Owner driver found to be employee

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Owner driver found to be employee

A Full Bench of the Australian Industrial Relations Commission has ruled that an owner-driver for a courier company was an employee.

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A Full Bench of the Australian Industrial Relations Commission has ruled that an owner-driver for a courier company was an employee. It was determined that the amount of control that the company exercised over the driver was much the same as that exercised over award employees. The Full Bench considered at length the possibility of radically expanding the definition of employee to encompass independent contractors. Ultimately, the decision in Sammartino v Mayne Nickless Express t/a Wards Skyroad, Print S6212, [2000] 555 IRCommA, (23 May 2000), confirmed that in determining whether a person is an independent contractor or an employee, the factor of control is merely one of a number of indicia which must be considered.

Backround

Initially employed as an owner-driver for Mayne Nickless, the employee at the centre of these proceedings, worked from July 1986 through to January 1998. On 29 January 1998, the driver's services as a contract carrier were terminated. The termination followed an investigation into an allegation of misconduct. Pursuant to s170CEof the Workplace Relations Act 1996the driver lodged an application for relief, which was founded upon the premise that he had been an employee of Mayne Nickless.

The first instance decision of Foggo C on 18 June 1998 was to dismiss the application, on the grounds that the owner-driver was at all times engaged under a contract for services and was not an employee. In similar fashion the Full Bench of the Commission dismissed the appeal proceedings on 14 October 1998. The Full Bench decision was then quashed on 25 August 1999 by a judicial review of the Full Court of the Federal Court, whereupon a writ of mandamus was issued directing the Full Bench of the Commission to hear and determine the appeal according to law. The matter was remitted back to the Full Bench of the Commission because the Full Court had identified an error of law going to jurisdiction.

The matter before the Full Bench was heard on 7 December 1999, and focused upon the statutory consideration of an employee and the question of whether the owner-driver was an employee. A great deal of the Full Bench's decision focused on the construction or interpretation of "employee" that emerged from Federal Court decision in Konrad v Victoria Police [1999] FCA 988 (6 August 1999). According to the Full Bench this case revived some of the options for enlarging the class of persons who may be considered to be employees.

The Full Bench did not expand the definition of employee to encompass independent contractors, but went on to confirm that Stevens v. Brodribb Sawmilling Company (1986) 160 CLR 16 No. F.C. 81, was the still the authority in determining the existence of a contract of employment. Therefore, the question of whether a relationship is one of employment is still cast as a question of degree for which there is no exclusive measure.

In Stevens v. Brodribbit was noted by Mason J that the existence of control, whilst significant, is not the sole criterion by which to gauge whether a relationship is one of employment. Control is merely one of a number of indicia which must be considered. The Full Bench determined that in relation to this matter the process for characterising the relevant contract between the owner-driver and Mayne Nickless required findings on:

  1. The work performed;

  2. The existence and identification of a contractual relationship; and

  3. The indicia of an employment relationship;

The relevant indicia include: the degree of control of the employer; the mode of remuneration; the provision and maintenance of equipment or resources; the obligation to work; the delegation of work by contractor or exclusivity of performance; and the deduction of income tax.

The work performed

Initially engaged as a casual in 1986, the owner-driver was in early 1987 taken on as a "courier-driver". He was required to supply his own vehicle, and used it to pick up and deliver parcel items on a set run. The work requirements and conditions at the time were broadly akin to those specified in an Industrial Agreement between Mayne Nickless and the Victorian Branch of the Transport Worker's Union.

The existence of a contractual relationship

It was not disputed that the owner-driver was in a contractual relationship with Mayne Nickless and that consideration was exchanged between 1986 and 1998. However, no written contract had been signed by the owner-driver, and there was no evidence that a formal written agreement existed incorporating the terms of the Agreement. Without a comprehensive written document signed by the owner-driver, the Full Bench derived the terms of the contract from the surrounding factual matrix.

Evidence before the Commission suggested that the owner-driver was employed on virtually the same terms and conditions as were applied collectively to all couriers in what was referred to as the 1997 Industrial Agreement. The inference being that the terms and conditions of the collective agreements at Mayne Nickless were ultimately incorporated into owner-driver's individual contract.

Applying the indicia of a contract of service

Whilst it was the intention of both Mayne Nickless and the owner-driver to create an independent contractor relationship, the Full Bench considered that having regard to the circumstances of this case, the expressed intention should not be accorded conclusive weight. It is appropriate to examine and apply the indicia used to test whether the owner-driver's contract was in truth a contract of service.

Degree of control

The employer's degree of control over what and how work should be done, has long been accepted to be at least a significant test for the existence of a contract of service. In this instance the Full Bench held that the degree of control exercised by Mayne Nickless over the owner-driver was much the same as that exercised over the union award employees at Mayne Nickless. For example, all drivers were expected to drive in accordance with the organisation's code of conduct. While the owner-drivers had liberty to determine aspects of the maintenance and upkeep of their vehicles, in all other respects they appeared to be under the same direction and control as the employees. The Commission accepted that the degree of control exercised over the work performed and the way in which it was performed was a significant factor indicating that the owner-driver's contractual relationship was in substance that of an employee to an employer.

Mode of remuneration

Throughout the course of the owner-driver's employment, his remuneration was generally based on the payment of a minimum rate for a prescribed or imputed weekly standard hours equivalent. According to the driver's evidence, whenever the relevant award classification increased, his own personal rate of pay would be adjusted accordingly. It was therefore, the owner-driver's belief that in relation to remuneration, he was paid as per award. The Full Bench concurred finding that the substance of the claim that there had been a broad correspondence between award employee rates and the contract labour rate component was accurate. On balance, the Full Bench concluded that the mode of the owner-driver's remuneration was marginally more indicative of an employer-employee relationship, and of a contract of service than it was of an contract for services.

Provision and maintenance of equipment or resources

Obligated to provide and meet the operational expenses of a vehicle, the owner-driver's maintenance of a vehicle was in the Full Bench's opinion an important indication that his contract was a contract for services.

Deduction of income tax

The owner-driver paid tax as a natural person, in that he supplied Mayne Nickless on regular basis with a Prescribed Payments System Payee Declaration (PPS Declaration). The use of PPS Declarations in contrast with the Pay as You Earn (PAYE) system has been used as an indication of a contract for services. The Full Bench noted that recent approaches had cast doubts as to the weight that ought to be attributed to the use of PPS Declarations instead of PAYE arrangements. In this case the use of the PPS Declarations had little independent weight as an indication of the true character of the contractual relationship between employer and the owner-driver.

Assessment of the total relationship

Having reviewed each of the main indicia, the Full Bench preferred the view that the owner-driver was an employee. On the one hand, the most significant considerations weighing against the characterisation of the contract as contract of services was the clear intention reflected in the contract to label the relationship as that appropriate to an independent contractor for services, and the requirement to provide and maintain a vehicle suitable to Mayne Nickless. Against this perspective was the indicia that weighed most heavily with the Full Bench and that was the fact that the degree of control exercised by Mayne Nickless over the driver was a degree not markedly different from that exercised over employees. On the balance of the indicia and in perspective with the totality of the arrangements under which the owner-driver worked at Mayne Nickless, the Full Bench determined that the owner-driver was an employee for the purposes of s170CE.

Leave to appeal was granted and the appeal allowed. The application under s170CEwas referred to Watson SDP for allocation of the matter for conciliation or arbitration in due course.

 

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