T11179
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TASMANIAN INDUSTRIAL COMMISSION Industrial Relations Act 1984 Michael Taylor and Cedar Packaging
Industrial dispute - alleged unfair termination - alleged breach of registered agreement - equity and good conscience - employee/employer relationship not proven - application dismissed REASONS FOR DECISION [1] On 26 November 2003, Michael Taylor (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 Cedar Packaging arising out of the alleged unfair termination of his employment. [2] The matter was set down for a hearing/conference before Shelley C on 10 December 2003 and 7 January 2004. The file was subsequently re-allocated to myself and a hearing was scheduled for 19 February 2004. Mr M Taylor was self-represented. Mr S Chopping, solicitor, sought and was granted leave to appear for the employer, together with Mr S Habib. [3] The employer operates a business that involves the sourcing and resale of packaging products, including paper bags and boxes, to the food and retail industries. The proprietor of the business, Mr Selman Habib, performed the role of sales representative, which involves a considerable amount of time on the road away from the business. Mr Habib also operates an independent supermarket on the same premises, but quite separate from, the packaging business. [4] Mr Taylor was employed as a Clerical Administration worker on 14 May 2003. This involved receiving stock, recording and consignment of stock, and general bookkeeping. The relevant industrial instrument is the Cedar Packaging Enterprise Agreement 2001.This agreement contains a classification of Clerical Officer with rate of $12.74 per hour. Adjusted for the August 2002 Safety Net Adjustment, this becomes $13.21 per hour, which is consistent with the amount shown in Mr Taylor's application. The evidence adduced during the hearing as to the amount Mr Taylor was actually paid is, however, confusing, although it is not an issue the Commission needs to determine at this stage. [5] At some stage in June 2003 Mr Taylor approached the employer with view of altering the relationship between the two from employer/employee to that of principal/contractor. Mr Habib agreed to this change with the details to be worked out with Mr Habib's accountant. [6] From 1 July 2003 onwards both parties described Mr Taylor as a contractor. [7] On 5 November 2003 a series of events occurred which resulted in the relationship between Mr Habib and Mr Taylor coming to an end. [8] The applicant's claim, as particularised during the hearing, is as follows: · One week's pay in lieu of notice · One week's pay for the last week worked · Two weeks' payment for annual leave · 75 hours' overtime [9] During the hearing the applicant did not press the remedy of reinstatement or compensation for alleged unfair termination. However in correspondence dated 5 March 2004 Mr Taylor advised that he did seek reinstatement, or alternatively compensation if reinstatement was found to be impracticable. [10] This latter submission presumably arose from a post-hearing invitation to comment on an authority the Commission intended to take into account, but which had not been raised during the hearing [see s.20(4)]. [11] The onus is on the applicant to pursue his claim during the hearing. Other than an oblique reference Mr Taylor did not, during the hearing, seek a remedy in relation to an alleged unfair termination. Mr Taylor had the opportunity and did not pursue it at the appropriate time. As a consequence Mr Habib was not required to present any evidence to counter such a claim. [12] There are no compelling reasons as to why the Commission should now consider this aspect of the claim via correspondence. Accordingly there is no reason to detail the circumstances leading to the termination. That part of the application which relates to an alleged unfair dismissal is dismissed. [13] The balance of the claim relates to alleged breaches of the enterprise agreement. In this context the primary question to be determined is the nature of the relationship between the applicant and Mr Habib. If there is no employment relationship, as Mr Habib contends, then the Commission has no jurisdiction to make orders. [14] Mr Taylor contends that whilst there was a verbal agreement relating to contractor status, the nature of the true relationship between himself and Mr Habib rendered this agreement to be invalid, thus affording the Commission jurisdiction to make orders. [15] Mr Taylor gave evidence by way of a sworn statement and was subject to cross-examination. Mr Habib also gave sworn evidence. Mr Taylor's Evidence [16] Mr Taylor agreed that he initiated the approach to Mr Habib for the purposes of establishing a contractor relationship. [17] He openly acknowledged that this approach had been motivated by a garnishee order served by the Child Support Agency on Cedar Packaging requiring certain deductions to be made from Mr Taylor's wages. Mr Taylor felt that if his status could be changed to that of a contractor, the garnishee order would have no effect. He confirmed that no deductions had been made between 1 July 2003 and the date of termination. Under cross-examination Mr Taylor said:1
[18] From 1 July 2003 Mr Taylor submitted invoices on a weekly basis. Each invoice was from "Michael Taylor Enterprises"; was for "Services" or "Back Services"; and identified a "Sub Total", "GST" component, "Total" and "Balance".2 [19] Mr Taylor said the amount he received each week did not change when he assumed contractor status. [20] Mr Taylor said that Mr Habib agreed to the contractor arrangement, with his accountant to sort out the details. There was an initial discussion between Mr Taylor and the accountant. According to Mr Taylor the accountant was to commit the agreement to writing, which he did not do. [21] Prior to 1 July Mr Taylor's hours of work were 9.00am to 5.30pm, with 30 minutes for lunch as opportunity offered. This arrangement did not change significantly after 1 July. Mr Taylor denied taking extended lunch breaks of up to three hours. On the matter of control Mr Taylor said:3
[22] And later:4
[23] In relation to flexibility Mr Taylor said:5
[24] Mr Taylor did not however agree that this flexibility commenced at the same time as the contractor arrangement. [25] Mr Taylor agreed that he could have performed some tasks at home but chose not to do so. [26] Mr Taylor agreed that it was possible to bring someone in to assist, thus facilitating an early finish. This, however, did not occur. Mr Habib's Evidence [27] In relation to the initial approach from Mr Taylor, Mr Habib said:6
[28] On the matter of hours of work he said:7
[29] And later:8
[30] Mr Habib said that Mr Taylor was in full control of financial transactions including payments to Michael Taylor Enterprises. He said:9
[31] Correspondence from Mr Habib's accountant, Frank W Bearup Pty Ltd, was tendered as evidence. This letter, dated 8 December 2003, read:10
Finding [32] Section 20(1)(a) of the Act reads:
[33] Coupled with this requirement is the legal maxim:
[34] This maxim is based on the notion "no court of equity will aid a man to derive advantage from his own wrong."11 [35] Whilst the Commission is not a court it would seem appropriate to be guided by this maxim in observing the requirements of s.20(1)(a) of the Act. [36] In this case the facts are clear. [37] Prior to 1 July 2003 an employment relationship existed between Mr Taylor and Mr Habib. [38] This status was changed at the initiative of Mr Taylor for the sole purpose of avoiding child support obligations. [39] Not only did Mr Taylor initiate the arrangement, he remained in control of the contract administration. It was he who issued the invoices and made the payments. Mr Taylor could have ended the arrangement at any time and he chose not to. [40] In Massey v Crown Life Insurance Co.12 Lord Denning noted that the parties cannot alter the truth of a relationship by putting a different label upon it. However he went on to say:
[41] In the same judgement Lawton L J said:
[42] The arrangement between Mr Taylor and Mr Habib was in my view quite unsatisfactory. The motivation for entering into the arrangement was for all the wrong reasons. Nonetheless the relationship did contain elements that point to a contractor status. I note in particular the acknowledged degree of flexibility and the capacity to subcontract (albeit not utilised). On the other hand there are numerous characteristics which point to an ongoing employment relationship. [43] Put in its worst light the arrangement might even be described as a device to avoid obligations. [44] I am prepared to accept that Mr Habib acted in good faith and perhaps was an unwitting party to an unsatisfactory arrangement. Nonetheless Mr Habib is potentially exposed in a number of areas and he would be wise to seek professional advice before considering similar arrangements into the future. [45] On balance I conclude that Mr Taylor has failed to satisfy the onus of proving his case. In reaching this conclusion I have given considerable weight to the fact that Mr Taylor initiated the arrangement for his own advantage and could have ended it at any time had he found it unsatisfactory. In such circumstances I find his application to now seek the benefits of an employment relationship to be quite inconsistent with the notion of equity and good conscience. [46] I should emphasise that had the arrangement been initiated by the employer a different result may have emerged. [47] Having found that the applicant has failed to prove the existence of an employment relationship it follows that no entitlements arise from the enterprise agreement. [48] The application is dismissed.
Tim Abey Appearances: Date and Place of Hearing: 1 Transcript PN 501 to 506 |