Employment law cases PDF

Preview

Summary

Download Employment law cases PDF

Description

TOPIC 1: EMPLOYEES VERSUS INDEPENDENT CONTRACTORS AND THE CONTEXT AND NATURE OF WORKING ARRANGEMENTS

1.2 Legal tests for distinguishing employees from independent contractors

Hollis v Vabu Pty Ltd [2001] Facts:



Hollis struck by Vabu’s bicycle courier and sued Vabu for negligence.



Pedestrian struck by V and sued co. for negligence. 3rd party suing business alleging business is vicariously liable. Wore uniform with company’s trade name.



Co. argued sue bicyclist directly

Issue: Were the couriers employees or independent contractors for the purposes of “vicarious liability”? Held:

The legal character of the worker will usually determine whether the worker is able to act as agent for the employer and whether the employer will be vicariously liable for negligence of the employee. High Court found the couriers were employees because: 

They had little control over work performed, while employer had actual control: Allocated jobs by radio and made to perform jobs in a specific way



They were required to wear uniforms which presented them as “public emanations” of Vabu



Vabu did not develop means of personal identification of individual couriers



Couriers had no scope to bargain for remuneration and limited scope for undertaking their own “business enterprise” (or to generate “goodwill”): Paid by hour and not job and deducted remuneration for cost of insurance



The fact that the couriers supplied their own transport was not determinative: Cyclist had to use their own bicycles.

•

Both indicators of employment and contractor present.

Compare earlier decision in Vabu v Commissioner of Taxation – NSW Court of Appeal concluded couriers (using car, van, bicycle) were contractors – for tax purposes

-

Same situation above but van couriers

-

Provided own vans and decided they were contractors.

-

Note: cost of bicycle and van easier to say bicycle was employment

-

CF cases…one is about tax and the other was about compensation

-

Public policy protecting person and not tax revenue.

Stevens and Gray v Brodribb Sawmilling Co (1986) Facts:



Brodribb owned and operated a sawmill and was licensed to remove timber. The logging was carried out for Brodribb by two individuals, Stevens and Gray, among others.



Stevens drove trucks that were loaded in the bush with felled timber and transported to the sawmill.



Gray operated a bulldozer that was used to load the logs and was also responsible for constructing a loading ramp for the purpose of loading the logs onto Stevens’ truck. Gray was negligent in the course of loading operations and Stevens was injured as a result of this negligence.



Stevens sued Brodribb, claiming that it was vicariously liable for Gray’s negligence, but Brodribb alleged that Gray and Stevens were both independent contractors and vicarious liability did not arise.



The additional facts were relevant to the question whether the relationship between Brodribb on the one hand and Gray and Stevens on the other was a contract of employment or a contract for services: 

Stevens and Gray both provided and maintained their own equipment (the truck and bulldozer);



Stevens and Gray each set their own working hours, though there was an expectation that two loads would be delivered each day;



Payment was made according to the volume of timber delivered;



There was no guarantee of work;



In the performance of work, Stevens and Gray were left entirely free to exercise their own skill and judgment;



Brodribb did not deduct PAYE tax instalments from payments made to Gray and Stevens; and



Gray assumed a power to delegate the work (he employed his son as a driver).

Held:



Held that Stevens and Gray were independent contractors



Court looked at the degree of control (not actual exercise but the right of the employer to exercise control) which the employer (B) had over the workers (S and G): “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.” - Humberstone v Northern Timber Mills



Control is only one 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 for holidays, the deduction of income tax and the delegation of work by the putative employee.



B’s control seemed to be confined to the organisation of activities in the forest, determining the location of roads and ramps, selecting logs to be snigged, monitoring the volume and quality of production and deciding whether work would take place in bad weather. There was no basis for inferring an intention that the bush boss should have authority to direct Stevens and Gray in the management and control of their equipment which they were using for the purpose of delivering timber to the mill.



The essence of a contract of service is the supply of the work and skill of a man. But the emphasis in the case of the present contract is upon mechanical traction. This was to be done by his own property in his own possession and control. There is no ground for imputing to the parties a common intention that in all the management and control of his own vehicle, in all the ways in which he used it for the purpose of carrying their goods, he should be subject to the commands of the respondents – Humberstone



Brodribb and the men, including Stevens and Gray, regarded their relationship as one of independent contract, not of employment, an attitude evidenced in the case of Gray by his employment of his son as a driver. The power to delegate is an important factor in deciding whether a worker is a servant or an independent contractor: Australian Mutual Provident Society v Chaplin (1978)



Decided that the element of organisation as simply a further factor to be weighed, along with control. Found that legal authority to control is more relevant and cogent than in determining the nature of the relationship.



In many, if not most, cases it is still appropriate to apply the control test in the first instance because it remains the surest guide to whether a person is contracting independently or serving as an employee. That is not now a sufficient or even an appropriate test in its traditional form in all cases because in modern conditions a person may exercise personal skills so as to prevent control over the manner of doing his work and yet nevertheless be a servant: Montreal v Montreal Locomotive Works. This has led to the observation that it is the right to control rather than its actual exercise which is the important thing (Zuijs v Wirth Bros Pty Ltd (1955)) but in some circumstances it may even be a mistake to treat as decisive a reservation of control over the manner in which work is performed for another. That was made clear in Queensland Stations Pty Ltd v Federal Commissioner of Taxation (1945) a case involving a droving contract in which Dixon J observed that the reservation of a right to direct or superintend the performance of the task cannot transform into a contract of service what in essence is an independent contract.

1.3 Development of the law and other important factors

Stevens v Brodribb Sawmilling Co (1986) Facts:

ABOVE

Held:

Sweeney v Boylan Nominees Pty Ltd t/a Quirks Refrigeration [2006] Facts:

Litigation arose out of the injury suffered by Ms Sweeney (S) at a convenience store at a BP service station. The fridge door which caused her injury by falling on her had been serviced by Boylan (B) mechanic.

Held:

Issue: whether B was vicariously liable for the negligence of the mechanic.  : Mechanic was an independent contractor



Crux of decisions rested on the contractual relationship between B and the mechanic. The r/ship between B and the mechanic was close; the mechanic would do work for B as requested there being no contractual arrangement between the two.



Mechanic ran a co. and was the director.



Mechanic was called a contractor by B which they engaged field service employees.



Mechanic supplied own equipment and tools



Mechanic took out workers compensation insurance and public liability insurance.



Payment was on the basis of an invoice supplied by the mechanic to B for hours worked.



Spare parts were supplied and provided by the mechanic.



Control: Judgement of mechanic was important and B left him to exercise his discretion in performing the tasks.



Mechanic did not work for other companies and it did not appear to be any requirement for B to give the mechanic work.



It was significant that he ran his own business and that he invoiced for payment for the work he did, undertaking his own liability insurance and so on. He also operated through his own company.



HC distinguished the Vabu case. Hollis hinged about whether the person whose conduct was negligent was to be identified as an employee of the principal. Seven considerations were identified. The courier wore the principal’s livery, that he was subject to close direction by the principal about not only the manner of performing the work (work which required only limited skills), but also both the financial dealings generated by the work and the times at which the work was done.



Circumstances are different in this case. Mechanic conducted own business. Mechanic was engaged in a business other than that of the respondent was demonstrated by a number of circumstances but chief among them were his invoicing the respondent for each job he did and the respondent’s concern to verify that the mechanic had proper workers’ compensation and public liability insurance. The interposition of the mechanic’s company would, of course, give further support to the conclusion that he was engaged in a business other than that of the respondent. His company was engaged from time to time as a contractor to perform

maintenance work for the respondent Unlike the principal in Hollis, the respondent did not control the way in which the mechanic worked. The mechanic supplied his own tools and equipment, as well as bringing his skills to bear upon the work that was to be done. And unlike the case in Hollis, the mechanic was not presented to the public as an emanation of the respondent. Mechanic was acting at the request of the respondent. •

Per majority (Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ) P&N 125: ‘The mechanic was not an employee of the respondent. He conducted his own business. ..[Relevant circumstances] were his invoicing the respondent for each job he did and the respondent’s concern to verify that the mechanic had proper workers’ compensation and public liability insurance….[T]he respondent did not control the way in which the mechanic worked. The mechanic supplied his own tools and equipment, as well as bringing his skills to bear upon work that was to be done….[T]he mechanic was not presented to the public as an emanation of the respondent.’

On Call Interpreters and Translators Agency v Commissioner of Taxation (No 3) (2011) Facts:



The company, On Call, provided interpreting and translating services, and treated most of its interpreters and translators as independent contractors; however, the Commissioner of Taxation classified them as employees so that the company had liability for contributions under the superannuation scheme.



The company had what Bromberg J described as ‘shambolic’ contractual arrangements of different types with its translators and interpreters — essentially, they would go on a panel and be offered work which they did not have to accept; were paid according to a schedule of rates for which they generally did not invoice the company but signed a form to indicate the work had been done; and did not work exclusively for the company.



While on assignment, it was a requirement for each translator to wear an On

Call badge (with the company logo, their name and photo and On call’s contact details) for the purposes of identification. 

Work was not delegated to others but swapped or substituted among the panel members. Little equipment was required — the company supplied specialist dictionaries and the workers used their own phones and computers.

Issue: Whether interpreters and translators were employees or deemed employees Held:

within the Superannuation Guarantee (Administration) Act 1992 (Cth). The test: 

Question of whether a person is an independent contractor in relation to the performance of particular work: Viewed as a ‘practical matter’: (i)

is the person performing the work an entrepreneur who owns and operates a business; and,

(ii)

in performing the work, is that person working in and for that person’s business as a representative of that business and not of the business receiving the work?



If the answer to that question is yes, in the performance of that particular work, the person is likely to be an independent contractor. If no, then the person is likely to be an employee.



The activities of the relevant interpreters were performed in and for the business of On Call’- it is likely they are a contractor (based on the second limb).



Applying the test above, Bromberg J concluded that the interpreters/translators did not generally own and run their own businesses. His Honour proceeded to the second limb, in case his conclusion was wrong on the first question. 

Control: Who directed the manner of work — the interpreter/translator or On Call? Bromberg J regarded the degree of control by On Call as supporting but not determining the nature of the relationship.



Representation of the user’s business that there was an employment relationship: ‘[T]he economic activities engaged in by panel interpreters were represented and portrayed as the activities of On Call, and not of the activity of the businesses of the interpreters’.



Goodwill: The overwhelming evidence was that goodwill went to On Call.



Outcome or result: Were the interpreters/translators paid by time or result? The remuneration was by both time and work and was ‘of neutral value’ in indicating the relationship.



Delegation: No evidence of such delegation occurred.



Economic dependency: There was no economic dependency — rather, there was integration with the business of On Call which tended to support an employment relationship.



Opportunity for profit and risk of loss: Payment was according to a standard schedule, supporting an employment relationship.



Characterisation of the economic activity: Individuals tended to be characterised as independent contractors but that did not lend ‘significant weight’ as an indicator



Tax, leave and equipment supply: No income tax was deducted, nor leave provided, but these were not indicative as they involve a circular argument. Equipment supply was only of some significance in the case of translators who worked from home.



On Call’s interpreters were carrying out the business of On Call, not engaged in conduct of their own businesses, and the substance of the relationship was therefore one of employment.



Superannuation payable by On Call! 9.5% x 2.5 hrs of interpreters

Decision impact statement following On Call: ▫

[T]he principles established in Vabu – based on the earlier decisions of the High Court – represent the current authority on the application of subsection 12(3). Hence, Commissioner will continue to administer subsection 12(3) in accordance with the Vabu line of authority. The ATO will therefore maintain the views set out in SGR2005/1

Follow Vabu case as its HC case

-

Roy Morgan Research [2010] Facts:

“Entrepreneurs-Only” Test Roy Morgan (RM) liable to pay superannuation on behalf of interviewers engaged as contractors.

Held:

Multi-factor test applied to determine interviewers ‘employees’: 

Control – RM exercised control over crucial steps in work, interviewers had very little control over the interview process



Interviewers took little risk – Interviewers invested 50% cost in street directory, were paid car allowance per km or reimbursed travel



Payment for results – Interviewers paid set fee per interview, but fee was calculated on a per hour estimate of amount of time RM thought it would take to prepare for and conduct interview, then report on the answers.



Incorporation – Fact that RM paid another entity, not the individual, did not alter relationship between RM and the individual

 -

Running own business? No, not engaged in business on own account Superannuation was payable as they were employees.

Tattsbet Ltd v Morrow (2015) Facts: 

Ms Morrow (M) was engaged by Tattsbet to operate a shopfront betting agency. Under the agency agreement, Ms Morrow was deemed to be an independent contractor and was required to work at least 32 hours per week in the agency, with the option of employing staff to operate the agency during the hours that she was not present. She was paid commission based on the turnover of the agency.



Ms Morrow made inquiries as to whether Tattsbet should be making payment to her for superannuation contributions as required under the Superannuation Guarantee (Administration) Act 1992 (Cth).



She held discussions with BT Financial Group who advised her that she should be receiving superannuation contributions from Tattsbet. Ms Morrow considered whether she should seek a ruling from the Australian Taxation Office on this or whether she should make a complaint to Tattsbet. Ms Morrow was reluctant to pursue the claim personally as she did not want to get into trouble with Tattsbet.



Ms Morrow instead met with a former agent who was prepared to take the superannuation contribution issue up with the ATO. That agent instead approached Tattsbet advising it that Ms Morrow was considering taking legal action against it to enforce her entitlement to receive superannuation

contributions. 

Following this, Tattsbet terminated Ms Morrow’s engagement.

Ms Morrow commenced proceedings in the Federal Circuit Court of Australia claiming that: 1.

She was an employee rather than an independent contractor;

...