Australian Liquor, Hospitality and Miscellaneous Workers Union, Queensland Branch, Union of Employees v Bark Australia Pty Ltd [2001] QIRC 19 (2001) 166 QGIG 255

9 March, 2001 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 255 ########################################################################################################################### QUEENSLAND INDUSTRIAL RELATIONS COMMISSION Industrial Relations Act 1999 – s. 275 – application for declaration about employment status of a class of person Australian Liquor, Hospitality and Miscellaneous Workers Union, Queensland Branch, Union of Employees AND Bark Australia Pty Ltd (No. B1064 of 2000) PRESIDENT HALL COMMISSIONER BECHLY COMMISSIONER THOMPSON 28 February 2001 Security industry – Section 275 Industrial Relations Act 1999 – Application for declaration that class of persons be deemed employees – Nature of agreement with alleged subcontractors – Circumstances in which agreement entered into – Subcontractors held to be independent contractors – Benefits available to independent contractors contrasted with those available to employees – Consideration of factors at s. 275(3) – Presence of employee characteristics – Absence of subcontractor characteristics – Declaration made. DECISION Initiation of the relationship Bark Australia Pty Ltd, a proprietary company limited by shares, commenced trading as a security contractor under the registered business name Bark Security on or about 30 June/1 July 1999. The registered business name Bark Security had previously been held by Secure-Co Pty Ltd, also a proprietary company limited by shares, which had itself traded as a security contractor. As well as acquiring the registered name of Secure-Co Pty Ltd, Bark Australia Pty Ltd acquired very many of its staff. However, whereas Secure-Co Pty Ltd had employed both a mixture of full-time, part-time and casual employees as well as contracting with subcontractors, as a matter of policy Bark Australia Pty Ltd was prepared to offer work only to those prepared to be engaged on a contract for services. The standard form contract used by Bark Australia Pty Ltd in effecting the engagements is in evidence as are copies of the contracts executed by many of the subcontractors who gave evidence. Not one of the executed contracts bears an initialled or other variation to or deletion of the typed words of the standard form contract. We accept the submission that the burden of the evidence is that the putative subcontractors were presented with the standard -- 1 of 6 -- 256 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 9 March, 2001 terms on a take it or leave it basis. The few subcontractor witnesses who asserted an opportunity to negotiate seemed to us to be gentlemen of limited vocabulary who thought that in accepting an offer they were negotiating. The Reference Schedule to the standard form contract is a different matter. Not only does it provide space for the insertion of the subcontractor’s name and address, it provides space for the nomination of the commencement date and duration of the contract and for the description of the services to be provided. It seems inherently likely that those matters were the subject of some discussion, particularly in the case of applicants (of whom there were some) who had not performed work for Secure-Co Pty Ltd and who (presumably) were interested in the number of weekly hours and who (presumably) would have had an interest in matching the commencement date with the cessation of other arrangements. Hourly rate One blank space in the Reference Schedule to be completed relates to the rate of payment per hour/week/month. There is clear evidence that in any particular case the rate was nominated by Bark Australia Pty Ltd. It may be admitted that there is lack of clarity about the hourly rate. Some subcontractor witnesses remember being offered $12.00, some remembered $13.00 and some remembered $13.50. The source of the difficulty is obvious. The rate has increased over time, on an individual by individual basis. It is understandable that witnesses had difficulty in remembering, without reference to any documents, what the rate was in July 1999. Additionally, many of the subcontractor witnesses who had worked for both Secure- Co Pty Ltd and Bark Australia Pty Ltd attached no significance to the change of corporate principal and identified as subcontractors who had worked for Bark Security. It is entirely likely that such witnesses erroneously volunteered a rate paid by Secure-Co Pty Ltd prior to July 1999. Whatever the difficulties in assessing the contractual rates paid by Bark Australia Pty Ltd in July 1999, the evidence was overwhelming that (with one exception) at the time of the hearing, no subcontractor to Bark Australia Pty Ltd was being paid more than $13.50 per hour. The exception was Leon Hughes who was paid $20.00 per hour including GST. Leon Hughes was a special case. It emerged from the evidence of his father Stephen Hughes, also a subcontractor to Bark Australia Pty Ltd, that a security contractor providing certain caretaker services at the Wivenhoe Dam had lost the contract, and that Bark Australia Pty Ltd had been engaged on a short-term contract until proper tendering arrangements to find a replacement contractor could be put in place. Because of the short-term nature of the contract, Bark Australia Pty Ltd had been able to charge a higher than usual rate. In the same way, Leon Hughes, whose engagement had been recommended by his father Stephen Hughes, was able to charge a higher rate for a subcontract with a duration of about five weeks. In concluding that by the time of the hearing no subcontractor was being paid more than $13.50 per hour (Leon Hughes excepted) we have rejected the evidence of Mr Roy Graham and Mr David Kirby. Mr Graham has the responsibility of supervising employees of, and subcontractors to, Bark Australia Pty Ltd in Rockhampton, as well as himself providing the services of a security guard pursuant to his contract for services with Bark Australia Pty Ltd. It would not be surprising if he were paid more than a subcontractor providing security services only. However, we have difficulty with Mr Graham’s evidence. The typed date of his “Independent Contractor Agreement” on the first page has been altered from 1 January 1999 to 1 January 1998. The date of commencement at the Reference Schedule is 22 November 1998. Mr Graham’s signature on the Independent Contractor Agreement is not the same as his signature on his witness statement. (Mr Graham says that his signature has changed). An $11.00 per hour rate at the Reference Schedule has been altered to $980.00 per week operative from 1 July 1999. It is his evidence that about two weeks before he gave evidence on 1 December 2000 he re-negotiated his weekly rate from $980.00 per week to $960.00 per week. He says that under the new arrangement he was very much better off because for the $980.00 he was expected to work a 60 hour week. For the $960.00 he was expected to work a forty hour week and was paid overtime of $16.50 for every additional hour ($25.00 per hour for a callout). If that evidence be correct, Bark Australia Pty Ltd had had a remarkable change of heart. Mr Graham went on to say that in the period since the change in his weekly rate, to the best of his recollection, he had earned about $985.00 per week. His evidence was that he had not worked overtime. The money additional to the $960.00 had come from callouts (callout?). We frankly thought that Mr Graham was an advocate in the witness box. Even in the case of his guard dog his evidence changed from “is used” to “was used” – the dog is ten year’s old – when pressed in cross- examination. David Kirby, the final witness called by Bark Australia Pty Ltd, is engaged as an independent contractor to provide the services of an Assistant General Manager to Bark Australia Pty Ltd. It was his evidence that the hourly rate for subcontractors was $14.20. He said that the figure of $14.20 had been adopted because it was the base rate payable to employees of Bark Australia Pty Ltd under a certified agreement – of which something must be said later – to which Bark Australia Pty Ltd is a party. Put aside that the correct rate under the certified agreement is $14.62, no other witness had volunteered a figure of $14.20. Importantly Mr Victorson, who in fact engages subcontractors for Bark Australia Pty Ltd and has general oversight of the subcontractors (Mr Kirby directs his attention to marketing to customers) did not mention the figure. If indeed some or all of the subcontractors were being paid at rates comparable to the rates payable to employees under the certified agreement, one might have thought that such subcontractors would have been called. The names and whereabouts of any such contractors must have been known to Bark Australia Pty Ltd. The evidence would have advanced the respondent’s case. We decline to act on the evidence of David Kirby on this matter. Two further matters about the Independent Contractor Agreement are deserving of comment. Nature of the relationship The applicant and the respondent are ad idem that the relationship brought into existence by execution of the agreement is a relationship of principal and independent contractor. We think that the parties are correct. As with any contract the intention of the parties is critical, compare Harker v Boon [1956] AR (NSW) 178 at 183 per Beattie J, Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 at 37 per Wilson and Dawson JJ. The title, the recital and clause 2.2 indicate in the clearest language that the intention of the parties was to avoid the relationship of employer and employee and to establish and to maintain the relationship of principal and independent contractor. There is nothing in the express substantive terms of the contract to suggest that the relationship is that of employer and employee, and that an attempt has been made to alter the true nature of the relationship by putting a label upon it. The absence of provision for annual leave or sick leave and the omission of Bark Australia Pty Ltd to make deductions in respect of taxation are a further indication that the intention of the parties was to bring about the relationship of principal and independent contractor, compare Building Workers’ Industrial Union of Australia v Odco Pty Ltd (1991) 29 Fcr 105 at 126, (admittedly a stronger case where it was agreed that annual leave and sick leave would not be paid and that income tax would not be deducted). The point is to be made shortly that Bark Australia Pty Ltd exercises considerable control over its subcontractors. But it is not unknown for independent contractors to sacrifice a measure of their autonomy and submit themselves to considerable supervision where there is economic advantage in doing so, Vavu Pty Ltd v Commissioner of Taxation (1996) 81 IR 150 at 152 per Meagher JA with whom Beazley and Sheller JJA agreed. It is submitted by Ms Cool for the respondent that the Independent Contractor Agreement fixes the terms upon which the independent contractors will perform hours of work offered to them by Bark Australia Pty Ltd on a week-to-week basis. Such an arrangement is a little unusual, but we consider the submission to be correct. By clause 3 of the Reference Schedule: “the subcontractor is expected to work the hours required to complete the scheduled of list within annexure ‘A’ within a calendar week commencing from the commencement date.”. -- 2 of 6 -- 9 March, 2001 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 257 S:\QIRCDEV-BASE\QGIG\2001\166\NO.10 09.03.01.DOCno.10 09.03.01 We have the difficulty that in no case where subcontractors gave evidence was annexure “A” to the contract tendered. It would surprise us not at all if the document was not made use of at all. However, it is clear enough from clause 3 that what is contemplated is a weekly cycle of hours. We notice that clause 2.3 of the Independent Contractor Agreement provides for the substitution for the hours at annexure “A” of other services which from time to time are required by the principal and agreed to by the subcontractor. Acceptance of that submission takes Ms Cool some way on the argument that those working under the Independent Contractor Agreement have greater liberty to determine the hours which they work than do employees. The difficulty is the similarity with the position of casual employees. (This is an industry characterised by and dependent upon casual employment.) Casual employees are perfectly free to reject an offer of a particular set of hours (or make a counter offer), but run the risk that if they do further offers may not be forthcoming. The subcontractors take the same risk. It is not to the point that there is evidence that some employees did not take up offers and worked instead (for a period) with other security providers, e.g. at the Indy. In all the cases of which we have heard they did so with the acquiescence of Bark Australia Pty Ltd. There was no evidence of Bark Australia Pty Ltd offering further work in a case where a subcontractor rejected an offer of work without the acquiescence of Bark Australia Pty Ltd. (We notice that a witness who worked at the Indy, Mr Stephen Hughes, when pressed as to whether he would have been better off working for Bark Australia Pty Ltd under the certified agreement, rather had the attitude that he might not have been taken on on that basis, and that his age he was grateful for the subcontract work with Bark Australia Pty Ltd.) The Certified Agreement In July of 1999, if Bark Australia Pty Ltd had engaged its subcontractors as employees, their employment would have been governed by the Security Industry (Contractors) Award – State. By the time of the hearing, as previously intimated, Bark Australia Pty Ltd and the Australian Liquor, Hospitality and Miscellaneous Workers Union, Queensland Branch, Union of Employees had entered into a certified agreement, viz Bark Security Certified Agreement 1999, approved on 10 January 2000, and operative from the same date. The certified agreement established rolled up wage rates in compensation for all penalties, shift and weekend, public holidays, all allowances (other than for torches and batteries) and even the annual leave loading. At the date of operation the hourly rate for the lowest classification was $14.20 per hour. The agreement provides for the wage rates to be increased by the same percentage increase as the Security Officer Level 1 wage rates contained in the Security Industry (Contractors) Award – State. By the time of the hearing the base rate for the lowest classification for ordinary hours had risen to $14.62 per hour. Additionally, although weekend and public holiday penalties have been rolled into the hourly rate for ordinary time, provision was made for payment of a penalty rate prescribed by the Security Industry (Contractors) Award – State for hours in excess of forty per week or eight per day or (by agreement twelve ordinary hours may be worked in a day). Additionally, employees are entitled to annual leave, sick leave, long service leave (a benefit in this industry of speculative value), time off in lieu of time worked on public holidays, family leave, bereavement leave, TUTA leave, and (where an employee is required to use his own vehicle) a mileage allowance. Not one of those benefits is available to the subcontractors, including the mileage allowance where a private vehicle is used. Legislation fastens upon the relationship of employer and employee so that any employee engaged by Bark Australia Pty Ltd would be entitled to superannuation in part funded by Bark Australia Pty Ltd and the protection under the WorkCover Queensland Act 1996 funded by Bark Australia Pty Ltd. Subcontractors are not entitled to such benefits. [For fullness, it should be emphasised that it is previously noted the exigencies of the industry promote casual employment and that the hourly rate for casuals, who do not enjoy such benefits as annual leave and sick leave, is at the base grade and other levels higher still.] Why a certified agreement It is perhaps useful to set forth the explanation given for Bark Australia Pty Ltd’s entry into the certified agreement by its assistant manager Mr David Kirby in his evidence-in-chief. To understand the passage it is necessary to know that Francis was from the outset and is the managing director of Bark Australia Pty Ltd, that Mr Slowgrove is an assistant secretary of the Australian Liquor, Hospitality and Miscellaneous Workers Union, Queensland Branch, Union of Employees and that Mr Martin is a research officer engaged by the same employee organisation. (Note that the passage has not been edited): “MS COOL: Thank you. Just have a look at paragraph 2. It’s one sentence, ‘I assisted in the negotiation of the certified agreement for employees at Bark Australia Pty Ltd.’ Could you explain to the Commission how you’ve assisted? – Certainly. One of the first things that was asked of me when we – when Francis took over the business was how he believes the company can grow and where we should be heading. One of the things I looked at was that the growth of Secureco had been reasonably good but I believed there was a lot more potential for us in the future. One of the ways to do that was to create a workplace agreement or an EBA. What that basically would do is to establish ourselves in the market so we could get more security officers to work for us and to create a broader base for us and, obviously, to expand throughout Brisbane, Queensland, obviously, eventually throughout nationwide. My belief was that this was the best aspect for us to create that growth, to have a solid foundation for us behind the company. Well, that’s why – you mentioned why but how did you assist in the negotiation? – Well, after it was decided this was how it should be done, we then contacted the – went through the internet and contacted DETIR with regards to the – they gave out handouts on how to put together workplace agreements. We went through that workplace agreement brochure or their proforma as such and created one based on their writing. We then took it to ---- Who is ‘we’ sorry? – Myself and Bark Australia. Right? – We then – Bark Australia and myself. Then we took it to the Commission to obviously have it ratified. I suppose in the process of putting the certified agreement together we were a little bit naive because we’re not lawyers and there was a few points there that when we put it first towards the Commission they were raised as to some of the aspects that were going to not pass the unfair – the unfair laws. At that time we were lucky enough to get involved with Mr Martin. We spoke after our original hearing and had a quick chat with regards to, perhaps, working together to form a certified agreement that was going to be beneficial for, obviously, ourselves and it’s going to get passed by the commission. I said that would probably be a fantastic idea, we’d like to work together. I then mentioned that to Francis and then we had an original meeting with Mr Martin, myself, Francis and another gentlemen – I think, offhand, Mr Slowgrove. I may be mistaken but I think it’s Mr Slowgrove. Just an initial meeting to establish what we wanted to do and how we were going to put it together. From there, Mr Martin and I had a meeting. We developed the EBA. It was put forward to – throughout our workplace for the people to have a look at, both contractors as well as the employees that they had to see, obviously, if everyone was happy with it. There was no objection. We then submitted it to the Commission and it was stamped and ratified by Commissioner Bloomfield on 10 January 1999. After it was ratified, can you tell us what – did you have any involvement with that certified agreement after that? – Yes, well, obviously, one of the things we then tried to do was to discuss about getting more people onto the EBA and have them as employees. All new people who were being interviewed were obviously given the opportunity to become on the EBA because it, obviously, is going to give us that solid foundation that we needed to create. Of course, then it was put to many of the contractors that were working that they had the opportunity then to come across onto the EBA as well.”. We have some difficulty with that evidence. If, with a view to establishing a contented and harmonious workforce, it was thought from the outset to be desirable to establish an enterprise bargaining agreement, it is difficult to understand why the first thing which was done was to ensure that all security -- 3 of 6 -- 258 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 9 March, 2001 officers were engaged as subcontractors. The preparation and submission for certification of a non-union certified agreement which significantly undercut the Security Industry (Contractors) Award – State is also inconsistent with the entirely worthy objectives propounded by Mr Kirby. The assertion that all persons engaged since the date of operation of the certified agreement have been offered a choice of engagement as an employee under the certified agreement or engagement as a subcontractor on the terms of the Independent Contractor Agreement is difficult to reconcile with the stated objective of bringing all security officers under the umbrella of the certified agreement. Granted that Bark Australia Pty Ltd has that objective, one may understand why existing subcontractors might forgo the opportunity to be engaged as employees. There are doubtless some who, because of lifestyle and commitments, would prefer to work seventy hours at $13.50 as a subcontractor rather than lose the final thirty hours (because Bark Australia Pty Ltd is unwilling to pay overtime) but instead be paid $14.62 per hour for a forty hour week. One can understand why the new policy might be difficult to impose upon such people. But in the case of incoming security officers if the objective is that all security officers be employees, it is difficult to understand why the option is made available. By making the option available, Bark Australia Pty Ltd makes implementation of its policy dependent upon the whim of the incoming security officers. Further, the overtime issue apart, it is difficult to understand why incoming security officers would not opt to be engaged as employees. Mr Kirby attempts to explain their reluctance to be employees by asserting that the applicant employee organisation has caused difficulty not only for Bark Australia Pty Ltd but also for its subcontractors. We have deliberately sought to avoid conducting a Royal Commission into the relationship between the applicant employee organisation and Bark Australia Pty Ltd and the earlier Secure-Co Pty Ltd. It is sufficient to say that the employee organisation’s relationship with both corporations was (and is) strained. Mr Kirby’s evidence apart, there is no material upon which a finding could be made about relations between the employee organisation and the subcontractors engaged by Bark Australia Pty Ltd and Secure-Co Pty Ltd. The inability to make that finding is of no significance. The matter under debate is the exercise of an option by the incoming security officers. Save in the case of an officer returning to the fold, the disputation between the employee organisation and Bark Australia Pty Ltd will be outside the experience of those persons. Further, Francis Simo Swer, the managing director said that after certification of the agreement the policy was still to engage subcontractors. We subsequently set forth a paragraph in which Mr Kirby acknowledged that Mr Simo Swer’s policy differed from his own. Why Mr Simo Swer’s policy would not prevail we were not told. Additionally, Mr Victorson could nominate only one subcontractor, Mr Greg Catley, who elected to become an employee when given the opportunity. It must be acknowledged that Bark Australia Pty Ltd has employees. Mr Saunders is one. Mr Saunders was previously engaged by another security provider who became embroiled in financial difficulty. The contract passed to Bark Australia Pty Ltd. Mr Saunders was taken on as an employee because that is what the client wished to occur. Bark Australia Pty Ltd also needs employees because it has clients in the public sector who, in short form, require that services be provided by persons remunerated in accordance with the relevant industrial instrument. (We accept that such employees may also perform work for Bark Australia Pty Ltd, as employees, for other clients of Bark Australia Pty Ltd.) But the precise number of contractors, casual employees, part-time employees and full-time employees engaged by Bark Australia Pty Ltd is something which we have been unable to discover. Mr Victorson, without access to documentation to refresh his memory, thought that there were about thirty-five employees (of whom 60% were full-time) and ninety subcontractors. Mr Kirby thought that over the period since 10 January 2000 Bark Australia Pty Ltd had moved from having 100%* contractors to 60% subcontractors and 40% employees. *(Given Bark Australia Pty Ltd’s obligations to its public sector clients previously referred to the figure may not be correct.) Neither can we make a finding as to the circumstances in which applicants are offered engagements as a subcontractor and the circumstances in which they are offered engagements as an employee. We are in that position because we do not accept Mr Kirby’s explanation and in the absence of that explanation we have simply not been told. Section 275 Doubtless, the power to declare a class of persons who perform work in an industry under a contract for services henceforth to be employees is a power to be exercised only after careful consideration of submissions supported by evidence. However, the novelty of the power is no justification for reading into s. 275(1) that the power is to be exercised only in unusual cases or exercised only with caution. Nor is it justification for reading s. 275(3) as if it provided that the Commission may “only” consider the matters there referred to. That said, the matters listed at s. 275(3) having attracted the attention of the legislature, it behoves us to give some consideration to them. Subsection (2) In many cases it is difficult to assess whether a subcontractor would fare better as an employee. If the base rates differ and the subcontractor rate is higher, it is necessary to assign a value to such benefits as annual leave, and to speculate on the likely availability of overtime. Here, there are no such problems. There is no benefit to be received by a subcontractor which is not received by an employee and many benefits which are received by employees which are not received by subcontractors. The base rate for an employee is higher than the base rate for a subcontractor and there is the possibility of overtime. As a matter of mathematics the employee must fare better. The respondent has had ample opportunity to develop an argument that it has long-term contracts on fixed rates with some of its clients at fees set on the assumption that the labour will be provided by subcontractors rather than employees under the certified agreement, and that as a consequence if the order under s. 275(1) which is sought is made, for a period of time the company’s outgoings will exceed its incomings and the company will (or may) fail. On the contrary (at transcript 628) the evidence of Mr David Kirby was: “And it’s the goal of the company, the clear stated goal of the company from your perspective to have everyone as an employee? – Very important. I mean – and the reason for that is that honestly Commissioners and your Honour, we’ve been here for two/three months this has been going on. It’s stopping the work from being concentrating on other valuable aspects of where we need to go ---- To the fact that witnesses have given their time up and everything? – Witnesses have given time up. Yes? – Everybody’s given their time up. It’s important for us to get people on the EBA so that it solves these problems. So, if the Commission makes the order that my client seeks, that’s not going to bother you too much or bother the company that much? – Well, as far as I’m concerned I believe that’s the direction it should head. That that’s my personal opinion as opposed to the owner’s which is the director. As opposed to the owner’s? – The director. The director? – Francis.”. Further (at transcript 629) Mr Kirby said it was his goal to staff the company with employees. On the face of it, there are great similarities between the subcontractors to Bark Australia Pty Ltd and employees under the certified agreement. Save in the case of one gentleman who trades behind a corporate seal, the subcontractors lack the characteristics normally associated with (even labour only) subcontractors. They do not advertise in the newspaper or the yellow pages or otherwise. They are sole traders. They do not have names registered under the Business Names Act 1962. They do not have firm licenses under the Security Providers Act 1993. They have neither logos nor registered trademarks. They do not maintain business accounts with their bankers. They do not employ staff. -- 4 of 6 -- 9 March, 2001 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 259 The subcontractors have many of the characteristics of employees under the certified agreement. They are paid weekly by arrears and at an hourly rate. They submit invoices whilst employees submit pay sheets. Employees and subcontractors are subject of the same standing orders. (The normal standing orders may vary from site to site to meet requests of the client. That is irrelevant to the current point.) Employees and subcontractors are provided with the same clothing. Subcontractors who were previously employed by Secure-Co Pty Ltd or worked beside employees of Secure-Co Pty Ltd acknowledge that the work which they perform was no different to the work performed by employees. Subcontractors and employees alike are placed upon probation. The Independent Contractor Agreement does not deny Bark Australia Pty Ltd the right to issue detailed directions about the performance of work. (We attach no significance to the submission that the subcontractors may not “delegate” their work. They have no employees or subcontractors to whom they might delegate the work and do not have the wherewithal to acquire such staff. The “delegation” referred to is a short-term novation of the subcontract which they hold with Bark Australia Pty Ltd to another subcontractor. The consent of Bark Australia Pty Ltd is inevitably an aspect of such an arrangement.) Section 275(3) A finding that the subcontractors engaged by Bark Australia Pty Ltd to perform security work would be more appropriately regarded as employees is inescapable. It is difficult to believe that in July of 1999 the former employees and subcontractors of Secure-Co Pty Ltd who became subcontractors to Bark Australia Pty Ltd had significant bargaining power. It may be, for there is no evidence on the point, that some employees of Secure-Co Pty Ltd or subcontractors to Secure-Co Pty Ltd were in a position to refuse Bark Australia Pty Ltd’s offer, and did so. But 100% of those who did accept the offer accepted an offer which, as to the nature of the engagement, terms other than duration and number of weekly hours and hourly rate, was put to them on a take it or leave it basis. (The differences of rates of subcontractors arose not because of negotiation but because Mr Victorson was prepared to offer a higher rate to somebody who indicated a willingness to work any hours on any day of the week, than he was prepared to offer to a subcontractor prepared to work only during daylight Monday to Friday.) Some of those who accepted the offer were employees of Secure-Co Pty Ltd who had previously resisted efforts by that corporation to induce them to become independent contractors. There is evidence by Mr Aichholzer and Mr Rolph who were engaged after the certified agreement became operative that they were given a choice as to whether they were engaged as employees or as independent contractors. Put aside the applicant’s criticism of their evidence as vague and unconvincing, which criticism we also make, on the view most favourable to the respondent the input which the two security officers had into the nature of their engagement was an input allowed to them by Bark Australia Pty Ltd. They had no input into the rate of payment or terms of engagement. Any person employed was engaged on the terms of the certified agreement. Subcontractors were engaged on the Independent Contractor Agreement. We think the truth is that that category of person had limited bargaining power. Overwhelmingly the subcontractors had little understanding of the Independent Contractor Agreement. Not one of them had taken legal advice. There is no evidence that any of them consulted with a union official or even a competent family friend or neighbour. We consider that underlying their docile acceptance of the document is the recognition that, in an industry where work is hard to come by, they would take the work and the money whatever the document provided. The subcontractor security officers from whom we had heard evidence were economically dependent on their contracts with Bark Australia Pty Ltd. While some of them seemed optimistic of their chances of finding further employment within the industry, the evidence of the secretary of the Queensland Security Association Mr Robert Barry Streadborough, also a director of the National Security Industry Executive and a witness called by the respondent, is that there is wide-spread unemployment and underemployment of the industry. (We entertain some scepticism that security officers are working for $5.00 per hour.) The witness statements submitted by the respondent were standard form witness statements, alterations being made to matters such as name and address, average weekly income and income from other sources. Amongst the matters originally asserted but time and again altered or abandoned in cross-examination were the estimates of earnings from other sources. The other earnings were either earnings of long ago or earings under short-term and atypical arrangements. We think that they depend on Bark Australia Pty Ltd. By s. 275(3)(c) the Commission is required to consider “particular circumstances and needs of low paid employees”. We consider that it follows from use of the noun “employees” that we can consider the interests of persons other than those in the class of the subject of the application. That is because at the point of consideration those in the class cannot be employees. However, we think we are entitled to consider also whether the consequence of making the declaration would be that those in the class would become low paid employees, perhaps worse off than they are as subcontractors. As to the first matter, we consider that rejection of the application would send a message that in a competitive industry with very tight margins it is acceptable to deprive workers of entitlements to annual leave, sick leave, long service leave, bereavement leave, family leave, overtime payments, rest pauses, shift allowances, payment for public holidays, penalties for ordinary hours performed on weekends, superannuation entitlements and workcover protection in order to be able to quote lower prices to clients. As to the second matter, we consider that the end of a week some of the subcontractors may be worse off if paid under the certified agreement. We think it unlikely that employees engaged under the certified agreement would be permitted to work significant overtime. The subcontractors working sixty to seventy hours per week will take home less at the end of the week, even if any passing taxation advantage which they enjoy is disregarded. But as the examples advanced in argument by the applicant sufficiently demonstrate, if the first forty hours worked are given their certified agreement value the additional hours are actually being worked for a very low hourly rate. It is unnecessary to refer to the arguments of the forty hour a week movement. It is not compatible with the fixation of ordinary hours and penalty rates for excess hours, whether by award, industrial agreement, certified agreement or Queensland workplace agreement, to permit those who wish to work excessive hours at rates lower than ordinary time rates to do so as long as they invoke the skills of a wordsmith conscious of a distinction between a contract of service and a contract for services. Objectively viewed the Independent Contractor Agreement is designed to avoid the Award and the certified agreement. No alternative objective has been advanced by the respondent. The evidence does not make s. 275(3)(e) relevant in this matter. It is plain from the evidence of competitors with Bark Australia Pty Ltd that there is a perception in the industry that Bark Australia Pty Ltd is undercutting. Ms Cool for the respondent has rightly highlighted in cross-examination that Bark Australia Pty Ltd has lost tenders even to some of the largest operators in the industry. Certainly, that is some indication that Bark Australia Pty Ltd is not undercutting prices in the industry. But factors such as past satisfaction with services, reputation and standing may influence acceptance of a tender. Mr Kirby frankly admits that on occasion, in order to expand business, he will quote on a “loss leader” basis. Out of fairness to Bark Australia Pty Ltd we do not set forth the basis on which the company calculates the price offered to a client. However, on the evidence before us quotations for contracts are now prepared by Bark Australia Pty Ltd on the basis that the obligations inherent in the certified agreement will have to be met because it is not known at the date of preparing a quotation whether the services required under the contract will be provided by Bark Australia Pty Ltd by the use of employees under the certified agreement at the (outdated) rate of $14.20 per hour or by the use of contractors. The actual figures make no mathematical sense. The calculation assumes that a mark up of 1.5% is adequate to make provision for annual leave and sick leave. We think it more likely than not that Bark Australia Pty Ltd is undercutting its competitors. Those who do not circumvent industrial instruments should not, by their observance, be at a competitive disadvantage. -- 5 of 6 -- 260 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 9 March, 2001 Conclusion We have decided to make the declaration sought by the applicant. We were initially concerned that the relief sought was so wide that a corporate subcontractor to Bark Australia Pty Ltd, as distinct from individual contractors, might be caught. There is some conceptual difficulty in treating a corporation as an employee. However, in the context of a legislative provision which deems relationships to be that which they are not, there can be no objection to bringing such a relationship into existence. Should Bark Australia Pty Ltd modify the contractual arrangements with subcontractors in a way which achieves the outcomes inherent in the application of the certified agreement we consider that it will be adequately protected against the risk that such arrangements will be caught by the order if the order is made subject to further order of the Commission. The order will issue contemporaneously with this decision. Dated this twenty-eighth day of February, 2001. D.R. HALL, President. R.E. BECHLY, Commissioner. Appearances:– Mr J. Merrell for the applicant. Ms S. Cool, instructed by Reardon and Associates, for the respondent. J.M. THOMPSON, Commissioner. Released: 28 February 2001 ########################################################################################################################## # -- 6 of 6 --