2-categorising-work-relationships

LAWS6024 Employment Law Week 2: Categorising work relationships At common law an employee: 1. Must be engages under a calid and enforceable contract and 2. That contract must be one of employment  Legislation - e.g. general industrial legislation such as Fair Work Act 2009 (Cth), Industrial Relations Act 1996 (NSW), workers' compensation, superannuation, leave legislation etc.  Industrial Instruments - awards, enterprise bargains  Common law - vicarious liability of employers There is no universal statutory definition, under s 11 the FWA employee and employer have their ordinary meanings. Apply the Multiple Indicia Test : '...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...' Mason, Brennan and Deane JJ in Stevens and Gray v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16. Bray CJ in Australian Mutual Provident Society v Chaplin (1978) 52 ALJR 407 summarised the application of the test: '...there is no magic touchstone. The court has to look at a number of indicia and then make up its mind into which category the instant case should be put. It is a question of balancing the indicia pro and con'. i. Control Control is still an important factor, arguably the most important factor, but it is only one of the factors that needs to be considered. Critical is the distinction between: a) One party having the right to tell another party what/where/when and how work is to be performed; and b) The capacity to control the manner in which the work is done. What is the 'control' test? - An examination of '...the nature and degree of detailed control over the person alleging to be a servant.' Performing Rights Society v Mitchell & Booker (Palais de Danse) Ltd 1924] 1 KB 762 - A determination as to whether '...in the case of a servant the employer has power, not only to direct what work the servant is to do, but also to direct the manner in which the work is done.' Latham CJ in F.C.T v J. Walter Thompson (Australia) Ltd (1944) 69 CLR 227 The right to control 1. It is the degree and nature of control the employer has over the way the employee performs the work that will be crucial. Control of itself is not sufficient, Humberstone v Northern Timber Mills (1949) 79 CLR 389 2. It is the ' right ' to control that is ultimately important, '...what matters is [that there is] lawful authority to command as far as there is scope for it' Dixon CJ, Williams, Webb and Taylor JJ in Zuijs v Wirth Brothers Pty Ltd (1955) 93 CLR 561 Downloaded by Jewelin Jijo ([email protected])

ii. Other factors • Whether the worker performs work for others (or has a genuine and practical entitlement to do so) • Whether the worker has a separate place of work and/or advertises his or her services to the world at large. • Whether the worker provides and maintains significant tools or equipment. • Whether the work can be delegated or subcontracted. • Whether the putative employer has the right to suspend or dismiss the person engaged. • Whether the putative employer presents the worker to the world at large as an emanation of the business. • Whether income tax is deducted from remuneration paid to the worker. • Whether the worker is remunerated by periodic wage or salary or by reference to completion of tasks. • Whether the worker is provided with paid holidays or sick leave. • Whether the work involves a profession, trade or distinct calling on the part of the person engaged. • Whether the worker creates goodwill or saleable assets in the course of his or her work • Whether the worker spends a significant portion of his remuneration on business expenses 'This list is not exhaustive. Features of the relationship in a particular case which do not appear in this list may nevertheless be relevant to a determination of the ultimate question.' Abdalla v Viewdaze Pty Ltd (2003) 122 IR 215, 229-3 Jiang Shen Cai trading as French Accent v Do Rozario [2011] FWAFB 8307 Indicator Employee Independent Contractor Degree of control over how work is performed Performs work, under the direction and control of their employer, on an ongoing basis Has a high level of control in how the work is done? Hours of work Generally, works standard or set hours (note: a casual employee's hours may vary from week to week). Under agreement, decides what hours to work to complete the specific task. Expectation of work Usually has an ongoing expectation of work (note: some employees may be engaged for a specific task or specific period). Usually engaged for a specific task. Risk Bears no financial risk (this is the responsibility of their employer). Bears the risk for making a profit or loss on each task. Usually bears responsibility and liability for poor work or injury sustained while performing the task. As such, contractors generally have their own insurance policy. Superannuation Entitled to have superannuation contributions paid into a nominated superannuation fund by their employer. Pays their own superannuation (note: in some circumstances independent contractors may be entitled to be paid superannuation contributions). Tools and equipment Tools and equipment are generally provided by the employer, or a tool allowance is provided. Uses their own tools and equipment (note: alternative arrangements may be made within a contract for services). Tax Has income tax deducted by their employer? Pays their own tax and GST to the Australian Taxation Office. Method of payment Paid regularly (eg, weekly/fortnightly/monthly). Has obtained an ABN and submits an invoice for work completed or is paid at the end of the contract or project. Leave Entitled to receive paid leave (eg, annual leave, personal/carers' leave, long service leave) or receive a loading in lieu of leave entitlements in the case of casual employees. Does not receive paid leave. Downloaded by Jewelin Jijo ([email protected])

Difficulties in application of the Test Re Porter (1989) 34 IR 179 "...a party may be described as an independent contractor, and the contract may even provide expressly that he or she is at liberty to provide services to other persons, outside of the contract. The reality may be that economic considerations dictate that work will only be accepted from the other party to the contract..." In Vabu Pty Ltd v Commissioner of Taxation (1996) 96 ATC 4898: Bicycle couriers supplied and maintained bikes, and paid according to delivery. Had to conform with policy and wear uniform, no capacity to refuse leave. Held as contractors. Five years later in Hollis v Vabu Pty Ltd [2001] HCA 44, held employees and the totality of the relationship should be looked at: "Viewed as a practical matter, the bicycle couriers were not running their own business or enterprise, nor did they have independence in the conduct of their operations. 'Simply expressed, the question of whether a person is an independent contractor in relation to the performance of particular work, may be posed and answered as follows: 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. On Call Interpreters and Translators Agency Pty Ltd v Commissioner of Taxation (No 3) [2011] FCA 366 at [208] - [209]: The question which this approach poses appears to me to be the central question in the application of the totality test. The question provides the focal point around which the indicia thrown up by the totality test may be examined. The central question has two elements. The first is whether the person has a business. The second is whether the work or the economic activity being performed is being performed in and for the business of that person. If the parties describe the parties relationship in, for example, the contract, generally self-description will be ignored: Cam & Sons Pty Ltd v Sargent (1949) ALJ 162. You "cannot create something which has every feature of a rooster, but call it a duck and insist that everyone else recognize it as a duck": Re Porter , 1989. Categorization must be done on a case-by-case basis, nobody knows what relative weight must be given to each factor. The test can be manipulated leading to sham work relationships. • It is possible to have dual status, e.g. Allen v Clarence Senior Citizens Centre (1996) 65 IR 164, Toole v Flexihire Pty Ltd (1991) 6 ACSR 455 • Work relationships may change over time, e.g Molfetas v Dwiar (1991) 6 ACSR 455 How to make somebody an Independent contractor • Make the contract for a certain or specified task • Make payment a lump sum payment • Have little control over the manner in which the contract is performed • No fixed hours • Do not prevent the person from securing other employment • Make the party supply their own tools and equipment • Allow the party the right to delegate work • Allow the party to conduct the work as a partnership or company • Do not deduct PAYG tax • Do not pay benefits such as sick leave, holiday leave or long service leave etc Downloaded by Jewelin Jijo ([email protected])

Other business practices include franchising, labour hire, outsourcing and internships. Independent Contractors Act 2006 (Cth) Rationale: There are about 1.9m people in Australia who are independent contractors. Independent contracting relationships should be governed by commercial, not industrial law. Unions should not control the ability of independent contractors or labour hire companies to perform work Howard Federal Government's position: work can be performed for someone under a contract for service, i.e. under more of a commercial basis (less control over the worker). Concept: parties to independent contractor arrangements should be free to agree on any terms they see fit, without outside interference. Federal Government view: this type of workplace arrangement should be recognised as legitimate and protected from industrial regulation The Act provides for the review of contracts under the Act. A court can review whether a contract is harsh or unfair, and make orders setting aside a contract, or varying that contract. Generally, a no- costs jurisdiction. The prohibition of Sham Arrangements under Fair Work Act 2009 (Cth) • s.357 - prohibits a person from misrepresenting an actual or proposed employment relationship as an independent contracting arrangement • s.358 - an employer must not dismiss or threaten to dismiss an employee in order to engage them to perform the same or substantially the same work as an independent contractor • s.359 - prohibits a person from making statements that they know to be false in order to induce a current or former employee to enter into an independent contract arrangement, under which they would do the same or substantially the same work they performed as an employee Restrictions on Hiring Key principle - an employer can employ whoever they want, however, some legal controls: Example - Qualifications o the need for qualifications or professional accreditation o Working with Children Checks - Child Protection (Working with Children) Act 2012 (NSW) Slavery and forced labour - Division 270 Criminal Code (Cth) makes slavery unlawful. - R v Tang (2008) 237 CLR 1 - sex slaves - Crimes Legislation Amendment (Slavery, Slavery-like Conditions and People Trafficking) Act 2013 (Cth) - "slavery like" conditions. - Modern Slavery Act 2018 (NSW), Modern Slavery Act 2018 (Cth) Child Labour s 223 Children and Young Persons (Care and Protection) Act 1998 (NSW), cll 6(1)(a) Children and Young Persons (Care and Protection) (Child Employment) Regulation 2015 (NSW), s 27(2)(e), reg 1.14(a) Fair Work Act 2009 (Cth), Children and Young Persons (Care and Protection) (Child Employment) Regulation 2015 : Children performing in the entertainment, exhibition, still photography or modelling sectors. Foreign Labour S 235 Migration Act 1958 (Cth) unlawful non-citizens cannot work, and temporary visa holders have restrictions on hours. S 482 (old 457) visas - market rate payable. Affirmative action and equal employment opportunity s 18 Public Service Act 1999(Cth), Workplace Gender Equality Act 2012 (Cth) Downloaded by Jewelin Jijo ([email protected])

Provision of Information The Fair Work Information Statement - ss 124, 125 Fair Work Act 2009 (Cth) Pre-employment screening • s 30 Disability Discrimination Act 1991 (Cth), Lane v Arrowcrest Group Pty Ltd (1990) 99 ALR 45, Hollingsworth v Commissioner of Police (1992) 47 NSWLR 151, Spring v Guardian Assurance plc [ 1995] 2 AC 296 • Medical information - potentially discriminatory • Criminal records - Australian Human Rights Commission Regulations 2019 • References Formation of the Contract of Employment i. Intention to create legal relations: Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 ii. Consideration: Cudgegong Soaring Pty Ltd v Harris (1996) 13 NSWCCR 92, Teen Ranch Pty Ltd v Brown (1995) 87 IR 308, Dietrich v Dare (1980) 54 ALJR 388 iii. Certainty and completeness iv. Illegality Vitiating factors  Duress  Undue influence  Mistake  Misrepresentation  Unconscionable conduct  Lack of capacity Downloaded by Jewelin Jijo ([email protected])

Problem Questions 1. For a number of years, Player had conducted a bricklaying business in partnership - at first with his two sons, later with one son and another man, Hardy. The partnership was managed by Player. It made use of a well-equipped home office. It owned equipment. It quoted on jobs, and invoiced for work performed. There were partnership books of account. It charged and paid GST. The books showed that distributions were made to the partners. Over the years the partnership had worked for Blankin, and for other builders. The partners worked their own hours, and sometimes worked on different jobs at the same time. Most of the partnership's work was bricklaying, charged per thousand bricks laid. Sometimes it did other work - demolition, patching, bagging and preparing footings. Sometimes, for bricklaying and other work, it charged an hourly rate. The partnership had been engaged on bricklaying work at a particular site for Blankin. That work had temporarily come to an end. Blankin, however, needed footings prepared for a perimeter wall. Blankin's concreter was to have done the job, but he was presently unavailable. So Player volunteered to do the job, on an hourly rate, as a way of keeping occupied. An agreement was made, but not documented. Consequently, Player, his son and Hardy began to dig the necessary trenches. They worked to plans provided by Blankin as the builder, but were essentially unsupervised. They used their own hand tools and they made use, when necessary, of equipment provided by Blankin; but only to deal with particular problems. Player, his son and Hardy had performed bricklaying for Blankin on numerous occasions during the previous five years or so, and during that time he or they had dug trenches for footings on four or five occasions. However, it was unusual for them to dig the trench for footings. With regard to these trenches Blankin directed Player and his partners as to where, when and how the trenching work was to be done, which in turn was in accordance with engineering plans obtained by Blankin and subject to a variation agreed to by Blankin. The work was labouring work and it had been agreed that the men would be paid at an hourly rate. Player and his partners provided their own shovels. Blankin provided the jackhammer necessary to deal with a concrete obstruction and provided a brick saw required to deal with protruding bricks. Player and his partners were at all times subject to the direction of the builder in respect of the digging of the designated trenches on the basis of the hourly rate agreed. They had no discretion in respect of the nature of the digging to be performed. Blankin held the whole of the financial risk. The work performed by Player and his partners in digging the trench for the footings was an integral part of Blankin's business. Player undertook to produce a specific result, namely the designated trenches, but did not select the result, nor was he at liberty to achieve a result in a manner selected by him. During the construction of the trench Player was killed. Is his wife entitled to claim workers' compensation? (Assume that she is if it can be established that Player was an employee of Blankin).  look at totality of relationship - pre-existing contractual work  side venture of the partnership - distinct and under some control points to employee-employer relationship  Downloaded by Jewelin Jijo ([email protected])

2. Bob Wilson was assisting in the removal of an awning attached to the roof of the premises from which Kerredan Pty Ltd (Kerredan) conducted its business. Kerredan was the corporate entity through which Bob's son, John, carried on a confectionary manufacturing, wholesale and retail business. The awning was between the business premises of Kerredan and the residence at which John and his wife lived (which was next door to the business premises). John was going to sell the residence and so had to remove the awning before the sale as it crossed the boundary between the business premises and the residence. Bob had started working with his son shortly after his son had started his business in 2015. Bob would help out on weekends and Sundays for no pay to assist John to get the business up and running. In September 2019 Bob and John came up with a new arrangement by which Bob would work for John. The arrangement was that Bob was going to be paid $400 per week but this amount would only be paid if there was cash available in the business. John was to continue paying Bob's fuel for travelling as well as providing meals at work. Bob did not have to work to any set start or finish times or any set days. He could work a few days each week in the business or seven days, it just depended on what needed doing and what Bob was up to at the time. Bob was a "jack of all trades" and he could handle any type of job that needed doing for the business, whether it was welding, grinding, mowing or working with the other staff in the production area, he could do the lot. He was not obliged to go into the business every day and could take time off whenever he wished. When he attended at the business he would undertake work which his son John told him needed to be done and on a number of occasions Bob would identify tasks that needed to be done and talk this over with John before commencing work. Bob provided all his own tools for any maintenance tasks which had to be done around the business. Bob did not have any financial interest or investment in the business other than that he and his wife were guarantors to a maximum of $100,000.00 for a loan to John to start the business. When it came to actual payment Bob might have received $400 per week two or three times but most times Bob received $200, $220 or $150 depending on what cash was available. There may have been one or two occasions when Bob was, in fact, paid more than $400 for a week. There was no way in really knowing as the payments to Bob were not recorded in the business in any way nor did Bob sign for the money that he received in a wages book. Whilst Bob was on the roof he stepped on some plastic roof sheeting, fell through the sheeting approximately three metres to the ground and was injured. Assuming that only employees are entitled to workers' compensation, will Bob be entitled to workers' compensation? Downloaded by Jewelin Jijo ([email protected])