Department of Employment, Training and Industrial Relations v Foster & Anor [2001] QIRC 72 (2001) 167 QGIG 118

118 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 8 June, 2001 ########################################################################################################################### QUEENSLAND INDUSTRIAL RELATIONS COMMISSION Industrial Relations Act 1999 – s. 276 – power to amend or void contracts Department of Employment, Training and Industrial Relations AND Christopher and Diana Foster (No. B981 of 2000) COMMISSIONER BLOOMFIELD 25 May 2001 Amend or void contract – Farm Worker – Question of whether worker was an employee of Respondent – Accommodation, electricity and water supplied to worker – Arbitrated Matter – Relationship was contract of services, not contract for services – Intention to create legally binding relationship – Unclear to what extent an award applied to the work being performed by worker – Vast bulk of the period and duration of worker’s employment was award free – Commission acted pursuant to s. 276 of the Act to amend the contract of services – Amounts paid to worker not considered to be fair and reasonable – Commission determined amount to be paid to worker based on award rate at 32 hours per week – Offset allowed for accommodation and power. DECISION -- 1 of 3 -- 8 June, 2001 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 119 In an unusual step Mr Sean Alan Genever of the Department of Employment, Training and Industrial Relations (DETIR), Cairns, has made application pursuant to s. 276 of the Industrial Relations Act 1999 to amend what was described as a “contract for services” between John Alexander Klein and Christopher John Foster of Fosters Farm, Kalunga 4872. The relief sought is that the contract be amended to mirror wages and conditions provided for by the Fruit and Vegetable Growing Industry Award – State. However, the circumstances which give rise to the application are also unusual. Undisputed material filed in support of the application disclosed that Mr Klein worked for several months for Mr Foster’s father at Fosters farm and vineyard in the middle of 1981 and that he was paid about $3 per hour. He returned again for several months in 1987 and was paid about $3.75 per hour. He worked again for about ten months during 1988/89 and for a period of about nine months in 1990 during which time he was also paid $3.75 per hour. During his periods at Fosters he lived free of charge in an old Queenslander, which had apparently seen better days, and spent time repairing it during his free time. In late July 1991 he returned to live and work permanently at the farm and worked until 1 January 1999. Mr Foster’s father left the farm in June 1994. Whilst there is some dispute as to who directed Mr Klein prior to that it is clear that he was always directed, in the work that he performed, after June 1994 by Mr Christopher Foster or his wife Diana. Mr Klein’s payment of $3.75 per hour remained unchanged from July 1991 until January 1997 when it was increased to $5 per hour. Payments were made fortnightly, every second Wednesday, though payment was sometimes irregular. Payments were sometimes made by cash, sometimes by cheque and sometimes by a combination of the two. No tax was deducted and no pay advice was provided to Mr Klein. In the early part of his time at the Fosters winery/farm he worked for five days a week but from December 1992 it was reduced to four days per week at the request of Mrs Diana Foster. Apart from expressing a belief that Mr Klein had his working hours reduced from four days a week to three days a week some time in 1998 Mr Foster did not challenge the above facts. He said that he directed Mr Klein as to the work which was to be performed on any given day but did not otherwise supervise or direct him in its performance. In that regard Mr Klein was left, essentially, to work on his own. Mr Foster said that the arrangement between he and his wife and Mr Klein was a special one in that there had been an agreement that Mr Klein would work for the rate of money quoted in return for being able to live in the Queenslander rent free with electricity and water provided. The material also suggested that the relationship between Mr Klein and Mr and Mrs Foster was, at times, strained in that they often did not communicate verbally with Mr Klein being left to work around the winery and farm without the Fosters specifically directing him what to do, how to do it and when to have it done by. Communication sometimes occurred by written note. The Department’s record of interview with Mr and Mrs Foster revealed that Mr Klein would often take time off to meditate and on a number of occasions after such meditation sessions he would go off and approach tasks in a “premeditated” way and no amount of attempted persuasion or discussion by the Fosters could deter him from his chosen course of action. The record also shows that they believed that they had provided him with free accommodation and paid him a token wage in return for work he agreed to do on the farm basically to honour a promise made years before by Mr Foster’s father. Unlike other employees (who were at all times paid the award rates) they kept no time and wages records and paid no tax on the amounts of money paid to him. Acting on Mr Klein’s instructions the Department has sought variation of the “contract for services” to the extent necessary to allow Mr Klein to receive payment at the basic award rate for a full-time employee, albeit for thirty-two hours per week instead of forty, with no adjustment being sought for any overtime payments or to reflect any casual type of engagement. A variation to the “contract for services” is also sought to include an entitlement to the standard quantum of annual leave, at four weeks per annum, to be paid as an entitlement upon Mr Klein’s termination of employment. Conclusion It is clear on the material provided to the Commission that the relationship between Mr Klein and Mr (and Mrs) Foster is a contract of services rather than a contract for services. Mr Foster also made it clear during proceedings before Vice President Linnane on 17 October 2000 that the employer was Mr Christopher and Mrs Diana Foster and not Mr Foster alone. Accordingly, I shall approach the matter on the basis that I am being asked to amend or declare void the contract of services between Mr Klein and Mr and Mrs Foster. Having regard to the way in which the contract was formed and operated I questioned the parties about whether there was an intent to create a legally enforceable obligation. I also questioned them about the degree of control and/or supervision exercised by Mr and Mrs Foster. Mr Foster made it clear that Mr Klein had agreed to perform work around the winery and farm in return for payment of a particular wage and the provision of free accommodation and power and that he did direct Mr Klein as to the work that was to be performed. Further, he also made it clear that Mr Klein was expected to work in order to receive the benefits of the free accommodation and the $3.75/$5 per hour which was paid to him. It was also clear that Mr Klein, for his part, regarded the arrangement as being legally enforceable. On a number of occasions he approached Mrs Foster (who was responsible for payments) about his wages and the fact that they may have been late. He also approached her to request an increase in his wage in 1997. In such circumstances it is clear, notwithstanding the fact that the parties did not discuss the issue directly at the time, that each of the parties believed that the arrangement entered into between them was binding. Mr Klein certainly expected to be paid for the work that he performed and Mr and Mrs Foster clearly expected that Mr Klein was going to continue to perform work in return for the agreed wages and the provision of free accommodation. As such, the arrangement created legally binding obligations. Section 155 of the Industrial Relations Act 1990, s. 139 of the Workplace Relations Act 1997 and s. 135 of the Industrial Relations Act 1999 – which applied at various stages during Mr Klein’s employment – provide that an award prevails over a contract of services and that the contract is to be amended to the extent necessary to make the area of inconsistency conform to the award. However, in this case, it is unclear to what extent an award, or awards, of this Commission applied to the work being performed by Mr Klein. Whilst it appears that he may have been covered at varying times, to varying degrees, by the Fruit and Vegetable Growing Industry Award – State, the Retail Industry Interim Award – State and the Building Products, Manufacture and Minor Maintenance Award – State it was submitted by Mr Johnston of DETIR, on behalf of Mr Klein, that the vast bulk of Mr Klein’s employment was award free because there was no award applying – at the time – to work in and around wineries. -- 2 of 3 -- 120 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 8 June, 2001 The fact that the vast bulk of the work was award free precluded DETIR from pursuing an underpayment of wages application under s. 278, or any other action for underpayment of wages which relied upon an inconsistency between the contract of services and the provisions of an award. After reviewing the material filed in support of the application I have decided to accept the submission of Mr Johnston that the vast bulk of the work performed was award free. In those circumstances (see s. 276(1)(a)(i)), the Department was entitled to make application pursuant to s. 276(3)(b) to have the contract of services varied to reflect an award of this Commission. After considering all of the material advanced I have decided to act pursuant to s. 276 of the Industrial Relations Act 1999 to amend the contract of services between Mr Klein and Mr and Mrs Foster from 28 June 1994, i.e. the date Mr Foster’s father left the farm. In so deciding I have considered the terms of the Fruit and Vegetable Growing Industry Award – State and compared its provisions with the benefits and entitlements provided to Mr Klein during his period of employment. The amounts paid to Mr Klein could not generally be considered to be fair and reasonable at any stage during Mr Klein’s employment and certainly not if they are compared to that Award. I propose to amend the contract of services such that it will require payment to Mr Klein at the award rate under the Fruit and Vegetable Growing Industry Award – State for thirty-two hours per week together with annual leave entitlements at the rate of four weeks per annum. I also propose to amend the contract to permit the employer to deduct the amount of $25 per week as an offset for the provision of accommodation and power to Mr Klein. Whilst there may have been no lost opportunity cost in connection with the provision of the accommodation, access to the house by Mr Klein can be seen to have been of benefit to him and, in those circumstances, should be taken into account. In the ultimate, I have decided that the contract of services be varied to require Mr Christopher and Mrs Diana Foster, of Fosters Farm, Flaggy Creek Road, Kalunga Qld 4872 to pay the amount of $25,536.15 to Mr John Alexander Klein within twenty-two days of the date of release of this decision. Such amount is calculated as follows:– • Additional wages payable on the basis of the application of the Fruit and Vegetable Growing Industry Award – State to Mr Klein’s employment from 28 June 1994 to 1 January 1999 $24,272.24 • Annual leave and loading entitlements representing entitlements accruing during the period 28 June 1994 to 31 July 1998, plus pro rata leave between 1 August 1998 and 1 January 1999 $7,113.91 • Less: Offset for the provision of accommodation and power at $25 per week from 28 June 1994 to 1 January 1999 (4.5 years) ($5,850.00) _________ $25,536.15 The Commission so determines and orders. A.L. BLOOMFIELD, Commissioner. Released: 25 May 2001 Appearances:– Mr N. Johnston, of the Department of Industrial Relations, with Mr J. Klein. Mr C. Foster for C and D Foster. -- 3 of 3 --