the right of the employer to exercise it.'
In the light of his Honour's observations in Stevens which I have cited both earlier and immediately above, the existence of actual control residing in the entity conducting labour hire operations may not have the same significance in a labour hire context.
139 It is also instructive to retrace the evolution of Australian authority to Drake Personnel Ltd v Commissioner of State Revenue (2000) 2 VR 635 at [54], in the context of a pay-roll tax dispute, in which Phillip JA (with whose reasons Buchanan J agreed, as did Ormiston JA whilst adding observations of his own), said as follows:
'All of this is very helpful here, for it indicates that in a case like the present where A makes an agreement with B under which A supplies to B the services of C for the performance of work and A also makes a contract with C for C to perform the work for B, it can be said readily enough, that in performing the work C not only benefits B but is also advancing the business of A, to the benefit of A. It is true that the High Court was considering a statutory definition serving to extend the concept of employment; but it seems to me to follow that a temporary, in accepting an engagement to perform work for Drake's clients, is doing the work as much for Drake as for the client….'
Phillips JA referred to a number of authorities, including Stevens, and at [56] continued as follows:
'In cases like these, we are often instructed to stand well back to assess the situation, after first having regard to the detailed facts. Standing back, it seems to me that in this case the subject matter of the contract between Drake and the temporary is casual employment. Once that step is taken, the rest falls into place. Drake can be seen, in a relevant sense, to be employing the temporaries to do casual work, albeitthat the contract between the temporary and Drake arises only upon the temporary accepting the offer of work through Drake. The arrangement made with Drake is for casual work: the temporary is to go to the designated work-site and perform work according to the directions of the designated employer for the day; that all flows from the contract made by the temporary with Drake. Tomorrow - or next week or next month - it will be a different work-site and a different temporary employer, but again that will be the consequence of the temporary accepting an offer from Drake and a contract arising between Drake and the temporary.'
His Honour's conclusion on this point was relevantly at [57]:
'Accordingly, if one looks at the matter "from a distance" as it were, the conclusion that the temporaries are employees of Drake according to ordinary concepts of the common law is one which not only can be supported but is I think required: the temporaries are engaged by Drake to perform casual work and the difficulties inherent in this case arise, first, from the very nature of casual work as impermanent and, secondly, from the fact that the contract between Drake and the temporary involves the temporary's doing work for and at the direction of a third party, Drake's own client. But given the contract made by the client with Drake and the contract made by Drake with the temporary, it seems to me perfectly consistent to conclude that the temporary is the employee of Drake in the relevant sense at common law.'
140 The evolution of Australian authority, in particular in a labour hire context as here, may next be made to Forstaff Pty Ltd v Chief Commissioner of State Revenue (2004) 144 IR 1 at [106]-[107], where the following appears in the comprehensive reasons for judgment of McDougall J (the abbreviated references below to Forstaff being to a labour hire company and to the client of Forstaff being to the operator of the business for whom a relevant worker undertook working duties):
'106. I think it is clear that, when a worker accepts an offer of work and goes to the client's premises to perform that work, the worker is subject to the immediate control and supervision of the client. The client must:
(1) Explain to the worker the precise nature of the work to be done.
(2) In most cases, supply the worker with appropriate clothing (including safety clothing) and tools and equipment.
(3) Direct or control the worker in the performance of his or her work.
107. The direction and control that the client has arises, I think, de facto rather than de [jure]. That is because … there is no contractual relationship between the client and the worker. The worker is bound, by the terms of his or her contract with Forstaff, to accept "the care, control and supervision of [the]client" and acknowledges "the right of [the]client to direct mywork activities". If the worker does not accept the care, control and supervision, or direction, of the client then the client may terminate the assignment. But the client is doing so pursuant to its contract with Forstaff, the effect of which the worker acknowledges in his or her contract with Forstaff.'
His Honour held in Forstaff that since a contract of employment will normally come into existence whenever a labour hire company offers and a worker accepts an assignment of work from a client of the labour hire company, there was no contractual relationship accordingly in operation between the worker and that client of the labour hire company. His Honour referred in that context to the indicia at [118] as tending to indicate the existence of a contractual relationship of employment, being the deduction of PAYE tax, the arrangement and payment of superannuation, the arrangement and payment of workers compensation insurance, entitlement to overtime, penalty rates, public holidays and other allowances. As to indications to the contrary, his Honour referred to the absence of entitlement to holidays or sick leave.
141 CAO submitted that the extent of control in a labour hire context is of less significance than in the normal employment context, and my attention was further drawn to the reasons for judgment of Merkel J in Damevski at [162], where his Honour referred briefly to Mason & Cox at [24]-[29] and Drake Personnel at [55] and observed that the entitlement of an employer to direct a purported contractor is '... relevant in determining whether an employment relationship exists although it is not as important as it may once have been, particularly in a labour hiring agency context'. In such a context, the fact that the client determines the hours of work should not preclude the existence of a contract of employment between a labour hire company and the worker, CAO thus contended and in my opinion rightly. CAO submitted moreover that '[s]ignificantly, the test for whether or not a contract is one of employment is not the "organisation test", which was identified by Mason J in Stevens at 26-29 and Wilson and Dawson JJ at 35-36, and where his Honour indicated at [27]-[28] that he was '… unable to accept that the organisation test could result in an affirmative finding that the contract is one of service when the control test either on its own or with other indicia yields the conclusion that it is a contract for services', because '[that] test does no more than shift the focus of attention to the equally difficult question of determining when a person is part of an organisation such that his wrongs may be imputed to that organisation'. Again of course as I have earlier emphasised, his Honour's consideration did occur in an immediate context of vicarious liability in tort, but nevertheless that dictum provides a measure of guidance in contexts involving issues as to the existence or otherwise of an employment relationship in an industrial setting.
142 As to the applicants' submission in favour of the operation and satisfaction affirmatively of the control test in the present circumstances concerning each of the applicants, CAO responded comprehensively as follows:
(i) there was little scope for CAO to control the manner in which the applicants operated the machinery used at the HVO, since the applicants were skilled and experienced in the use thereof and were in a physical sense left alone by CAO (or expected to be left alone in the course of the operations which each undertook) to operate the equipment each of them was using for the time being 'without interference' by CAO, other than in relation to safety concerns;
(ii) CAO directed the applicants as to the equipment each was to operate for the time being whilst engaged at the HVO, and in relation to the areas in which to operate the same, the giving of such directions reflecting the arrangement between the applicants and MES that the applicants would accept directions from CAO;
(iii) CAO supervised the applicants to ensure that they performed work in accordance with the contractual arrangements between CAO and MES; I was referred to clause 14.1 of the Supply Agreement, which reads as follows:
'14.1 The Company will monitor your performance under this contract';
(iv) CAO and statutory officials such as the OCEs also supervised the applicants in relation to the discharge of their obligations under safety legislation, in particular the CMR Act, the CMG Regulation and the OHS Act;
(v) the applicants conducted themselves implicitly upon the basis that they were responsible to the CAO supervisors, but only in the sense that those supervisors were responsible for allocating individual tasks for the time being to the applicants, including tasks undertaken in the CAO area to be worked and the machinery to be operated;
(vi) CAO did not undertake any 'disciplinary action' in relation to the applicants, and in that regard, the evidence was said by CAO to disclose that:
(a) CAO did not counsel or warn the applicants;
(b) CAO did not take corrective or punitive action against the applicants;
(c) the only action that CAO took towards Mr Cumberland as a result of the first relevant incident (involving a dozer coming into contact with a grader) was to discuss the need to ensure that the work area was clear prior to his proceeding to drive the dozer into the area, being conduct said not to constitute disciplinary action;
(d) the only action that CAO took towards Mr Cumberland as a result of the second relevant incident (involving the driving of a dozer close to a shovel) was to require him to participate in a communication audit, being action said by CAO not to have constituted disciplinary action but rather a measure designed to ensure safety at the HVO;
(e) the only action that CAO took towards Mr Cumberland as a result of the third relevant incident (involving the driving of a water cart into a stand pipe) involved discussion with him as to the need to exercise caution whilst operating the cart, being action said by CAO not to constitute disciplinary action;
(f) the only action that CAO took towards Mr Wilton involving his early finish of a shift was to discuss the need for him to manage his time better, being action said also not to constitute disciplinary action;
(g) the only action that CAO took towards Mr Wilton involving his taking of an extended crib break was to state that such conduct should not happen again, and that he was to be cognisant of the length of crib breaks in the future, being action that was said not to constitute disciplinary action; in that regard Mr Wilton seemingly acknowledged that MES was the only party who could control his earning capacity.
(vii) MES continued to exercise a measure of control over each of the applicants; I was referred in that regard to the following examples of that exercise of control:
(a) after the second incident involving Mr Cumberland, MES took disciplinary action against Mr Cumberland, including the provision of counselling, the giving of a warning and his standing down for the time being from the HVO;
(b) after an incident involving Mr Wilton finishing a shift early, MES discussed that conduct with Mr Wilton in order to obtain a commitment that it would not occur again;
(c) MES required the applicants to complete timesheets, though MES also required the applicants to have their timesheets counter-signed by CAO;
(d) MES required the applicants to attend tool box meetings on a monthly basis;
(e) MES counselled Mr Cumberland in relation to his late attendance at a particular tool box meeting and sent memoranda to him over his late attendance at tool box meetings generally;
(f) MES required the applicants to complete MES forms from time to time;
(g) MES sent a memorandum to Mr Wilton concerning a record of observation in relation to his conduct; and
(h) MES required the applicants to submit to alcohol testing.
143 CAO submitted additionally that the evidence did not support a conclusion other than that the ultimate legal control over each of the applicants resided with MES, and further that although CAO could forbid the applicants to enter the mine and could restrict their movement on the mine site, that situation was no different from what applied to any person present on the mine site or seeking to enter the mine site. Moreover CAO emphasised that the factor of control was only one factor to be considered in assessing the existence of an employment relationship, and was not a determinative factor; I was referred in that regard to ACT Visiting Medical Officers at [19] and [27]. As to the proposition that a person accepting superintendence or control of another person did not necessarily mean that the person became an employee, I was referred to Queensland Stations Proprietary Ltd v the Commissioner of Taxation (1945) 70 CLR 539 at 552, Stevens at 36 and Ready Mixed Concrete (South East) Ltd v Minister Of Pensions and National Insurance (1968) 2 QB 497 at 526 (MacKenna J); that dictum in Ready Mixed Concrete at 526 included the following:
'A man does not cease to run a business on his own account because he agrees to run it efficiently or to accept another's superintendence.'
144 CAO's submissions then moved to what were described as important reasons for the exercise by it of supervision, certain aspects of which related to contract workers involved at the HVO, such as the applicants. CAO referred in that context to the following CAO requirements and practices, and the reasons therefor:
(i) the requirement that contract labour workers 'sign-in' and 'sign-out' of the HVO was for safety reasons, being in particular to ensure that no person was left at a pit at the conclusion of a shift;
(ii) the requirement that contract labour workers swiped their access cards at the card reading machine at the HVO was also for safety reasons, being to ensure that workers had completed the necessary induction, and to further ensure that no person was left at the HVO in the event of an evacuation, and also to enable the monitoring of hours worked as an incident to fatigue management;
(iii) the requirement that contract workers (inclusive of the applicants) had their timesheets signed by an officer of CAO (being a requirement imposed by MES) was to verify the hours worked by each contract worker;
(iv) the requirement that contract workers (inclusive of the applicants) informed CAO of an inability to attend work at the HVO, by reason for instance of sickness, and being a requirement imposed in part at least by MES, was to enable CAO to make arrangements for another person to take the place of the worker;
(v) the requirement that contract labour (including that of the applicants) should notify CAO of an intention to take leave, a requirement which was imposed at least in part by MES, was to enable CAO to make arrangements for another person to take the place of the worker;
(vi) the provision of a pre-shift briefing by an OCE employed by the CAO related to the obligations under ss 37 and 42 of the CMR Act to enforce the observance of the CMG Regulation, including an obligation that an OCE 'give to those workers [under the charge of the OEC] such instructions (orally or in writing) as are necessary for them to comply with' the CMR Act and the Open Cut Regulations (until such legislation was repealed);
(vii) the concerns of CAO as to the taking of an extended crib break reflected the so-called knock on effect which a delay in recommencing work had upon subsequent shifts at the HVO;
(viii) the treatment of all workers (whether they were employees of CAO or so-called contract labour) in a similar manner reflected the obligations imposed on an OCE pursuant to the CMR Act and the CMG Regulation; and
(ix) the conduct of random drug and alcohol tests was consistent with a Mine Manager who worked for CAO discharging his or her obligation under s 37 of the CMR Act to enforce the observance of the CMG Regulation (until its repeal), including the requirement of s 43(3) of the CMG Regulation that a person not attend work at a mine if 'impaired through the consumption of intoxicating liquor or drugs'.
145 It was next emphasised by CAO that it bore comprehensive obligations pursuant to safety legislation, including the CMR Act, the CMG Regulation and the OHS Act; by way of one example, it was and remained obliged, pursuant to s 8(2) of the OHS Act, to 'ensure that people (other than the employees of the employer) are not exposed to risks to their health and safety arising from the conduct' of the employer's 'undertaking'. In relation to the analogous statutory obligation of an employer '… to ensure the health, safety and welfare at work of all employer's employees' imposed by s 15(1) of the precursor Occupational Health and Safety Act 1983 (NSW), it was said in Carrington Slipways Pty Ltd v Callaghan (1985) 11 IR 467 at 470 (Watson J) that 'the words "to ensure" are to be construed in… their ordinary meaning of guaranteeing, securing or making certain'. It was pointed out by CAO that the HVO remained at all material times a so-called controlled safety environment, as was acknowledged at least by Mr Wilton.
146 It was pointed out by CAO moreover that the obligation to ensure the safety of workers extended to every person working on site, whether as permanent employees, contractor personnel or some other persons; so much was said to have been testified by each of Messrs Wilton, Hendriks and Sargent. Moreover Mr Sargent further testified as to what CAO described as its proactive approach to safety precautions by way of policies and procedures designed to minimise safety risks to contractor personnel. Of course as an owner and occupier of its Ravensworth or Hunter Valley Operations, (to which I have been abbreviating as HVO), CAO would be subject to tortious duties of care in relation to visitors and other entrants and occupiers for the time being, irrespective of statutory liabilities flowing from its CAO mining operations.
147 CAO therefore submitted that the circumstances of exercise of control on its part, such as they were, did not demonstrate that CAO and the applicants were mutually involved in any employment relationship, and further that the explanation for the exercise by CAO of direction and supervision, to the extent of those CAO activities which took place, reflected the CAO case that the applicants were each employees of MES who had been supplied by MES to CAO in or towards discharge of the contractual obligations of MES to CAO.
148 It was further submitted by CAO that the manner in which the applicants performed work at the HVO, including their respective acceptances of directions of and supervision by CAO, reflected the contractual arrangements as between MES and the applicants, for which CAO contended, as well as the observance and performance of the statutory safety obligations imposed upon CAO and its relevant statutory officeholders. It was said in that regard that those factors did not support the applicants' contention that CAO and each of the applicants were placed in an employment relationship according to the general law, and that the explanations given in evidence for the manner of performance of work supported the CAO case that the applicants were employees of MES who had been supplied by MES to CAO in order to fulfil the contractual obligations of MES created by the Supply Agreement continuing in operation between CAO and MES.