Automotive, Metals, Engineering, Printing and Kindred Industries Industrial Union of Employees, Queensland (for Kerr) v Sam’s Trailer Hire Pty Ltd [2004] QIRC 177 (2004) 177 QGIG 404

404 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 15 October, 2004 ########################################################################################################################### QUEENSLAND INDUSTRIAL RELATIONS COMMISSION Industrial Relations Act 1999 – s. 278 – application for unpaid wages Automotive, Metals, Engineering, Printing and Kindred Industries Industrial Union of Employees, Queensland (for Douglas Kerr) AND Sam’s Trailer Hire Pty Ltd (No. W152 of 2003) COMMISSIONER THOMPSON 5 October 2004 Unpaid wages – Arbitrated matter – Witness evidence – Application amended – Contractor vs employee – Application granted. DECISION Background An application was filed on 19 December 2003 by the Automotive, Metals, Engineering, Printing and Kindred Industries Industrial Union of Employees, Queensland (AMEPKU) (the applicant) seeking an order for payment of remuneration lost in relation to s. 391(2) of the Industrial Relations Act 1999 (the Act) by Mr Douglas Kerr, a member of the organisation. It was alleged that Sam’s Trailer Hire Pty Ltd (the respondent) had deducted monies in the amount of $1,795.04 from monies owing to Mr Kerr without proper authority. In the course of the proceedings, the amount claimed was amended to that of $1,432.00 and later again to the amount of $1,415.00. Applicant The applicant relied upon evidence given by Mr Evan Moorhead and Mr Kerr in support of the application. Moorhead Mr Moorhead, a Research Officer in the employ of the applicant, gave evidence relating to a phone conversation with Mr Sam Salih, Manager of the respondent, on or around 23 December 2003 in which Mr Salih confirmed that he had refused to pay monies to Mr Kerr as such monies had been deducted to compensate for alleged poor workmanship by Mr Kerr whilst in the employ of the respondent. Mr Moorhead recalled that Mr Salih had stated that no agreement (in writing) between the parties existed in respect of the deduction of the said monies. At attachment EM–1 of the affidavit, Mr Moorhead provided the file note he had kept following the 23 December 2003 phone conversation. Kerr The evidence from Mr Kerr went to his employment with the respondent which occupied the period between 12 April 2002 and April 2003. On commencement of employment, he was paid a rate of $20 per hour which subsequently increased to $25 per hour once he had obtained and Australian Business Number (ABN). His duties whilst employed were to include the fabrication and repairs of truck trailers. The ordinary hours of work were from 7.00 a.m. to 4.00 p.m., with optional overtime being available on Saturdays, although he chose not to take up the option of overtime as he did not want to work overtime for a flat rate of pay. On arrival at work, he would “clock on” with the Bundy clock, repeating the process on his departure. The employer, at the end of the week, would subtract time taken for meal breaks and made weekly payments on the remaining hours each Friday. He claimed to have worked regular hours with Mr Salih assigning him tasks which were not subject to negotiation and all work given was to be undertaken. It was his evidence that if he had refused to perform a task as assigned, he believed that he “would be told to leave and not come back”. He did not have the option of subcontracting out the work given to him. -- 1 of 5 -- 15 October, 2004 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 405 Other employees were given fixed price contracts and were able to subcontract that work onwards to another subcontractor. His work was carried out under the supervision of Mr Salih to ensure that it met specifications and if Mr Salih was unhappy with how the task was being undertaken, he would issue instructions for the task to be performed differently. All work was performed at the respondent’s workshop with no option available to perform the work at outside locations. Mr Kerr provided all his own hand tools, in addition he also provided an angle grinder, welding mask, and an oxy–acetylene set. In regards to the payment process, he submitted a weekly invoice which contained a brief description of the type of work performed and was paid in cash each Friday. He was not paid for public holidays or other forms of leave. On the issue of other employment, he stated at paragraph 43 of his affidavit: “I did not work for anyone other than the Respondent during this time. My employment was full–time and their [there] was not time to perform other work – I did not have the choice of working elsewhere on a particular day rather than attending at the Respondent’s workplace.”. In respect of the deduction of wages, his evidence went to two separate incidences, firstly in February 2003 when Mr Salih deducted an amount of $132 from wages owing for the damage caused by himself to a windscreen, and secondly in March 2003 where amounts of $500 and $800 were withheld from monies owing as a result of damage caused to a Kenworth truck. He told Mr Salih that he had earned the wages and he could not deduct them. On being questioned by the Commission on the deduction of the $132, at page 32, line 1 of transcript, the following exchange occurred: “Commissioner: So – and then you signed it. When you signed it, though, you signed it because you were worried about losing your job; is that what you’re saying? Kerr: Pretty much so, yeah. Commissioner: But you did sign as acknowledgment of the $132 being taken off you, you accepted that at the time? Kerr: Yep. Commissioner: Because this happened in 2002, didn’t it? Kerr: Yep.”. In respect of WorkCover, it was his evidence that he had no such coverage. On his employment status, at page 50, line 42 of transcript: “Commissioner: So, you figure that your rate of $25 covered what? Kerr: The hire of my grinder and my epoxy Commissioner: Yes, but what other – what other entitlements within your work? Kerr: I was working – working for wages and that’s it, a casual employee. Commissioner: You say you considered yourself casual? Kerr: That’s it. Commissioner: And when you were casual employee what don’t you get? Kerr: Don’t get public holidays, you don’t get sickies, you don’t get annual leave.”. He had terminated his employment because of the refusal of Mr Salih to pay him the monies owing. Respondent The respondent presented four (4) witnesses in the proceedings, those being Mr Clinton Salih, Mr William Kendall, Mr Ian Brown and Mr Sam Salih. The evidence from (Clinton) Salih, Kendall and Brown was brief and went to the employment arrangements that existed between themselves and the respondent. Clinton Salih He had worked for the respondent for a number of years during which time his employment had always been governed by a contract. The contract required him to build aluminium tipper bodies which, upon completion, he would hand in an invoice and receive payment. He would supply his own plant and equipment and would pay the respondent for workshop use and consumables. It was his understanding that if he damaged a customers truck or trailer he would replace or repair the damaged item. On one occasion he had to make a payment of $520 for a tyre he had damaged. He did not have WorkCover policy instead he had an accident policy which covered him 24 hours a day, 7 days a week. On some jobs performed for the respondent he would at times seek progress payments. -- 2 of 5 -- 406 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 15 October, 2004 In the absence of his father (Sam Salih) he would allocate work and his evidence was that on two occasions he had warned Mr Kerr for being drunk at work. At page 62, line 27 of transcript Mr Salih stated: “Well, there was twice he come in drunk, I said go home. I gave him a warning a couple of times.”. Kendall Mr Kendall has worked for the respondent “on and off” for six and a-half years performing such work on a contract basis. The jobs in question were generally done on an agreed fixed price rate per job or in the case of repair work at an hourly rate. He performed work for other companies, sometimes from the respondent’s premises and understood that damage to customer’s property had to be repaired at the contractor’s expense. Mr Kendall had his own WorkCover policy. Brown Mr Brown gave evidence that he was a self–employed subcontractor, having worked as a spray painter for the respondent for the past four (4) years. His arrangement with the respondent was for some work to be paid at hourly rates with other work being fixed price. He acknowledged that an arrangement existed where contractors damaged a customer’s property this would have to be paid for by the contractor. Sam Salih In evidence, Mr Salih initially went to the circumstances surrounding the employment of Mr Kerr with the respondent firm. He commenced on an hourly rate of $23, later moving to $25 per hour when he supplied his own equipment. Mr Kerr, according to the witness, never worked regular hours and could start and finish at his own discretion. He confirmed that time cards were kept for contractors, but that was “to keep the contractors from cheating their payments”. Contractors generally had smoko and lunch breaks, however at times some would choose to forgo such breaks. Payslips were not provided to contractors as payment was made on the presentation of invoices to the company. On two occasions, Mr Kerr caused damage to customers property in the course of carrying out his work. On the first job, according to the witness, he agreed to pay the amount of $132 for the replacement of a rear window. The second job, which caused substantial damage to a Kenworth truck of around $1,600, lead to the withholding monies from payments to Mr Kerr. In response to the evidence of Mr Moorhead and, in particular the attached file note, he stated at point 10 under the file note heading the following: “At the time I had no contract in writing but we had a verbal agreement on several things such as if you damaged something you will pay for them, and everyone agreed at the time. So did Kerr that is why he paid for the rear window first.”. Arising from the cross–examination of Mr Moorhead, the witness gave the following evidence: • The sub–contractors did not speak directly to customers in terms of quoting on jobs • On the control of who worked for the respondent (page 83, line 5 of transcript): “Well, yes, I hire people and – and fire people, yeah”. • On the type of work performed by Mr Kerr and how the remuneration was determined (page 87, line 28 of transcript): “Moorhead: But if – did you sell jobs to Mr Kerr? Salih: Well, that’s basically what we do is – we’ve got a job. You do this job, you get this amount of money for it. Moorhead: But he was paid by the hour though, wasn’t he? Salih: Well, he – a lot of the jobs he did were repairs. He did very little manufacturing. Moorhead: And from the evidence of Mr Kendall it’s the manufacturing jobs that are fixed price? Salih: That’s right. Moorhead: – – and it’s the repairs that are hourly rate? Salih: They are easier for them to work out and for me.”. In relation to the deduction of the $132 from monies owning to Mr Kerr for the replacement of the rear windscreen, at page 92 of transcript, the witness stated that Mr Kerr, even if he had terminated his employment over the deduction, would not have been given the $132 deducted. The second job for which monies were deducted, resulted in a deduction of $700 according to the witness, however in the course of the cross- examination, acknowledged that the amount withheld might have been more. -- 3 of 5 -- 15 October, 2004 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 407 Submissions Applicant Mr Moorhead, in submissions, stated that a breach of s. 391(1) of the Act had occurred in that monies had been deducted from wages owing to Mr Kerr without his written authority. Following the hearing of evidence in the matter, the amount deducted appeared to be that of $1,415 as opposed to he amended amount of $1,432. The case of the applicant was that Mr Kerr was an employee and not a contractor as argued by the respondent. In support of the applicant’s case, a number of authorities were relied upon which included: • The Haggarty Group Pty Ltd v Justin Wallace (No. C69 of 2000) – Hall P • Hollis v Vabu Pty Ltd [2001] HCA 44 (9 August 2001) – High court of Australia – Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ. • Abdalla, Abraham and View Pty Ltd t/as Malta Travel – 14 May 2003 – AIRC – Lawler VP, Hamilton DP and Bacon C. Mr Moorhead went into significant detail in respect of his reliance upon the matter of Hollis v Vabu Pty Ltd where it went to a series of “tests” which identified where a person could be adjudged as an employee rather than a contractor. Such matters included the control test, performing work solely for the employer, lack of goodwill, ability to bargain for rates and the level of detailed instruction. Mr Moorhead stated that in determining whether a person was an employee or contractor then the totality test must apply where “the totality of the relationship must be examined”. In examining all of the factors above and other relevant points such as the use of time cards, length of the relationship, resources of Mr Kerr (i.e. workshop facilities); provision of material, ability to suspend or dismiss then Mr Kerr was, in fact, an employee rather than a contractor. On the issue of income tax Mr Kerr had been forced to make such payments due to the employment arrangement offered by the respondent. The respondent according to Mr Moorhead had put in place the contracting arrangement to avoid a range of obligations including deduction of PAYE tax, payroll tax and superannuation contributions. Mr Kerr was remunerated on a weekly basis and not in a periodic manner as was the position of contractors. On making a comparison between Mr Kerr and other persons performing work for the respondent, Mr Moorhead, at page 106, line 10 of transcript, stated: “Mr Salih in his own evidence agreed that there was a distinction between manufacturing work and repair work. Those persons who were performing manufacturing work were employed on fixed prices and were paid with reference to a task rather than the hours worked. Mr Kerr on the other hand performed repair work which was only paid according to the hours that were worked. So we say it’s more than open to the Commission to find that Mr Kerr is an employee without that decision being made for the other employees. And the distinction is only further seen when you look at Mr Brown, who only comes in when there’s particular jobs to do. Mr Kerr on the other hand would come in without knowing what tasks were there to do.”. Finally, he stated that the Commission should find that Mr Kerr was an employee and, as such, was entitled to the benefit of s. 391 of the Act. Respondent The submissions put by Mr Salih were brief, in the first instance began by questioning the ability of Mr Kerr to perform certain duties. At page 111, line 45 of transcript, Mr Salih stated: “I don’t think Mr Kerr’s capable of starting a business on his own. He’s - the reason he subcontracts because it’s all given to you on a plate. You get the job; you get paid.”. Mr Kerr had never approached him with a proposition to work for other persons such as Mr Kendall but had he, then approval would have been given. On the issue of control, he stated at page 112, line 10 of transcript: “The reason I allocate people jobs, someone has to be in control of every project.”. Mr Kerr was not an employee nor had the respondent ever employed labour, they were all contractors. Decision The application to be decided by the Commission was that Mr Kerr had performed work for the respondent and that from the monies due for the work a deduction had been made by the respondent without Mr Kerr’s written consent. The provision relied upon by the applicant was s. 391(1), in particular (c): “391 Wages etc. to be paid without deduction (1) If the employer employs an employee to perform work for a fixed rate, the employer must pay the employee the fixed rate without deduction, other than a deduction authorised by – (a) a relevant industrial instrument; or (b) this division; or (c) the employee’s written consent.”. -- 4 of 5 -- 408 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 15 October, 2004 In the course of the proceedings it was established to the satisfaction of the Commission that deduction occurred in respect of two separate instances where the respondent had withheld monies from Mr Kerr without his written authority. In the first matter, an amount of $132 was taken for the replacement of a rear windscreen, accidentally broken by Mr Kerr. Evidence before the Commission confirmed that Mr Kerr had signed an invoice acknowledging that the monies had been deducted, but there was no evidence confirming his consent. The second matter which, according to Mr Kerr, led to a severing of the employment relationship, saw the deduction of the remainder of the amended claim, that being $1,283, and again no evidence confirming his consent for such deduction. With that aspect of the claim not contested, the Commission was required to determine whether Mr Kerr was an employee or a contractor as argued by the respondent. A finding that Mr Kerr was an employee would confirm that there had been a contravention of s. 391(1)(c). If the Commission was to find that Mr Kerr was, for all intents and purposes, a contractor, then the Commission would lack the jurisdiction to find on behalf of the applicant. The evidence adduced on behalf of the respondent through witnesses (Clinton) Salih, Kendall and Brown, demonstrated that they performed work for the respondent on the basis of a fixed price, where by they submitted a dollar amount which would cover the labour component of a particular task. In addition, there was evidence that they would make a payment, at the completion of the task, to the respondent for the use of the workshop and the facilities available within that workshop. On some occasions, rare as they were, they would be paid an hourly rate for some repair jobs. In the case of Mr Kerr, the uncontested evidence was that he worked almost exclusively on repair work and received an hourly rate for all work undertaken as opposed to the fixed price arrangements of the other employees. The time card and invoice process was, in the view of the Commission, a further indication that the employment of Mr Kerr did not fit comfortably with the contractor “tag” put forward by the respondent. The Commission found that the arguments advanced by Mr Moorhead, as they related to the Hollis v Vabu Pty Ltd decision were both consistent and logical when applied to Mr Kerr’s employment arrangements and, as such, are accepted by the Commission. The definition of “Who is an employee” is identified at s. 5 of the Act and, when applied to Mr Kerr, leads the Commission to favourably consider that Mr Kerr was, for all intents and purposes, an employee, paid on the basis of an hourly rate for all time worked: “5 Who is an employee (1) An “employee” is– (a) a person employed in a calling on wages or piecework rates; or (b) a person whose usual occupation is that of an employee in a calling; or (c) a person employed in a calling, even though– (i) the person is working under a contract for labour only, or substantially for labour only; or (ii) the person is a lessee of tools or other implements of production, or of a vehicle used to deliver goods; or (iii) the person owns, wholly or partly, a vehicle used to transport goods or passengers . . .”. It would not be unreasonable to form a view that the respondent entered into the arrangement with Mr Kerr so as to avoid the obligations that are the “norm” with genuine employer/employee relationships. Therefore, having considered the evidence, material and submissions before the proceedings, the Commission finds that the status of Mr Kerr was that he was an employee and that the deduction of monies (as alleged in the amended application) was without his written consent and should, as a matter of course, be refunded. The respondent is ordered to pay to Mr Kerr the gross amount of $1,415 less the applicable income tax, 22 days after the release of this decision. I order accordingly. J.M. THOMPSON, Commissioner. Hearing Details: 2004 3 August 23 September Appearances: Mr E. Moorhead, of Automotive, Metals, Engineering, Printing and Kindred Industries Industrial Union of Employees, Queensland, Applicant. Mr S. Salih, of Sam’s Trailer Hire Pty Ltd, Respondent. -- 5 of 5 --