Department of Industrial Relations, Wide Bay/Sunshine Coast Region (for Bridge) v Binnavale Pty Ltd [2007] QIRC 21 (2007) 184 QGIG 158

[Extract from Queensland Government Industrial Gazette, dated 16 March, 2007, Vol. 184, No. 11, pages 158-169] QUEENSLAND INDUSTRIAL RELATIONS COMMISSION Industrial Relations Act 1999 - s. 278 - power to recover unpaid wages and superannuation contribution etc. Department of Industrial Relations, Wide Bay/Sunshine Coast Region (for Michael Doug Bridge) AND Binnavale Pty Limited (W/2005/156) DEPUTY PRESIDENT SWAN 2 March 2007 DECISION This application, made by the Department of Industrial Relations on behalf of Mr Michael Bridge, seeks a decision pursuant to s. 278 of the Industrial Relations Act 1999 (the Act). The application claims an amount of $36,145.95 representing wages payable to Mr Bridge for the period of his alleged employment with Binnavale Pty Limited trading as Alpha First Aid Supplies (Alpha). The time period in question is from 10 October 2000 to 21 April 2004. The claim is based upon the adoption of provisions contained in the Retail Industry Interim Award - State (the Retail Award). The question to be determined by the Commission is whether Mr Bridge was an employee of or an independent contractor for Alpha. Alpha sells first aid supplies. Evidence of Mr Michael Bridge The evidence of Mr Bridge shows that he has worked selling first aid products prior to working for Alpha where he had challenged the nature of his contract. The most recent arrangement prior to working for Alpha was with a company called Rely First Aid conducting business similar to that of Alpha from Bundaberg. In this arrangement, Mr Bridge was paid on a commission basis only. Rely First Aid did not pay WorkCover insurance or superannuation but did deduct 20% of income for taxation purposes for the first part of the financial year and then no taxation payments were deducted for the remainder of the financial year. Mr Bridge had raised the question of his employment status with this business, but received no definitive answer. Upon enquiring from WorkCover as to whether he was a "worker" for the purposes of that legislation, he received correspondence in October 2000 from WorkCover advising that he was considered to be a "worker" under the WorkCover legislation. On that basis, Mr Bridge believed he had been an employee with Rely First Aid. Against a background of uncertainty as to his employment status with Rely First Aid, Mr Bridge sought other work and was interviewed for a position as a sales representative with Alpha by Mr Wayne Messer, Managing Director, and his business partner at the time, Mr Ray Bushnell. At the initial interview, Mr Bridge says that he was advised that he could be paid a maximum commission of 35%. Below that, the commission decreased on a sliding scale which related to 6 different price levels. Mr Bridge also states that Mr Messer said Alpha would deduct PAYG taxation and pay superannuation and WorkCover insurance. Mr Bridge signed a taxation declaration form. He asserts that at no time was there a discussion as to whether he was being engaged as a contractor or an employee. Mr Bridge was offered a Distribution Agreement which required his signature. He was told that he could seek legal advice before signing the document but chose not to do that. He signed the document and it was witnessed by a Justice of the Peace. He was not given a copy of the Distribution Agreement as Alpha retained the original copy. Mr Bridge did not see this document again until February 2003 when he had requested a copy. The Distribution Agreement required the production of invoices which would be paid by Alpha on a weekly basis. The company logo was on each invoice. Mr Bridge possessed an Australian Business Number (ABN) for taxation purposes and a Goods and Services Tax (GST) number. Mr Bridge said that this had been a requirement of Rely First Aid. Mr Bridge had advised Messrs Messer and Bushnell of this, but he states that they told him he was not required to utilise it. He consequently cancelled both numbers at that time, and then sought to have the numbers reinstated towards the end of his period with Alpha because he thought his relationship with the company was diminishing and he might have to find alternative work. -- 1 of 11 -- 2 Mr Bridge had been referred to, on company business cards, as a "representative" and later, in 2003, as a "distributor". Mr Bridge was provided with product to sell for Alpha and was not required to pay for the stock. During 2003, Mr Bridge's car was damaged and he made a claim against the other party's insurance company which required information from his insurer as to his employer. Mr Messer, wrote to the insurer stating: "I wish to confirm that Mr Mike Bridge is employed by Alpha First Aid supplies as a full time sales representative. A condition of his employment is that he provides a reliable vehicle to be used on a daily basis to service our existing and potential customer base and to fill orders at the point of sale from his vehicle ...". [Affidavit of Michael Bridge, paragraph 105.] Mr Messer said that he wrote this letter to assist Mr Bridge. He did not believe that Mr Bridge was an employee, however, he complied with a request from Mr Bridge in a genuine attempt to be helpful. The duties performed by Mr Bridge whilst at Alpha were described by him as follows:  visit and service clients;  build an enlarged client base;  "cold-calling" on businesses;  gathering tender documents from prospective clients and forwarding same to Alpha;  performing administrative duties in managing clients and his diary;  on a regular basis, depositing cheques and cash from the previous week's sales into Alpha's bank account;  describing sales in order to apply appropriate commissions;  sending a copy of all invoices each week to Alpha with a copy of the bank receipt;  organising and conducting first aid courses as a means of generating sales;  in tenders for work with a major energy company, Mr Bridge being nominated to perform training;  stock was sold from Mr Bridge's own vehicle - a Ford Econovan;  Mr Bridge maintained the van and personally incurred all expenses in running the vehicle (i.e. maintenance and petrol);  in his vehicle, Mr Bridge would collect freight from the post office or from local freight companies; and  Alpha always paid for the freight on the stock. The hours worked by Mr Bridge were described by him as follows:  there were no set hours of work and on a daily basis the hours could vary;  work could be performed at any time if a customer required the service;  Mr Bridge was not directed to work particular hours on any day by Alpha;  Mr Bridge managed his own working hours;  in December 2003, Mr Bridge was directed by a Ms Janine Vosper (Manager of Alpha) to attend an extraordinary meeting in Brisbane;  at this meeting, Mr Messer publicly raised issues regarding Mr Bridge's sales performance;  Mr Bridge viewed this as a request for him to work longer hours;  Mr Bridge said that his sales incentive documents showed that he had consistently increased the number of his sales; and  Mr Bridge was not required to keep his own starting and ceasing times. The commissions paid to Mr Bridge consisted of:  commission only basis, with the exception of: o 50% of the $90 fee charged by Alpha for First Aid training was paid to Mr Bridge; and o for securing the sale of a Senior First Aid Certificate training course, Mr Bridge was paid $13.50 per participant up to a total of 15 participants;  commission of sales were calculated at 35% gross of retail sales and for special price sales, he would receive 20%;  for wholesale price sales, Mr Bridge would receive 12.5% gross commission;  Mr Bridge was reimbursed weekly;  towards the end of Mr Bridge's "employment", Mr Messer had told him that he could work on other jobs if he wished;  Mr Bridge was not paid an allowance for any expenses such as fuel, office equipment, vehicle, postage, telephone account computers and general office expenses;  Mr Bridge was provided with a telephone/facsimile machine for business use;  Mr Bridge always used "Alpha First Aid" letterhead (which he had created) when communicating with customers. He believed that Alpha would have been aware of this and never asked him to desist; and -- 2 of 11 -- 3  on his vehicle, Mr Bridge had the company logo "Alpha First Aid" for which Alpha had paid half the cost. Mr Bridge previously had the logo from Rely First Aid on his van and had modified this by deleting Rely and placing Alpha on the sign. The evidence provided by Mr Bridge regarding group certificates and tax returns was as follows:  he was provided by Alpha with a PAYG Payment Summary - Individual Non Business Group Certificate covering the entire period of his association with Alpha; and  for the financial year ending 30 June 2001, a total gross payment was made by Alpha of $10,394.00. Similar taxation payments were made for the years 2001/2002; 2002/2003 and 2003/2004. The company invoices showed "Binnavale Pty Ltd ACN 058 052 190 t/as Alpha First Aid Supplies Tax Invoice" and not the name of Mr Bridge. Mr Bridge stated that he had worked overtime for the company. He was not directed to work as such, but nevertheless, was not paid for the work. Mr Bridge worked on statutory holidays. He was not paid penalty rates for this work. During his period of time with Alpha, Mr Bridge was not paid for or granted annual leave. Mr Bridge was covered for workers compensation and occupational superannuation. Mr Bridge referred to the production of a weekly newsletter by Alpha. Mr Bridge said that: "... those newsletters included instructions from the company regarding how and when to perform my duties eg client invoicing and some had instructions on when and where I was to attend company conferences etc.". [Affidavit of Michael Bridge, paragraph 214.] At the 2003 company conference, Mr Messer advised that those persons who were not "up to standard", would not be invited to the next conference. When Mr Bridge injured himself at work, Mr Messer undertook to pay the physiotherapist's account. All business quotes and tenders in Mr Bridge's geographical area were performed by Alpha. Further, during 2004, Mr Bridge was advised by Alpha that his geographical area was not profitable and that it may have to close. Mr Bridge said that any decision to do this was out of his control. When the company warehouses were closed over the Christmas and New Year period, Mr Bridge was unable to access stock. In October 2003, Mr Bridge made a formal complaint to the Department of Industrial Relations regarding his conditions of work. On 21 April 2004, Mr Bridge advised Mr Messer that he was resigning from "employment" with Alpha. He was advised by Mr Messer that a term of his contract was that he could not operate his own business in the same geographical area for a period of 6 months. Response of Alpha It was always the intention of Alpha that Mr Bridge was a contractor providing distribution services. In fact, Mr Messer's evidence is that Mr Bridge offered to become an employee, but that this was rejected by him. At the initial interview between Mr Bridge and Messrs Messer and Bushnell, the respondent says that the offer made to Mr Bridge was that of contractor. It was also made clear that there would be no payment of sick leave or annual leave. The respondent states that it had entered into similar arrangements with other persons. Mr A. McDonough and Ms D. Browne gave evidence to the effect that they were contractors of the respondent, under similar terms and conditions to those applicable to Mr Bridge. Both witnesses undertook a range of paid employment and business arrangements separate from their work with the respondent and also had employed others to assist in their business arrangements with the respondent. -- 3 of 11 -- 4 Mr Bridge had approached the respondent looking for work. Both parties agreed that there was no position on offer at the respondent's business when Mr Bridge first made contact. The respondent says that it appears odd that Mr Bridge, who had challenged his previous workplace (Rely First Aid) as to his "employment" status, did not seek to clarify the position with the respondent. At best, Mr Bridge suspected he might be an employee with the respondent. The respondent points out that there was no requirement placed upon Mr Bridge as to "how, where and when work was to be performed or whether work was performed at all" [respondent's submissions, page 8]. Mr Bridge was given a geographical area, but he could chose where he performed duties within that area. Reference was made to one meeting at which the respondent required attendance - a meeting scheduled for 9 December 2003. The respondent's evidence was that, although he required distributors to be present at the meeting, he understood that he could do little were a distributor not to attend. Conferences occurred primarily for the purpose of providing information and promoting products. Mr McDonough's evidence was that he regularly did not attend conferences, without any repercussions. The weekly newsletters which circulated through the business, in the respondent's view, were not an indication of control by the respondent over the distributors. They provided relevant information with regard to products. The respondent said that it did not control the price of its products - there were six levels at which the distributor could pitch his/her sales. In terms of any equipment used by Mr Bridge in the performance of his work, it was submitted that he in fact supplied his tools of trade - i.e. a van, office, telephone system, computer system and warehouse facility. The Distribution Agreement required the provision of a vehicle suitable for the carriage of pharmaceutical goods - this van was maintained by Mr Bridge. The respondent states that it had contributed to the alteration of the signage on Mr Bridge's van on a "one-off" basis. Mr Bridge had worked from his home office and his taxation records show that he had sought taxation deductions for his desk, chair, computer, lighting, heating, cooling, postage and telephone. Mr Bridge was required to provide his own stationery and business cards in his arrangement with the respondent. Mr Bridge also owned storage facilities for the purpose of holding the respondent's goods. This was in the form of a specific purpose caravan with appropriate shelving for the products. The respondent did not believe that Mr Bridge had held an integral role in the respondent's business. In fact, the work ultimately performed by Mr Bridge had been previously performed by Rely First Aid. Mr Bridge had been able to delegate his work to others had he so chosen. The respondent determined it necessary to "screen" any person first. Mr Messer's evidence was that no prospective distributor had ever been rejected. In fact, both Mr McDonough and Ms Browne had both employed people to assist in their businesses. Mr Bridge's evidence is that he chose not to do this. In relation to the payment of WorkCover premiums for distributors, Mr Messer states that the decision to do so was based upon advice he had received from his accountant that the definition of an employee under the WorkCover legislation could cover his distributors. That was not the only basis upon which the decision was made. As well, it was a requirement by clients such as Energex and TAFE that distributors be covered before they were able to enter their premises. Accepting further advice from their accountant, the respondent determined to deduct PAYG tax for its distributors. The respondent says that the advice was given because there was a "grey" area relating to the manner in which distributors were retained. Similarly, the payment of superannuation for distributors was another step taken by the respondent. The respondent stated that "a person can be considered an employee for the purposes of Superannuation Guarantee requirements and not be an employee as defined by the Act nor considered an employee at common law." (respondent's submissions page 25). Given that all of the circumstances surrounding an arrangement required consideration in the determination of whether a person was an employee or contractor, the respondent set out what it believed to be the indicia which might show an employee/employer relationship and compared that with indicia of a principal/contractor relationship relying upon the facts of this case. -- 4 of 11 -- 5 The indicia showing an employee/employer relationship consisted of: "A PAYG declaration was filled out. Income tax was deducted accordingly. Workers' Compensation premium paid by the respondent. Superannuation paid by the respondent. Invoice books were provided for the transaction of sales. Some monies were deposited into the account of the respondent rather than into the account of Mr Bridge and then a cheque was forwarded to the respondent. The respondent had provided a fax machine.". [Respondent's submissions, page 26] The indicia showing a principal/contractor relationship consisted of: "Brought a deal to Alpha First Aid that he would distribute product rather than existing distribution arrangements. Distribution Agreement itself. It is an agency Agreement relating to a territory and defining a remuneration range. Payment within the agreement was by results and only by results. No sick leave was payable, nor annual leave nor long service leave. No control was exercised regarding hours, times, or when Mr Bridge worked at all. Mr Bridge provided, paid for and maintained the tools of trade that were essential to the engagement; motor vehicle and expenses; office and associated expenses; office equipment (desk, chair, storage, computer, stationery); warehouse facility and associated expenses. Business expenses were treated as business expenses for taxation purposes. Work was able to be delegated. Only once was Mr Bridge ever directed to be anywhere and that was at a meeting in December 2003 (common ground).". [Respondent's submissions, page 26] Evidence of Mr Bradley Rogers Mr Rogers is an Inspector appointed under the Act. In response to a complaint made by Mr Bridge concerning Alpha, Mr Rogers interviewed Mr Messer on 12 February 2004. Mr Rogers' evidence was that the discussion between he and Mr Bridge was recorded and also Mr Rogers kept notes of the interview in his official notebook. In that conversation, Mr Rogers referred to Mr Bridge's contract with Alpha to be that of employment. So much so, that questions are posed as follows: "How did this employment arise?"; "What was he employed as"; "On what date did he start employment with you?". [Affidavit of Bradley Rogers, paragraph 11, points 27, 29 and 31 respectively] Mr Rogers' affidavit does not show that an understanding had been reached, prior to the interview, between himself and Mr Messer that the engagement of Mr Bridge by Alpha would be termed "employment" for the purpose of the interview. While Mr Messer had not agreed that this was factually correct, in good faith he agreed to undertake the interview on that basis. Mr Rogers, in his affidavit, should have clarified that point to the Commission. Regrettably, this fact only came to light through cross-examination of Mr Rogers by the representative for Alpha. During that interview, Mr Messer stated as follows:  that Mr Bridge worked his own hours;  that he performed his duties from his home at Pine Creek;  that his work consisted of selling first aid products;  that there were no special qualifications needed for the position, save for a driver's licence and a roadworthy vehicle;  there was no requirement for Mr Bridge to keep accurate time and wages records because "he was a contractor";  Mr Bridge was paid on a commission basis save from 20 November 2003 when he was given a $600 per week safety net payment;  Mr Bridge was paid on a weekly basis;  Mr Bridge did not receive a payslip but rather a commission summary;  that Mr Bridge was not under any direction or control by Alpha in the performance of his duties;  Mr Bridge was not supervised in the performance of any duties -"It's his own business"; -- 5 of 11 -- 6  Mr Messer had stated in response to a question concerning the hours worked by Mr Bridge - "No hours, up to the employee to work when he wants to work. He chooses his own customers. From time to time he is offered referrals, but it is up to him if he wants the sale.";  Mr Bridge had been supplied with a charge card machine and invoice sheets - he also received new product samples to show customers as well as price lists;  Mr Bridge could have been instantly dismissed if he was "caught stealing" from Alpha;  Mr Bridge would hire and fire those engaged by him;  Mr Messer confirmed that he deducted tax from the commissions earned by Mr Bridge;  he also provided WorkCover and superannuation for Mr Bridge, but no annual leave or sick leave was paid; and  Mr Bridge was free to work for more than one person, but not in the sale of other first aid products. Based upon the information provided by Mr Messer, Mr Rogers formed the view that the work performed was covered by the Retail Award. Mr Rogers believed the following requirements of the Retail Award applied to Mr Bridge. These are:  38 hours work per week;  a car allowance;  annual and pro rata annual leave; and  allowances for retail travellers. Evidence of Mr Wayne Messer Mr Messer is the Managing Director of Alpha. His evidence was that when engaging people to be distributors: "... what I say to people who come to us is parrot fashion. I tell them they run the territory as their own business. I tell people they manage and run their own establishments, and control their own method of work and how much they work. I also go to great lengths to explain to them that as they are a contractor and on commission only, it is difficult for us to add value. We also allow distributors to price the goods themselves. There are 6 price lists and we tell distributors they should charge according to the value of servicing the client.". [Affidavit of Wayne Messer, paragraph 7] Mr Messer gave the Distribution Agreement to Mr Bridge and invited him to take his time to read it and to get independent advice as to its contents. Mr Bridge chose not to do that. Mr Messer also stated that distributors usually asked who would pay for the overheads - i.e. the vehicles, business cards, mobile phone and home phone, stationery, price lists, product etc. It is explained to them that with the exception of the invoice books and banking facilities, the distributors always pay for all of their infrastructure. Mr Messer denied that Mr Bridge would have to seek company approval to engage staff and that the company would employ and pay these people. Mr Messer says its company policy to meet any person who might be engaged by a distributor to see if the person fell "within our broad culture". But beyond that, the company did not involve itself in whether or not the person was retained by the distributor. Mr Messer says the reality was that "the decision to employ, and the decision to terminate are up to the distributor.". The requirement of Mr Bridge to sign a PAYG taxation declaration was implemented by the respondent because it had been following the advice of its accountant. The advice was to the effect that "the definition of an employee under the tax act was sufficiently unclear that for taxation purposes Mike, and our other distributors, could be deemed to be employees". Similar advice had been received from the accountant with regard to superannuation and workers' compensation. With regard to WorkCover, Mr Messer said that many of the company's clients require the distributors and others entering their sites to have coverage under WorkCover. The "compulsory" meeting which was held with the company and its distributors on 9 December 2003, from Mr Messer's perspective related less to Mr Bridge's "low level of performance" and more to conduct being exhibited by Mr Bridge. Mr Messer says that whilst Mr Bridge was not claiming "overtime" as such, the hours undertaken by him on a daily basis showed that he was averaging around 2 hours worth of sales per day. From company records, Mr Messer says that Mr Bridge had sales on two statutory holidays (one in 2001 and another in 2003) and, with the closure of the warehouse during the Christmas period, there was no evidence of Mr Messer preparing for a quiet period by increasing his sales in anticipation of the closure. The newsletters and bulletins issued by Alpha did not include any instructions as to how one might perform one's duties, but rather provided assistance and suggestions as to more effectively undertaking administrative processes together with information on various products. -- 6 of 11 -- 7 Alpha engaged in providing the tenders for prospective clients. The distributors did not perform this duty as the product knowledge required to do this accurately was best left in the hands of Alpha. Mr Messer states that as from 20 November 2003, he had reached an understanding with Mr Bridge that he receive $600 per week as a safety net. Mr Messer states that: "The remuneration was a straight commission structure of up to 35 per cent. On 20 November 2003 Michael Bridge asked me to provide him with a retainer which was paid to him as a form of advance on the commissions that would be paid. I made that retained [sic] $600.00 a week. The safety net does not change the calculation of the remuneration. I would have made that clear.". [Affidavit of Wayne Messer, paragraph 66] While documentation showed that Mr Bridge received statements identifying "hours worked", "gross salary" and "taxation paid", Mr Messer explained that as follows: "Those advices were done on a program utilised within my company for the purpose of payment of wages. It notes a number of hours worked and paid. It shows a 'Scale' noted as 1.000. Nothing should be read into the scale, it has no meaning when provided to Mr Bridge. Similarly the notion of 38 hours worked and 38 hours paid that is shown on the statement has no meaning when applied to Mr Bridge. As I have stated elsewhere in my statement there was no requirement for Michael Bridge to work any particular amount of hours and he was certainly not remunerated based on hours, he was remunerated on results. Attachment 7 is an example of software designed for one purpose being used for another. My advice is that it would be too expensive to modify the software to remove the notion of hours, and it would add no value to do so.". [Affidavit of Wayne Messer, paragraph 67] In summary Mr Messer states:  Mr Bridge was not an employee;  Mr Bridge approached the company for work. There was no job vacancy;  Mr Bridge proposed that he would bring a new territory to the company using a client base already utilising products which had largely been sourced from Alpha;  Alpha had offered commission only arrangements to Mr Bridge. Mr Bridge would be paid on an agreed basis for the products he sold on Alpha's behalf;  products were advanced to Mr Bridge and what was not sold was sent back to Alpha;  Mr Bridge could have sustained losses in running his business. Mr Bridge had complained that he had a high ratio of expenditure to income. Mr Messer viewed that as one of the risks one takes in that type of environment;  Mr Bridge could arrange his day as he saw fit;  Mr Bridge could engage others to work for him;  colleagues of Mr Bridge's, under similar agreements, could and did operate other businesses as well as work for Alpha;  Alpha provided a framework for how distributors could operate, however, it ultimately became a matter of their own choice;  distributors could use Alpha shirts if they so desired. It was not compulsory to do so;  all of the tools and equipment, with the exception of an invoice book and charge card facilities, were the property of Mr Bridge;  Mr Bridge was not paid for the hours he chose to work - rather, he was paid for the results produced;  Mr Bridge was not contracted to the company under a business name. Other distributors have done this;  Mr Bridge had never raised the matter of an ABN. Had this occurred, Mr Messer said that "there would have been a very different reaction and discussion" between the parties [Affidavit of Wayne Messer, paragraph 92];  Mr Bridge was afforded time in which to have the agreement pursued by anyone of his choice, but chose not to do this;  payments were made to Mr Bridge on a weekly basis, however payments were made only on results;  WorkCover was paid based on professional advice. Similarly, payments were made for superannuation; and  "We were not advised by our accountant that deducting taxation would conclusively indicate the distributor was an employee. Had we been given that advice we would not have deducted tax from any commissions.". [Affidavit of Wayne Messer, paragraph 100] Evidence of Mr Ray Bushnell Mr Bushnell recalls the period when Mr Bridge sought work from Alpha. He says that Mr Bridge expressed his concern about continuing to work for Rely First Aid (a company which was a regular customer of Alpha) because his existing territory made it difficult for him to make reasonable commissions. -- 7 of 11 -- 8 Mr Bushnell explained that Alpha worked similarly to Rely First Aid - i.e. commission only and all running costs met by Mr Bridge. There was some hesitancy on the part of both Messrs Bushnell and Messer about engaging a distributor who had worked for a good customer. At the initial interview between Messrs Bushnell and Bridge, Mr Bushnell explained the nature of the arrangement and Mr Bridge expressed no concern as he had worked under a similar arrangement with Rely First Aid. Mr Bushnell confirmed that Mr Bridge had been asked to read the agreement and to take it away for further perusal if he so chose. Mr Bridge determined to sign it at the end of the meeting. Mr Bushnell's evidence is corroborative of Mr Messer's in that there was no ambiguity around the question of Mr Bridge's contractual arrangement with Alpha. Evidence of Ms Donna Browne Ms Browne confirmed that when she commenced with Alpha she was advised she was a contractor and not an employee and that her commissions would be up to 35% of her product sales. Ms Browne understood that the payment of workers' compensation by Alpha occurred because of the requirements of some clients - e.g. Ergon Energy and the Toowoomba Grammar School. Ms Browne also understood that the taxation deductions by Alpha was to ensure that no distributor was left with a "big tax bill" at the end of the financial year. [Affidavit of Donna Browne, paragraph 7] Ms Browne also received a safety net of $10 per hour should her commissions fall below $150 in any one week as she had limited hours available to her in a week to establish her territory. Evidence of Mr Robert Crossett Mr Crossett was the former owner of Rely First Aid. When Mr Bridge sought to be a representative for this company, he was advised by Mr Crossett that reimbursement was by way of profit sharing and the representative would be referred to as an agent. The agent then signed an agreement which states that the agent is an independent operator. Mr Crossett did not have an ABN registered in the name of Rely First Aid but he subsequently became aware that Mr Bridge's ABN was registered in that name. Subsequent to Mr Bridge's resignation from Rely First Aid, Mr Bridge had claimed money from Rely First Aid stating that he had been an employee. Evidence of Mr Anthony McDonough Mr McDonough's evidence was that he had worked for Alpha on a commission basis for some 11.5 years. When he commenced with Alpha, he had advised them that he wished to add Alpha's line of product to his already existing businesses. He had always understood that he was not an employee of Alpha. Information received from Alpha in the form of bulletins was more in the nature of "what is going on" and was, according to Mr McDonough, common amongst distributors. Consideration of evidence and submissions The majority of the High Court in Hollis v Vabu Pty Ltd (2001) 181 ALR 263 at 270 said, inter alia, that it is necessary to establish the "totality of the relationship" between the parties. A Full Bench of the Australian Industrial Relations Commission in Abraham Abdalla v Viewdaze Pty Ltd t/as Malta Travel [PR927971] [2003] AIRC 504 (14 May 2003) succinctly summarised the law on distinguishing employees from independent contractors. As a preface to that summary, the Full Bench said as follows: "Whether a worker is an employee or an independent contractor turns on whether the relationship to which the contract between the worker and the putative employer gives rise is a relationship where the contract between the parties is to be characterised as a contract of service or a contract for the provision of services. The ultimate question will always be whether the worker is the servant of another in that other's business, or whether the worker carries on a trade or business of his or her own behalf [Marshall v Whittaker's Building Supply Co (1963) 109 CLR 210 at p. 217 per Windeyer J approved by the majority in Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at p. 39; see also Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 per Wilson and Dawson JJ at p. 37]: that is, whether, viewed as a practical matter, the putative worker could be said to be conducting a business of his or her own [Hollis v Vabu (2001) 207 CLR 21 at p.p. 41-42 and p. 45]. This question is answered by considering the totality of the relationship [Brodribb (supra) per Wilson and Dawson JJ at p. 37].". -- 8 of 11 -- 9 The Full Bench believed that the matters to be considered should at least include the following:  The actual nature of the work must be considered.  The terms of the contract must be considered. However, parties are unable to deem that a relationship is something that it is not.  There is no definitive list of indicia which clearly shows that a contract is one or the other. Appropriate weight must be given to all indicia and this may vary according to the circumstances of the case.  In listing, generally, indicia which can be significant in determining the relationship between the parties, the Full Bench stated as follows: o "Whether the putative employer exercises, or has the right to exercise, control over the manner in which work is performed, place or work, hours of work and the like [Brodribb (supra)]. o Whether the worker performs work for others (or has a genuine and practical entitlement to do so). o Whether the worker has a separate place of work [Brodribb (supra) per Wilson and Dawson JJ at p. 37] and or advertises his or her services to the world at large. o Whether the worker provides and maintains significant tools or equipment [Brodribb (supra) per Mason J at p. 24]. o Whether the work can be delegated or subcontracted [Brodribb (supra) per Mason J at p. 24]. o Whether the putative employer has the right to suspend or dismiss the person engaged [Brodribb (supra) per Wilson and Dawson JJ at p. 36]. o Whether the putative employer presents the worker to the world at large as an emanation of the business [Hollis v Vabu (supra) at [50]]. o Whether income tax is deducted from remuneration paid to the worker [Brodribb (supra) per Mason J at p. 24; Wilson and Dawson JJ at p. 37]. o Whether the worker is remunerated by periodic wage or salary or by reference to completion of tasks [cf Brodribb (supra) per Mason J at p. 24]. o Whether the worker is provided with paid holidays or sick leave [as to paid holidays, see Brodribb (supra) per Mason J at p. 24]. o Whether the work involves a profession, trade or distinct calling on the part of the person engaged [Brodribb (supra) per Wilson and Dawson JJ at p. 37]. o Whether the worker creates goodwill or saleable assets in the course of his or her work [ibid]. o Whether the worker spends a significant portion of his remuneration on business expenses [ibid].". The Full Bench went on to state that: "If the indicia point both ways and do not yield a clear result the determination should be guided primarily by whether it can be said that, viewed as a practical matter, the individual in question was or was not running his or her own business or enterprise with independence in the conduct of his or her operations as distinct from operating as a representative of another business with little or no independence in the conduct of his or her operations.". Alpha says its intent upon establishing a contract with Mr Bridge was to engage him as a distributor and not as an employee. Mr Bridge says he believed he entered into an employment contract. Given the terms and conditions of the arrangement, it is easy to see why both parties were confused. The understanding of each party at the time of signing the Distribution Agreement has been detailed in the body of this decision. What strikes me as odd, in all of this, is that Mr Bridge, having most recently considered the question of employee/contractor with Rely First Aid, did not seek some written clarification from Alpha as to whether he was an employee or contractor. It is not disputed that Alpha advised Mr Bridge to take time to have the Distribution Agreement considered by his legal advisors before signing it. Mr Bridge saw no need to do this. As well, it is interesting that, were he to have considered himself to be an employee, Mr Bridge did not seek to claim typical employment conditions - e.g. annual leave. The Distribution Agreement is silent on the question of whether the agreement is based on an employment or contractor basis. However, clause 5 of the Agreement states inter alia that: "The Distributor agrees that it is being employed on a commission only basis of: ...". Further components of the Agreement have been drawn to the Commission's attention as being indicative of the degree of "control" exercised by Alpha over Mr Bridge. These include:  Clause 4(e) which states: "The Distributor covenants and agrees that it will:- ... -- 9 of 11 -- 10 (e) Not knowingly sell without the prior written approval of the Principal in each instance Products to any person or firm or corporation who may re-sell or ship the same outside the Territory.".  Clause 8 which states: "The Distributor shall maintain a suitable motor vehicle at its own expense. Such motor vehicle will at all times be kept in a clean and roadworthy condition. The motor vehicle used for sales shall be of a nature so as to ensure that stock will not suffer damage from the elements and that Products will not be visible to the public.".  Clause 9 which states: "The Distributor agrees that during the course of business its personal presentation and conduct will at all times be of a professional nature in keeping with the Principal Company's image.".  Clause 14 which states: "This agreement may be terminated at any time by either party upon one (1) months written notice save in the case of breach of this agreement by the Distributor, the Principal shall be at liberty to terminate this agreement immediately by giving written or oral notice of such termination.".  Clause 16(a) which states: "(a) This agreement shall not be assigned by the Distributor to any person or firm;". The Agreement was signed by Mr Bridge as a "distributor". The evidence of Ms Browne and Mr McDonough (both distributors for Alpha) shows that both conducted their businesses differently from Mr Bridge. For Mr McDonough, the distribution of Alpha products was but one part of a number of businesses in which he was engaged. Ms Browne stated that she had "limited hours available to her in a week" to establish a territory and she had negotiated a retainer in the event that her commission fell $150 in any one week. Both gave clear evidence that they were engaged as contractors and not as employees of Alpha. Mr Bridge, however, only distributed for Alpha, conducting no other businesses but, like Ms Browne, had negotiated a retainer. That was a matter of choice for Mr Bridge. Ms Browne viewed the payment of WorkCover by Alpha as compliance with the request of some clients and nothing more. She also understood the payment of PAYG taxation by Alpha as helping distributors avoid "big tax bills" at the end of the financial year. The evidence of these 2 witnesses was forthright and I have accepted that they have given truthful evidence. I have found the evidence of Messrs Messer and Bushnell relating to the initial interview with Mr Bridge to be convincing. I accept that information was produced in "parrot fashion" by Mr Messer to Mr Bridge. Considering the evidence around this initial interview, Alpha, with its cautionary arrangements based upon the advice of its accountant (who was not called to give evidence) appeared to be covering all concerns in its agreement with its distributors. It appeared to be apprehensive that it might be held liable under one of the various pieces of legislation for its distributors and in the selling of its product. To some degree, Alpha did exercise some control over Mr Bridge. The control went to issues such as the set range of prices for the selling of its products. The requirement from Alpha for Mr Bridge to introduce prospective persons who might assist Mr Bridge in the sale of Alpha's products is a matter of "limited" control as Mr Bridge could also terminate the arrangement. The presentation of Mr Bridge's vehicle used for selling Alpha's products and the "one off" direction for Mr Bridge to attend an Alpha conference in December 2003 also suggest a limited degree of control. Mr Messer's evidence is that: "Our distributors have engaged staff previously. How we operate is not like that. We do request to meet with prospective staff of our distributors to ensure they fall within our broad culture. However, once we determine that the person broadly fits our organisation, we do not have any say in whether the person is retained and they are not retained by us. They are engaged on whatever terms by the distributor. The decision to employ, and the decision to terminate are up to the distributor. Those decisions are nothing to do with us. Mike did not seek to employ anybody but his business was not big enough to do so.". [Affidavit of Wayne Messer, paragraphs 21 and 22] I have accepted that evidence as factual. -- 10 of 11 -- 11 There was no special qualifications required to work as a distributor for Alpha. Alpha says that the only requirement was a driver's licence and a roadworthy vehicle, however the fact that Mr Bridge had worked in a similar environment and had a client base in the proposed geographical area under consideration was an attraction to Alpha in engaging him to sell its products. An absence of control was evident in how many hours were to be worked by Mr Bridge; when Mr Bridge was to commence his work; where, within his area, Mr Bridge was to work or whether Mr Bridge worked at all on a particular day. Mr Bridge also conducted his business from his own home. Mr Bridge was not supervised in the performance of his selling of Alpha's products. Mr Bridge was not required to meet any sales targets. Mr Bridge purchased shirts from Alpha, at a discount, with Alpha logos on them but he was not required to wear these shirts. He chose to because, in his view, it produced a more professional look. There was no control over Mr Bridge if he chose to work for businesses other than Alpha save for any businesses distributing first aid products. Mr Bridge primarily owned and maintained his own tools of trade. These included his motor vehicle; his office expenses including his desk, chair, storage space, computer; warehouse facilities and associated expenses. Mr Bridge had been supplied, by Alpha, with a charge card machine and invoice sheets, price sheets and new product samples only. Mr Bridge claimed taxation deductions for his office expenses. The respondent viewed this as an indication of his contractor status. However, it may be appropriate for him to do so without having to be working as a contractor. Mr Bridge was paid weekly, however, Alpha states that this was because it was an "administratively efficient" way to operate. The payments were always related to results. Mr Messer said that "to ensure our distributors have regular funds we pay weekly" [Affidavit of Wayne Messer, paragraph 96]. As well, Alpha had acquiesced to Mr Bridge's request to be paid a weekly retainer. Having considered all of the evidence in this case, and the relevant case law which has been cited, I have formed the view that Mr Bridge was an independent contractor as described by Alpha. This is the type of circumstance envisaged in Abdalla (supra) where the indicia points both ways, and from a practical perspective, it appears more clearly the case that Mr Bridge was running his own business with sufficient independence in the conduct of his operation to enable him to fall into the category of an independent contractor. Certainly, there are elements of an employment contract in the engagement between Mr Bridge and Alpha (the most obvious ones being the PAYG taxation arrangements; the WorkCover coverage and superannuation) however, there are believable reasons for Alpha having taken those steps. If anything, it appears that Alpha had sought to facilitate its distributors as best it could, and, to this end, left itself exposed to a claim of this nature. However, when one weighs those factors against those which show the engagement to be one for service (most notably, the overall lack of control over the distributor; the distributor's ability (with some limitation) to hire and fire those who might be engaged by them; the distributor's ability to work for others; the lack of apparent employment entitlements (i.e. paid annual leave and sick leave); the provision and maintenance of the distributor's tools of trade being in the hands of the distributor; the ultimate conclusion is drawn that Mr Bridge was engaged in a contract for service. I dismiss the application. Order accordingly. D.A. SWAN, Deputy President. Appearances: Hearing Details: 2006 6, 7, 27 March 7 November Mr G. Thompson of Department of Industrial Relations, Wide Bay/Sunshine Coast Region, for the applicant. Ms K. Prior of Prior and Associates, for the respondent. Released: 2 March 2007 Government Printer, Queensland The State of Queensland 2007. -- 11 of 11 --