TASMANIAN INDUSTRIAL COMMISSION
Industrial Relations Act 1984
Australian Workers' Union, Tasmania Branch
Michael Garland and Katherine Anne Schaefer
Industrial dispute - Termination of employment - employer/employee relationship challenged - independent contractor status determined - no jurisdiction - application dismissed
REASONS FOR DECISION
This application by the Australian Workers' Union, Tasmania Branch (the AWU) sought the reinstatement of one of its members, Bruce Vincent to the position of Skipper of the vessel "Anmaropa" which was chartered by Michael Garland and Katherine Anne Schaefer to do work for Tassal Limited connected with its Dover Marine Farm.
At the commencement of proceedings Ms Lyon, solicitor, appearing by leave for Michael Garland and Katherine Schaefer, submitted that Mr Vincent was not an employee for the purposes of the Industrial Relations Act 1984 but was an independent contractor having entered into a contract for that purpose with Mr Garland and Ms Schaefer.
In order to pursue that preliminary point, Ms Lyon called Mr Garland and Mr J G H Smith, a fin fish manager for Tassal Ltd, to give evidence.
Mr Garland said that he and Katherine Schaefer leased the "Anmaropa" from J & M Mitchell from 1 December 1994 for a period of 12 months to do certain work for Tassal Ltd, mainly to feed Tassal's fish in the marine farm and to be present on the offshore farm1. The contract with Tassal Ltd2, in Mr Garland's words, was:
The agreement with Tassal Ltd was "a month by month agreement", because the Tassal fish farm lease was uncertain; it was an experimental lease which was subject to government decision as to its continuity. Mr Garland said he wanted to engage the other skipper "on a contractual basis" because of the "uncertainty of the job". He said he had started looking for another skipper and had been approached by Mr Vincent who offered to do the relief work. A separate contract, between Mr Garland, Ms Schaefer and Mr Vincent had been prepared by Mr Garland's solicitor which, according to his instructions, included the following as clause 12:
Another clause which Mr Garland drew to the Commission's attention stated:
The agreement, which was tendered as Exhibit L.3, was entered into by the parties on 1 February 1995. It was headed:
Mr Garland said Mr Vincent had not requested any changes to the agreement. Mr Vincent had been acting as skipper before the contract was signed. Mr Garland said that the verbal agreement with Mr Vincent was that he was to be skipper every second week so that Mr Vincent could supplement his income by crayfishing on the West Coast in the off week. The Tassal contract was suspended at the beginning of 1995 because "the fish had grown and they were ready for harvest"4 and Mr Vincent "went fishing"5.
The skipper's responsibilities were "to keep the boat in a seaworthy condition, safe and drive it"6. Mr Vincent was not given any directions as to how he was to skipper the vessel. The skipper was required to follow the directions of the Tassal representative as to feeding the fish in the morning and in the afternoon. Feeding would take between one and two hours each time. Mr Garland said he was not "entirely" aware of what Mr Vincent would do during the gap between the morning and afternoon feeds. He said that was Mr Vincent's prerogative.
Mr Garland said his accountant had advised him to pay occupational superannuation on behalf of Mr Vincent on the basis that he was an independent contractor. Income tax had been deducted from monies due to Mr Vincent in accordance with another clause in the agreement which provided in part:
No workers compensation cover had been taken out in respect of Mr Vincent.
Mr Vincent had been paid, pursuant to the contract, after he had finished each seven day shift when he returned the vessel to the jetty. He had received no annual leave or long service leave payments because Mr Garland said Mr Vincent "was a contractor"7. He said that Mr Vincent could have engaged or contracted with some one else to do his shift for him.
Mr Garland said Mr Vincent had not raised the question of his employment status at any time after 1 February 1995 until a letter from the AWU dated 18 October 19968 had been received.
In cross examination Mr Garland said he had discussed the work of Tassal with Mr Vincent prior to getting the contract with that company but no offer had been made to Mr Vincent prior to the contract with Tassal. Mr Vincent had "worked for" him for "nearly 2 months - 3 months"9, Mr Garland said. He was not sure why it took so long to get the contract drawn up and he said nothing changed in the relationship with Mr Vincent after the contract was signed. He thought Mr Vincent was happy with his rate of pay, but he had asked for more money about June 1995. At that time he had offered Mr Vincent a bonus to be paid at the end of the financial year and at Christmas. The bonuses were to be "roughly 1300" and "600-odd" respectively10. Mr Garland said that the word "maintenance" in the agreement meant keeping the "boat relatively clean"; keeping the "oil to the motors", and "everything .. tied down .. and .. in a nautical manner"11. He could use the generator whenever he wanted to do so.
Mr Garland said that "out of courtesy", Mr Vincent should have told him if he had wanted to arrange for another skipper to relieve him. He said he was happy if Mr Vincent left the boat as long as it was secure. He had informed Tassal that Mr Vincent was to be the alternate skipper.
He said the vessel had to be present in the vicinity of the farm's site, although the skipper could go ashore with the dinghy but it would be prudent to remain with the vessel at night.
The arrangement was for 24 hour shifts and Messrs Garland and Vincent had arranged a seven-day on, seven-day off roster to suit Mr Vincent's fishing. That had been arranged from day one, he said. Mr Garland said he asked for a change but Mr Vincent wanted the arrangement to continue. Mr Garland provided the food and fuel. The boat was self contained insofar as tools were concerned which were provided by the owner. Mr Vincent was paid $185.71 per day, tax was deducted and occupational superannuation was paid. To Mr Garland's knowledge Mr Vincent did not work for anyone else. Mr Garland did not pay Mr Vincent any overtime or sick pay and he said Mr Vincent was not entitled to any public holidays.
In re-examination Mr Garland said he did not direct Mr Vincent to change shifts.
In evidence Mr Smith said his company's agreement with Mr Garland and Ms Schaefer was basically on a month by month basis as the company was still operating on an exploratory licence subject to the marine farming plan being approved for the D'Entrecasteaux Channel. Tassal's representative on the vessel would direct the skipper as to when and where to feed the fish. The representative did not give directions to the skipper as to how to skipper the boat. In this particular case the vessel's presence was deemed to be sufficient security for the area. The company did not expect its employee or the skipper to remain awake and be patrolling the site at night. The charter agreement, Mr Smith said, allowed the skipper to leave the vessel, but the skipper was to be on call in the event of any emergency.
In his evidence under examination in chief by Mr Cooper, Mr Vincent said he had asked Mr Garland and Ms Schaefer about the job after the crayfishing season started in mid November 1994 and later, at the end of November or early December, he had been told by Mr Garland that if he wanted the job as relief skipper on the "Anmaropa" he could have it.
He started on the "Anmaropa" early in December 1994. He signed the contract in February 1995.
Mr Vincent said he signed the contract for $185.71 per day but he was not happy that that rate would apply for the life of the agreement.
He said he had not had the contract "checked by a solicitor" or by anyone else and that he did not have a copy of it. He did not know the meaning of clause 12 of the agreement. He thought the contract simply meant that he "was going to work for the Garlands, being his relief skipper"12. Asked what he thought the contract meant in terms of his responsibilities to Mr Garland and Ms Schaefer, he replied:
Mr Vincent said that Mr Garland told him he would be paid "$36,000 a year and it would be a week on, week off arrangement, staying out there for the 24 hours a day, acting as presence as security on the vessel and feeding the fish during the day time"14. He said he was "instructed on what to do" and he had nothing to do with setting the hours of work. Mr Garland instructed him not "to have anything to do with Tassal as far as helping them with their operations" and that he was to "just drive the boat around and around the pens and stay on the boat and sit out there and basically just keep (his) eye on the site for them"15. The instructions for the feeding and for towing came from Tassal.
Mr Vincent said:
Mr Vincent said when asked how he was paid:
He said he did not put in accounts for his work; the tax deducted was what Mr Garland and Ms Schaefer said they were going to take out of his pay; and that superannuation contributions had been paid into a fund on his behalf. He told Mr Garland the money was not enough to cover the night times that he spent "sitting out there", and that another $10,000 would cover it19. He said Mr Garland told him he would talk to his partner about that and later said they could not do that because of the month by month nature of the contract. He was offered two $1,000 bonuses over the year, which was later revised to a $500 and a $1,000 bonus because Mr Garland and Ms Schaefer had not realised that the superannuation was going to cost so much.
Mr Vincent said a few months later Mr Garland and Ms Schaefer said they had to renegotiate their contract with Tassal. He told them to "put in that extra $10,000 for me", and they replied:
Mr Vincent said he would maintain the boat and if anything broke down he would telephone the owner of the boat who would get the part. He said it was his obligation to stay with the vessel when it was moored at night.
He had one New Year's Eve off and he went to a concert at night on one other occasion. He said he was only 10 minutes from home but because it was his job he stayed on the vessel as a "presence for security on the boat at night"21.
When asked whether he was allowed to leave the vessel during the day, Mr Vincent said:
He said he did not have to get permission to do that. He said he would let Tassal or Mr Garland know when he left the boat to go ashore.
He did not consider himself to be a contractor but an employee doing a job as instructed. He said he had been told by Mr Garland that he worked for him and if wanted relief for any reason he went to Mr Garland. He could not go and get anybody because he (Mr Garland) "had all that organised with Tassal."23
Mr Vincent said it was probably within the first month of the contract that he had asked Mr Garland for more money or that he wanted things changed; and several times after that. He said he knew Mr Garland was still trying to get something better from Tassal.
Under cross-examination Mr Vincent said he had allowed Tassal to use the "Anmaropa" dinghy and as a result Mr Garland had told him not to do so in future.
He said he had signed the contract but he had already been told about the two bonuses and had been told that once Mr Garland had a permanent contract with Tassal there was more money in it for him.
He said the seven day on, seven day off arrangement suited his own crayfishing business. He let go the lease for the "Bernadette", his crayfishing boat, in May 1995 and sold his crayfishing licence in July 1995. He had gone crayfishing for 4 weeks when the "Anmaropa" was on the slip.
He said it was not really possible to get extra work with another employer to fit in with the seven day on, seven day off arrangement and he denied that he had told Mr Garland he did not want to change shifts. His view was that the crew had said they would prefer the 7 day on, 7 day off shift. He said he did not think he could arrange for someone else other than Mr Garland to do his shift.
He said he had assumed he was an employee until his accountant had told him he needed a group certificate for income tax purposes rather than the Prescribed Payments System form. His accountant had suggested he see the Tasmanian Trades and Labor Council and he had been directed to the AWU.
Ms Lyon submitted there was an express agreement signed by both parties providing at clause 12 that the agreement "shall not create any partnership or relationship of employment between the parties"; and that Mr Vincent was aware of the terms of the agreement.
Ms Lyon referred to Stevens and Brodribb24 regarding the general tests as to whether or not an employment relationship existed. In particular the degree of control exercised by one party over the other and the right to exercise that control were significant tests, she said.
Ms Lyon said Mr Garland could exercise no control over the way in which Mr Vincent skippered the vessel. Tassal employees directed Mr Vincent as to how he would do his daily duties. At the end of the day the way he performed the work was totally a matter for him. The fact that Mr Garland had familiarised Mr Vincent with the vessel and its idiosyncrasies was of no significance, she said. Directions as to how and when to use the generator were of little consequence as that did not go to the manner in which Mr Vincent was to perform his duties under the contract.
As to the other indicia referred to in Stevens and Brodribb, Ms Lyons said that in this case no annual leave, long service leave or sick leave were paid. Similarly there was no need for workers compensation to be taken out by Mr Garland and Ms Schaefer because for all intents and purposes Mr Vincent was not a worker in the terms of the relevant Act. She said no weight should be given to the fact that the skipper did not have to supply a vessel or to provide any tools. The payment of superannuation, despite the fact Mr Vincent was an independent contractor, had been made on the advice of the accountant to Mr Garland and Ms Schaefer, having regard to the terms of the Superannuation Guarantee Administration Act at section 12.
The fact that prescribed payments for income tax purposes were made at the end of each shift was consistent with such payments being made at the end of each contract period.
She said Mr Vincent admitted that he did not need to get permission to leave the boat which indicated a degree of flexibility which was consistent with an independent contractor situation rather than an employee/employer relationship.
Mr Vincent's ability to get some one to replace him was also indicative of an independent contractor situation.
Ms Lyon said it would be erroneous for the Commission to consider in this case the provisions in the Tassal contract which required, among other things, the charterer to maintain and keep in effect adequate workers compensation insurance in respect of the two skippers.
Ms Lyon referred to AMP Society and Allen and Chaplin and Another (1978) 18 ALR 385 which determined that if the relationship was ambiguous and capable of being one of either service or agency, then the parties can remove that ambiguity by agreement between themselves which becomes the best material from which to gather the true legal relationship.
Ms Lyon repeated her assertion that Mr Vincent was not an employee of Mr Garland and Ms Schaefer.
Mr Cooper used the AMP Society case to reinforce his submission that the parties could not "fix a label to their relationship to alter the true nature of their relationship"25. He applied the view espoused in that case that it is a question of "balancing the indicia pro and con" whilst recognising that the power of control over the manner of doing the work is very important perhaps the most important of the indicia. He said that the hours of work were set by the employer. Mr Vincent was unaware that he could leave the vessel at night or have a night off26 without making arrangements with Mr Garland. Mr Cooper argued that Mr Vincent had to comply with the directions arising from the contract between Garland and Schaefer and Tassal Ltd. That contract also provided that the charterer "shall cause the skipper of the vessel to comply promptly with directions given by Tassal's representative", and to react in a certain way if unauthorised persons were detected in the area. Mr Cooper referred to other features of the charterer's contract which, via the charterer, imposed directions on the skipper. It was submitted that discretions vested in the skipper in respect of weather conditions and the safety of the vessel and crew were discretions which were related to the skipper's licence to take control of a vessel, not to the contract between Mr Vincent and Mr Garland and Ms Schaefer.
Mr Cooper referred the Commission to the tests applied in City Motors (1981) Pty Ltd v. Commissioner of State Taxation, Supreme Court of WA, (White J) (No. 1218 of 1991) and drew attention to salient points in that decision with relevance to the circumstances of this case.
The Commission was told that the agreement between Mr Vincent and Mr Garland and Ms Schaefer contained provisions which if breached could result in the termination of the contract, in particular Clause 11 which required the skipper not to breach any of the charterer's obligations to Tassal Ltd under the charter agreement. The latter provision was indicative of an exercise of control over the way in which Mr Vincent performed his duties, Mr Cooper said.
He submitted the relationship was of an ongoing nature. The main difference between City Motors and this case he said was that Mr Vincent did not understand what Clause 12 of the written agreement (Exhibit L.3) meant.
Mr Cooper referred to L G Mueller and Smith Bros, SA Industrial Court (Di Fazio I.M.) (No. 113 of 1978) which found an employee/employer relationship existed where work was done as an integral part of a business not as an accessory to it; where there was an absence of an ability to delegate completely the task without the permission of the "principal"; where control was not exercised but the right to control was retained; where the "principals" never required or believed they could require the exclusive services of the other party.
In respect of an Industrial Appeals Court of Victoria decision (Leckie J, Mews and Gibbs) in R J Kington and Circle Realty Pty Ltd, the Commission was told that a real estate sub-agent was found to be an employee. Mr Cooper specifically referred to a commentary on this case at AILR, 18 April 1979, 132, which was:
Mr Cooper maintained that the contract clearly established Mr Vincent was required to attend for duty at designated hours and stay in the vicinity of the vessel; he was obliged to observe the conditions imposed on the skipper of the chartered vessel as set out in the charterer's contract; if something went wrong with the vessel, Mr Vincent was not directly responsible unless he contributed to the malfunction by his own negligence; the work was carried out at a specific place. Mr Garland and Ms Schaefer determined the starting and finishing times which were regular over the two years of the contract. Mr Vincent was paid regularly at a specified daily rate. Tax was deducted from his remuneration. Mr Vincent believed he had to perform his work personally.
Mr Cooper also relied on Stevens v. Brodribb Sawmilling Co Pty Ltd in particular the quoted observation of Dixon J. in Humberstone v. Northern Timber Mills (1973) 129 C.L.R. 395 at p.402.
Mr Cooper said his submissions were supported by the other observations of Mason J in Stevens v. Brodribb from which Ms Lyon also drew comfort.
He said "the ultimate authority" rested with Mr Garland and Ms Schaefer. Further in Stevens v. Brodribb he claimed that the other relevant matters addressed in that case all pointed toward Mr Vincent being regarded as an employee. He said it was clear that Mr Vincent was carrying on work for Mr Garland and Ms Schaefer. All Mr Vincent did was to present himself for work and supply his skills.
Mr Cooper submitted that although there was a written contract, Mr Vincent was subject to reasonably strict control; he worked regular hours and performed his duties as directed. The reliance on the written contract to establish the status of independent contractor he was said was wrong.
Further, Mr Cooper submitted that Mr Vincent was a full time employee for award purposes. In particular he said details of the claim provided to Mr Garland on 18 December 1996 (Exhibit L.4) contended that the "appropriate award to underpin the contract of employment arrangements" was the Security Industry Award27. Mr Cooper said if the union had "got it wrong in respect of the appropriate award, Mr Vincent should not be penalised as other awards might apply". Ms Lyon submitted that the award "in no way applied to the tasks undertaken by Mr Vincent"28.
I am satisfied that Mr Garland and Ms Schaefer were able to control the way in which Mr Vincent performed the work of skipper of the "Anmaropa" via the contract (Exhibit L.3); that was its purpose. That Mr Vincent simply stepped onto the vessel, which was supplied, to commence work; that provisions were supplied by Mr Garland and Ms Schaefer; that all tools were provided; and that he took instructions on where and when to feed the fish from the deckhand who was a Tassal employee or from Tassal representatives on shore, were features of the contractual relationship created by the agreement between Mr Vincent, Mr Garland and Ms Schaefer. Mr Garland and Ms Schaefer had the right to discuss with Mr Vincent the performance of his contractual responsibilities as any other person hiring an independent contractor may do, and particularly in this case because of the contractual responsibilities of Mr Garland and Ms Schaefer to Tassal Ltd.
Mr Vincent did not submit accounts for his work, and he was paid at completion of each of his fixed periods of duty which might suggest an employee/employer relationship but equally could be a requirement of an independent contract. His contract required him to be available on seven hours' notice "seven days a week, 365 days per year" for an unspecified term, and was terminable on thirty days' written notice. When given notice to do so he had to work 24-hour shifts and set days. In my opinion each of these indicia is neutral in determining the control test.
The fact that the shifts were not changed even though Mr Garland would have preferred they be changed is not indicative of either relationship.
I am not satisfied that Mr Vincent had the direct power to delegate his work to anyone else as the contract was silent on this point. That the contract between Tassal Ltd and Mr Garland and Ms Schaefer allowed for such a possibility provided the alternate skipper was acceptable to Tassal is interesting but does not assist in my deliberations. In the circumstances I consider this factor to be neutral.
The contract provided that Mr Garland and Ms Schaefer were authorised by Mr Vincent to "deduct tax on the basis of the prescribed payment system at the rate of 23%". This strange arrangement is not conclusive of either a contract for service or a contract of service.
Mr Vincent had control over the actual skippering of the vessel, including his responsibility for the safety of the vessel and crew, but they are among the normal responsibilities of a skipper of a vessel and I regard them as neutral factors in the control test.
Having considered all of the above criteria I have come to the conclusion that none of them are applicable only to employees. Each of them can exist in a contract for service and consequently I do not find them decisive in this matter. The most significant factor in my opinion is the existence of the signed agreement appointing Mr Vincent "Independent Contractor to be Master of Vessel" which expressly provides that the "agreement shall not create any partnership or relationship of employment between the parties".
I am unable to come to any other conclusion than that, at the time of signing the agreement, Mr Vincent was prepared to accept the status of an independent contractor and not that of an employee. As a consequence, in my opinion Mr Garland and Ms Schaefer were entitled to rely on the terms of the written contract. It is possibly trite to record in such a decision that if Mr Vincent was unhappy with his terms (and they had been trialed for approximately 2 months) he should not have signed the contract. However, he did so and he was prepared to continue under the contract until the termination took place in December 1996; he did not raise concern about whether or not he was an "employee" until after that time.
Given the special circumstances of this case on the material put to the Commission, I find that Mr Vincent was not an employee of Mr Garland and Ms Schaefer for the purposes of the Industrial Relations Act 1984 and that the Commission lacks jurisdiction to deal with the matter. Consequently I do not intend to address the claim that the work of Mr Vincent was subject to the provisions of the Security Industry Award or some other awards.
For the above reasons the application is dismissed and I so order.
F D Westwood
Date and place of hearing:
1 Exhibit L.1