T11508
TASMANIAN INDUSTRIAL COMMISSION Industrial Relations Act 1984 Clive Anthony Robertson and K W McCulloch Pty Ltd
Industrial dispute - alleged unfair termination - severance pay - long service leave - annual leave - employee or independent contractor relationship - jurisdiction - order REASONS FOR DECISION [1] On 21 May 2004, Clive Anthony Robertson (the applicant) applied to the President, pursuant to Section 29(1A) of the Industrial Relations Act 1984, for a hearing before a Commissioner in respect of an industrial dispute with K W McCulloch Pty Ltd arising out of the alleged unfair termination of his employment, severance pay in respect of termination of employment as a result of redundancy and a dispute over the entitlement to long service leave, or payment instead of any such leave. [2] This matter was listed for a conciliation conference before McAlpine C on 19 July 2004. The file was subsequently referred to myself and listed for hearing on 11, 12 and 13 October 2004 and 16 and 22 December 2004. Mr J Zeeman, solicitor, appeared for the applicant. Ms T Badenach, together with Mrs A Burrows-Cheng, solicitors, appeared for the respondent. Overview [3] Mr Robertson, in partnership with his then wife, purchased the business of K W McCulloch Pty Limited in November 1983. Mr Robertson stated that he was managing director of the company, directly responsible for sales and marketing. [4] In 1985 Mr Robertson's wife died. Subsequently Mr Ronald Easther purchased Mr Robertson's deceased wife's shares in the company. Mr Robertson and Mr Easther had a friendship extending back to school days. [5] Mr Easther and Mr Robertson continued to manage the business as joint managing directors. It would seem that Mr Robertson concentrated on sales and installation whereas Mr Easther's role was predominately administrative and financial. [6] In November 1999, at the initiative of Mr Robertson, the parties entered into an arrangement that purported to be a relationship of principal/contractor, rather than employer/employee. It was common ground that up to this point both Mr Robertson and Mr Easther were employees of the company, notwithstanding their 50% shareholding and director status. [7] In November 2000 Mr Robertson was declared bankrupt. [8] Mr Easther purchased Mr Robertson's 50% shareholding for $2000. Mr Easther's evidence was that the shares were "worthless" at the time in that the company was essentially insolvent. There was a "gentleman's agreement" that Mr Robertson could purchase the shareholding back at the same price at some point in the future. [9] Mr Robertson continued to "work" for the company up until May 2004. [10] In July 2002 Mr George Mamacas purchased a one third shareholding from Mr Easther and became a director of the company. Mr Easther continued to hold two thirds of the shares. [11] In August 2003 an incident occurred in the workplace involving Mr Robertson and another employee. Following that incident it was agreed that Mr Robertson would not attend the company office and would concentrate on the promotion and marketing of a particular product [the Hills project]. The financial arrangements in place after August 2003 are in dispute. [12] In late April 2004 the Hills project collapsed. [13] Mr Easther terminated the arrangement with Mr Robertson with effect from 3 May 2004. [14] The applicant claims that at all material times he was an employee of the company. The arrangement entered into in November 1999 was a "sham" designed for other purposes. In any event the arrangement ended in September 2000. [15] The applicant claims payment for accumulated annual leave and long service leave up to 3 May 2004. [16] The applicant further claims a redundancy payment calculated on the basis of two weeks' pay for each year of service. [17] The respondent contends that the employment relationship ended in November 1999. Accumulated leave entitlements were, with the consent of the applicant, offset against Mr Robertson's loan account with the company. [18] Thereafter Mr Robertson provided consultancy services to the company in the nature of an independent contractor. The consultancy arrangement further "evolved" with the events of August 2003. [19] The respondent, as a consequence, rejects any liability for accumulated leave entitlements or redundancy pay. Evidence [20] Sworn evidence was taken from Mr Robertson, Mr Easther and Mr Mamacas. [21] An unsigned statement from a Mr Joe Bilac was tendered. [22] Counsel for both the applicant and respondent invited the Commission to make an adverse finding as to witness credit against Mr Easther and Mr Robertson respectively. I have not found it necessary to make such a finding in a global sense of preferring the evidence of one over the other, to the extent of any inconsistency. Nonetheless there was significant conflict in some important aspects of the evidence, and where necessary I have made findings based on the balance of probabilities. [23] Mr Mamacas presented as a reliable witness who gave his evidence in a straightforward and honest manner, notwithstanding that he had difficulty in understanding certain questions. The 1999 Agreement [24] In August 1999 Mr Robertson initiated discussions with Mr Easther concerning a change in the relationship between Mr Robertson and the company. The following exchange of e-mails provides some insight as to the nature of these discussions:1
[25] On 5 November 1999 Mr Robertson, under the letterhead of Careb Consulting, wrote to K W McCulloch Pty Limited in the following terms:2
[26] Attached to this letter was a document set out in full below:
[27] It would appear that this agreement was executed on 7 November 1999. [28] Asked as to the purpose of this agreement, Mr Robertson responded:3
[29] It is not entirely clear what the second reason was although it may well have been a requirement of a major K W McCulloch Pty Limited client to separate the functions of consultant and supplier.4 [30] Mr Easther said that he assumed Mr Robertson wished to enter into this arrangement so that he could earn more money through external consulting.5 [31] Mr Easther said whilst he was aware that Mr Robertson had separated from his wife, he denied that Mr Robertson had told him this was the primary motivation for the contract.6 [32] On 8 February 2000 Mr Robertson sent the following handwritten note to Mr Easther:7
[33] Mr Robertson's evidence was:8
[34] Mr Easther denied that he instigated the memorandum.9 He also said that he did not understand why it had been sent, and "probably didn't take any notice of it".10 [35] I found Mr Easther's evidence on this question to be both evasive and unsatisfactory. It beggars belief that Mr Easther could accept a document purporting to nullify a legally binding contract entered into three months earlier, without either knowing the background behind it, or seeking an explanation as to what it meant. And further, to fax the contract to a firm of solicitors without being aware of whom they represent. [36] I am satisfied that Mr Easther was fully aware that the primary motivation behind the contract related to a claim from Mr Robertson's wife for 25% of the company shares. I am fortified in this conclusion by the following evidence:
Period November 1999 to August 2003 Duties Performed by Mr Robertson: [37] Mr Robertson said that the "Tasks" outlined in the letter of 5 November 1999 were the same as the duties he was performing prior to the agreement coming into effect. His further evidence was that he continued to perform this same work following the execution of the agreement. [38] Mr Easther was extensively cross-examined on the duties performed by Mr Robertson in the post agreement time frame.14 [39] Having reviewed the evidence I am satisfied that whilst there were some changes, they were not a consequence of the agreement being executed. I refer, for example, to the fact that for a period of time all Hobart staff worked from home as a cost saving measure. It would also seem that Mr Robertson focussed on a small number of major projects. I am satisfied that these are changes which would have occurred in any event as part of an evolving business environment. [40] I am also satisfied on the evidence that the level of supervision applied to Mr Robertson's work did not alter as a consequence of the agreement.15 Mr Robertson performed his duties in a largely autonomous manner, with occasional discussions with Mr Easther. Given Mr Robertson's level of seniority within the company, such an arrangement would not be unusual. [41] Mr Robertson continued to use the title of managing director. He had business cards styled as such, which he continued to use up until the time of termination.16 [42] Mr Easther initially said that he was unaware that Mr Robertson held himself out as managing director, pointing out that following the sale of his shares, Mr Robertson was no longer a director. [43] Subsequently Mr Easther agreed that Mr Robertson may have used the business card with his authorisation, and may have signed letters and quotations with the managing director title. Financial Arrangements: [44] It would seem [although the evidence is not entirely clear]17 that prior to 7 November 1999, Mr Robertson was paid a wage of $1170 per week. In the period immediately following the execution of the agreement, Careb Consulting [Careb] was paid an amount of $1170 per week. From 18 July 2000 to 1 April 2003, the amount paid was $1320 per week. Thereafter the amount became $1500 per week. [45] At all material times, the amount paid as a wage to Mr Easther and as a "Consulting and Retainer Fee" [the fee] to Mr Robertson, was the same.18 [46] The fee was paid to Careb on a weekly basis as part of the staff payroll.19 [47] Throughout the relevant period the fee was paid irrespective of absence on leave or otherwise [see Leave Entitlements below]. The fee was the same each week and did not on its face have any profit/risk component. [48] K W McCulloch Pty Limited continued to provide Mr Robertson with a fully maintained vehicle, petrol card, cab charge card, mobile phone and home telephone following the execution of the agreement.20 Workers' Compensation [49] The agreement clearly requires the Contractor to provide workers' compensation insurance. [50] Mr Robertson said that he did not take out such insurance, because, with the agreement of Mr Easther, such cover was provided on a continuing basis by K W McCulloch Pty Limited.21 [51] Mr Easther said that following the execution of the agreement, Mr Robertson was not covered by the company workers' compensation insurance policy. 22 [52] A workers' compensation quotation from GIO for Careb was tendered.23 This quotation had the following handwritten note on it:
[53] It is difficult to draw any meaningful conclusions in relation to this document. External Consulting: [54] The agreement contained a Non Exclusivity clause, which allowed the contractor to engage in other work. [55] Mr Robertson's evidence was that he did not work for anyone else.24 [56] Two invoices and a quotation from Careb were tendered. On reviewing the evidence I am satisfied that one invoice dated 3 October 2000, for $759 was a genuine external consultancy from which Mr Robertson, through Careb, personally profited. There were circumstances surrounding the other two documents which sets them apart.25 Company Clothing: [57] Mr Robertson's evidence was that he on occasions wore company provided clothing with a K W McCulloch Pty Limited logo. Mr Easther said the wearing of company clothing was not compulsory. Taxation: [58] K W McCulloch Pty Limited did not deduct PAYE tax nor provide Group Certificates for payments made after the execution of the agreement. Superannuation: [59] K W McCulloch Pty Limited did not make superannuation contributions on behalf of Mr Robertson following the execution of the agreement. This however was the subject of a subsequent ATO audit [see Invoices below]. Invoices: [60] It would seem that Mr Robertson raised invoices on a weekly basis for the period November 1999 to September 2000. Mr Robertson's evidence was that the arrangement came to an end at that point. He said:26
[61] Mr Easther denied that this conversation occurred.27 Nonetheless, K W McCulloch Pty Limited continued to make weekly payments to Mr Robertson for the next three and a half years, despite the absence of invoices. [62] On 6 February 2004 Mr Easther sent Mr Robertson an e-mail relating to a tax audit in respect of superannuation payments. This part of the evidence was tendered in closed hearing pursuant to a s.26 application. As such the text is not reproduced in this decision. It has however been fully taken into account in the decision. [63] In summary, as a consequence of an ATO audit, Mr Easther requested Mr Robertson to retrospectively reconstruct weekly invoices for the previous three years. He made suggestions as to how this might be done and offered certain observations as to a possible outcome. [64] Mr Robertson said that he initially objected to this request and complied only because he was told that no more payments would be made until the invoices were completed. [65] Mr Easther said he had always assumed the invoices had been put in and only became aware that this was not the case through the ATO audit. [66] Under cross-examination [in open hearing], Mr Easther said:28
Period August 2003 to May 2004 [67] In August 2003 there was an incident in the workplace involving Mr Robertson and another employee. Notwithstanding Mr Zeeman's objection I allowed evidence to be taken in relation to the circumstances surrounding this incident. [68] Having reviewed the evidence I am satisfied that the circumstances of the incident are not relevant to the primary question of whether or not an employment relationship existed. Suffice to say that the incident did lead to a significant change in the relationship between the parties. [69] The evidence in relation to what followed is confusing and in some respects contradictory. [70] It is clear that Messrs Easther, Mamacas and Robertson had a meeting sometime in August at which time the future of Mr Robertson was discussed. [71] It was agreed that Mr Robertson would no longer work from the Hobart office. In fact it would be fair to say that he was barred from attending the office. [72] It would seem that three options were discussed. The first option, involving the dismissal of a staff member and possible litigation, was not pursued. [73] The second option was described as a $75000 "walk away" payment. [74] The third option was a payment of $50000 plus 10% of the net profit resulting from the Hills project, should it materialize. Inherent in this proposal was the forfeiture on Mr Robertson's part of the right to buy back his shareholding. It was also a common expectation that Mr Robertson would ultimately move to Melbourne and work for Hills. It would also seem likely that it was agreed that the payment would be made in instalments, although the detail of such arrangement was anything but clear. [75] Both Mr Easther and Mr Mamacas were adamant that a "gentlemen's agreement" was reached at this meeting. Mr Easther said:29
[76] Mr Robertson acknowledged that discussions took place but denied that agreement was reached. Further, he said that it was not agreed that he would cease to be an employee of the company. [77] On 26 August 2003 Mr Robertson sent a handwritten note to Messrs Easther and Mamacas. The note read in part as follows:30
[78] The note went on to outline why he considered the $50000 to be inadequate. His rationale is not material to the matter before the Commission. Suffice to say that Mr Robertson considered he was entitled to an amount considerably in excess of $50000. [79] Cross-examined on this letter, Mr Robertson said:31
[80] On 25 September 2003 the following note was sent on K W McCulloch Pty Limited letterhead to key customers:32
[81] By letter dated 30 September 2003 Mr Easther responded to Mr Robertson's note of 26 August. This letter covered a range of issues including bank security; private expenditure charged by Mr Robertson to the company; shareholder value and the Hills project. [82] The letter was inconclusive and concluded with the following:33
[83] By letter of same date Mr Easther wrote to Mr Robertson seeking to clarify internal arrangements as Mr Robertson's consulting activities. [84] The letter included the following comment:34
[85] The attached letter read as follows:
[86] There is no evidence that this undated draft letter was actually sent to customers, nor was it put to Mr Robertson for comment. [87] Mr Robertson's evidence on his duties post August 2003 was as follows:35
[88] And later:36
[89] Mr Easther's evidence was:37
[90] And later:38
[91] The evidence of Mr Mamacas on this issue was:39
[92] In January 2004 Messrs Easther and Robertson made a presentation to Hills management. Tendered in evidence was an extract from a Powerpoint presentation, which read in part:40
[93] On 3 February 2004 Mr Easther wrote to Hills concerning the project. The letter said in part:41
[94] Mr Easther's evidence on this point under cross-examination was confusing, but it would seem that Mr Easther intended this as a futuristic commitment, to be funded by Hills.42 Given the sequence of dates and the words used, Mr Easther's evidence was not entirely convincing. [95] In late April 2004 the Hills project collapsed. On 3 May Mr Easther sent an e-mail to Mr Robertson which read in part:43
[96] It would appear that at least three staff were made redundant in addition to ending the arrangement with Mr Robertson. [97] At the time of termination Mr Robertson had been paid a total of $52500 in $1500 instalments. Mr Easther said this was an extra two weeks' payment because he thought the Hills deal was going ahead. He went on to say:44
[98] There was evidence that Mr Robertson, albeit to a limited extent, continued to perform a management/supervisory role for K W McCulloch Pty Limited.45 [99] There can be no doubt that Mr Robertson did perform some consulting work for K W McCulloch Pty Limited. Between August 2003 and May 2004, Careb submitted invoices for $13308. There was no evidence of Mr Robertson performing consultancy work external to K W McCulloch Pty Limited. [100] Mr Easther's evidence was that invoices were produced for all work on the Hills project. Save for a $231 component of one invoice in January 2004,46 this documentation was not tendered. Given the potential significance of such documentation, this was most surprising. [101] From the confusing evidence, I have reached the following conclusions: [102] Mr Robertson did receive regular payments of $1500 each week. This was precisely the weekly payment that he was receiving prior to the August 2003 arrangement. The payment also continued beyond the purported "agreement" of $50000. The arrangements in relation to his car and mobile phone continued. [103] Mr Robertson did perform a substantial amount of work on the Hills project. I am unable to determine whether or not this amounted to a full-time workload. [104] Mr Robertson did, to a limited extent, continue to perform a management role for K W McCulloch Pty Limited. [105] Mr Robertson did perform some specific consultancy work for K W McCulloch Pty Limited, and for which he rendered specific invoices. This can be contrasted with the position prior to August 2003. [106] Mr Robertson did not attend the Hobart office of K W McCulloch Pty Limited. [107] I am unable to determine with certainty whether the $1500 was in the nature of salary, consultancy retainer, or an agreed "settlement" paid in instalments. Accrued Leave Entitlements [108] Mr Robertson said that his contract of employment provided for the following:
[109] He said that Mr Easther was aware of these arrangements prior to becoming a director, in that he was providing accounting services to the company. The respondent did not contest this evidence. [110] As at 9 November 1999, the accrued entitlements were as follows:47
[111] Mr Easther acknowledged that these accrued entitlements were due at the time the 1999 agreement was entered into. They were not paid out, as the amount was offset against Mr Robertson's "loan account", which according to Mr Easther, was greater than the accrued entitlements. [112] There was a considerable amount of evidence in relation to expenditure of a private nature incurred by Mr Robertson and charged to the company. Examples of such expenditure include private travel, accommodation and entertainment; household goods; cash advances; legal fees; rent for private dwelling; wedding reception; goods borrowed from stock and not returned. The position of the respondent is summarised in the letter of 30 September 2003.48 [113] Mr Robertson admitted that some debt was owed to the company but certainly not to the extent asserted by the respondent. He rejected the suggestion that he accepted an offset against accrued entitlements.49 [114] I note that the notion of charging private expenditure to the company was not unknown to Mr Easther, and to a minor extent, Mr Mamacas. The level of Mr Robertson's expenditure was, however, of a quite different order. [115] Mr Robertson's evidence was that he had not taken any annual or long service leave since November 1998.50
[116] Mr Easther said the company continued to pay the consultancy retainer when Mr Robertson was absent52; that Mr Robertson did not seek permission before he went on leave53 and that he could take as much leave as he wanted.54 [117] The evidence of Mr Mamacas on the leave issue was:55
Authorities [118] Counsel for both the applicant and respondent acknowledged that the leading authorities in this heavily litigated area are Hollis v Vabu56 and Stevens v Brodribb Sawmilling Company Pty Ltd.57 [119] Ms Badenach also relied upon Global Plant Ltd v Secretary of State For Social Services58 and Connelly v Wells.59 [120] In Connelly Gleeson CJ said:
[121] More recently the law was discussed in Bedelph v Protective Security Pty Ltd60 by Underwood J and by the Full Court on appeal.61 [122] In the judgement at first instance Underwood J overturned a decision of the Workers Rehabilitation and Compensation Tribunal which had found the existence of a contractor/principal relationship. A major issue in this judgement was the relative weight to be given to the terms of the written contract when balanced against the facts of the relationship. Underwood J observed:
[123] On appeal Crawford J said:
[124] The full court dismissed the appeal. Jurisdiction [125] Towards the end of the hearing I raised with the parties the question of whether the Commission had jurisdiction to determine the annual leave question, given that there was no suggestion of an alleged award breach, which would in turn give rise to jurisdiction pursuant to s.29[1A][c] of the Act. [126] Section 29[1A][a] reads:
[127] In Section [3][1] "industrial matter" is defined as:
[128] Mr Zeeman contended that annual leave clearly falls within the specific terms of subclause (i), or failing that, the generality of the opening terms of the definition. [129] It follows that there is an "industrial dispute relating to ... the termination of employment of the former employee" in that the question of annual leave only arose as a consequence of the termination. But for the termination, there would be no dispute. [130] I agree with the submissions of Mr Zeeman. I am satisfied that the Commission has jurisdiction to determine the annual leave question. Findings Was there an employment relationship? [131] The respondent submitted that the relationship of contractor/principal was established with the execution of the agreement in November 1999. The events of August 2004 amounted to an "evolution" of this relationship. It was not advanced as an alternative argument of changing the status of the relationship at that point, in the event that the Commission was against the respondent insofar as the agreement was concerned. [132] A review of the authorities points to the following conclusions: [133] The existence of control, whilst significant, is not the sole criterion. [134] There exists a number of indicia, none of which by itself is necessarily determinative. [135] The existence of express terms in a contract is a matter to be considered and given due weight, but such a contract cannot purport to create something which it is clearly not. [136] I turn now to the question of control. [137] It was common ground that on a day-to-day basis, Mr Robertson was largely autonomous. Direction from Mr Easther, and later Mr Mamacas, was probably limited to an identification of the projects upon which Mr Robertson should concentrate. Mr Robertson was however a senior manager, and this level of autonomy would be expected. Importantly, the level of control did not alter following the execution of the agreement. If Mr Robertson was an employee prior to November 1999, then in terms of control, nothing changed as a consequence of the agreement that would alter this status. [138] As to the intention of the parties, the plain words of the agreement clearly point to an intention to create a contractor/principal relationship. Indeed Clause 9 specifically denies an employee/employer relationship. The question to be determined is whether on the facts of what actually happened, the agreement should be viewed as labelling the relationship as something that it was clearly not. [139] The non payment of superannuation and absence of PAYE taxation deductions are indicia of a contractor relationship. The provision in the agreement requiring the contractor to take out workers' compensation insurance is in the same category. The evidence as to what actually happened in relation to workers' compensation is in conflict and I am unable to decide where the truth lies. [140] The submission of invoices, on its face, points to a contractor relationship. Against that, the invoices that were submitted were identical in style and quantum. For three and a half years no invoices at all were submitted, yet Mr Robertson [Careb] was still paid on a weekly basis. It is difficult to give any serious credence to invoices submitted with such extensive retrospectivity, and for a purpose unrelated to gaining payment for services rendered by Mr Robertson. [141] Invoices rendered between November 1999 and September 2000 were not tendered. It is however a reasonable assumption that they would have been similar in style to those subsequently submitted retrospectively. [142] The invoices did not identify any services provided. The quantum was identical for extended periods of time and equated precisely with the amount Mr Easther was paid as a weekly wage. There was no element of risk/profit attaching to the weekly payment. [143] Mr Robertson received the same payment every week, irrespective of what he actually did. Indeed he continued to receive the same payment even when he was absent. [144] The respondent submitted that GST was paid on the payments made to Mr Robertson. I doubt whether that was the case. The GST did not come into effect until 1 July 2000. Mr Robertson said that he ended the arrangement in September 2000, because of difficulties in complying with BAS requirements, the first of which would have fallen due at that point. Given the circumstances in which the retrospective invoices were submitted in February 2004, I would be highly surprised if Mr Robertson remitted to the ATO 10% of his earnings for the previous three and a half years. [145] The duties performed by Mr Robertson did not change as a consequence of the agreement. [146] There was evidence that Mr Robertson performed some consulting work external to K W McCulloch Pty Limited, albeit to an extremely limited extent. Given its limited nature, this is not necessarily inconsistent with an employment relationship. Indeed Mr Easther, on the evidence, provided external consulting services, yet continued to consider himself an employee of K W McCulloch Pty Limited. [147] Mr Robertson presented to the outside world as an employee of K W McCulloch Pty Limited. I instance the use of his business card styled as managing director together with wearing of company clothing with logo. [148] Perhaps the most telling point is that the level of remuneration did not change as a consequence of the agreement. Mr Robertson, who was at the time a 50% shareholder and director of the company, initiated the agreement. Why then would he accept the same level of remuneration and at the same time assume liability for insurance, annual and long service leave and potentially GST. It simply does not make sense. [149] Mr Robertson continued to receive the benefits of an employer provided car, mobile and home telephone and cab charge etc. Indeed there was no evidence of Mr Robertson making any capital investment in his business. [150] In my view the evidence points overwhelmingly to an employment relationship. The agreement was clearly a device designed for other purposes. I have already found that the parties were fully aware of the reason the agreement was entered into. [151] I have previously expressed misgivings about the creation of agreements for the sole purpose of avoiding obligations in one area, only to spurn the arrangement to gain an advantage when it suits [Taylor v Cedar Packaging62]. However in this instant matter there was no evidence that the agreement was actually used in another jurisdiction to avoid an obligation. Rather it seems that Mr Robertson felt that the agreement might provide him with a defence in matrimonial proceedings, but it has not been actually tested. In the circumstances I must determine the question on the facts as they present. [152] I should say that the events of August 2003 substantially altered the nature of the relationship, particularly the level of consulting undertaken by Mr Robertson, the genuine nature of the invoices submitted and the fact he no longer worked from the K W McCulloch Pty Limited office. Against that, Mr Robertson continued to work for the company for which he continued to be paid the same regular weekly payment. Had I been required to determine this question in isolation, then I would observe that there would be a much stronger arguable case for the existence of a contractor relationship. I put it no higher than that. [153] In any event it is unlikely that much would change even if I was against the applicant at that point. It would then come down to an "extension of time" application, and given the confused nature of the evidence, which could only be definitively decided by a decision of the Commission or a court, there would be a strong argument as to the existence of "exceptional circumstances". [154] I find that Mr Robertson was an employee of K W McCulloch Pty Limited on a continuous basis from November 1983 until 3 May 2004. Long Service Leave: [155] Mr Robertson's evidence was that he was entitled to three months' long service leave after 10 years' service. This was not contested by the respondent. [156] The accumulated entitlement as at 9 November 1999 seems more consistent with an entitlement based on 13 weeks' leave after 15 years' service.63 This of course is consistent with the Long Service Leave Act 1976. [157] The Commission has no jurisdiction to enforce common law contracts. It can however take into account the terms of any such contract when making an order to settle an industrial dispute. If Mr Robertson's evidence is correct, then the contract was made at the time when Mr Robertson and his then wife were the sole owners of the business. It was effectively an agreement with himself. It would seem to me to be manifestly unfair to foist the liability for what amounts to an entitlement well in excess of prevailing statutory standards on the remaining shareholder/s who was not party to the original agreement. In the circumstances I would not be prepared to endorse the agreement, if that is what it was. [158] A simpler explanation would be that Mr Robertson was simply mistaken in his evidence. [159] Cleary there is an entitlement to long service leave. I propose to accept as correct the accrued entitlement as at November 1999 and calculate the balance based on the 1976 Act for the period up until 3 May 2004. Annual Leave: [160] It is common ground that Mr Robertson had accumulated 684.8 hours annual leave as at November 1999.64 [161] Mr Robertson's evidence is that he did not take any annual leave between November 1999 and May 2004. This was contradicted by both Mr Easther and Mr Mamacas in their uncontested evidence. [162] It is disappointing that Mr Robertson gave the evidence he did on this point without qualification. It defies credulity that anyone would not have at least one day off in four and a half years. On the available evidence I am quite satisfied that Mr Robertson did take leave on a reasonably regular basis. It is not possible on the evidence to determine whether this amounted to four weeks each year and I would be surprised if records exist. [163] Mr Robertson was in a position to take leave as and when it fell due and I am satisfied he did so, either in whole or in part. Either way, he has failed to satisfy the onus falling to the applicant to prove his case for leave accruing after November 1999. Offsetting: [164] The respondent submitted that the accrued entitlements were determined at the time the agreement was executed, and with Mr Robertson's knowledge and consent, offset against his loan account at the time. Mr Robertson denies that he consented to this arrangement. Further there is no satisfactory evidence that the accrued entitlements were actually determined and agreed at the time. It would seem that "employee inquiry" shown in Exhibit R6 was made on 30 June 2004. In any event, the so called loan account was still a matter of discussion in September 2003.65 [165] Absent a specific agreement, it is not open to the company to unilaterally offset accrued entitlements against amounts allegedly owed by Mr Robertson. Redundancy: [166] I am satisfied that Mr Robertson was made redundant as a consequence of the collapse of the Hills project. [167] The applicant claims a redundancy payment calculated on the basis of two weeks' pay for each year of service, claiming that this is a standard of this Commission. [168] Whilst it is true that a so called standard may be seen to have emerged as a consequence of a number of Commission decisions, it is equally true that the Commission has consistently maintained a case-by-case approach since the TCR decision66. [169] In my view there are circumstances surrounding this case which demand a departure from the norm. [170] From 1983 until 2000, Mr Robertson was either a 100% or 50% owner of the business. If we accept the notion that redundancy payments are in the nature of contingent liability accruing on a yearly basis, then it would seem to me quite unfair that the entirety of this possible liability should be foisted on the shareholder/s who happens to be there at the end. [171] Secondly there was a considerable amount of evidence as to expenditure of a private nature incurred by Mr Robertson and charged to the company. Whilst the quantum is in dispute, Mr Robertson acknowledged that there was a significant amount which was duly owed. [172] Taking into account these two factors, I have concluded that a fair and equitable redundancy payment would be an amount calculated on the basis of 0.5 of a week's pay for each completed year of service. ORDER Pursuant to section 31 of the Industrial Relations Act 1984, I hereby order that K W McCulloch Pty Ltd, 28 Thistle Street, Launceston, Tasmania 7250 pay to Mr Clive Anthony Robertson the following:
Such payments are to be made not later than 5.00pm 4 April 2005. Details of the above calculations are shown at Appendix 1. There was some evidence relating to a change in the company structure/shareholding which occurred during the course of the hearing. In the event that the above order is not satisfied, leave is reserved to the applicant to reapply for different orders. Leave is reserved generally to the parties to reapply in the event of an error/s in calculation being detected. In the meantime the file shall remain open. Tim Abey Appearances: Date and Place of Hearing: APPENDIX 1
1 Exhibit R1 |
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