T12268
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TASMANIAN INDUSTRIAL COMMISSION Industrial Relations Act 1984 DECISION APPEALED - SEE T12556 Construction, Forestry, Mining and Energy Union, Tasmanian Branch and Crossroads Civil Contracting Pty Ltd
Industrial dispute - alleged breach of the Civil Construction and Maintenance Award and Building and Construction Industry Award - foreperson - management duties - entrepreneurial aspects - work not subject to award - application dismissed REASONS FOR DECISION [1] On 5 September 2005, the Construction, Forestry, Mining and Energy Union, Tasmanian Branch (CFMEU) applied to the President, pursuant to Section 29(1) of the Industrial Relations Act 1984, for a hearing before a Commissioner in respect of an industrial dispute with Crossroads Civil Contracting Pty Ltd, arising out of the alleged breach of the Civil Construction and Maintenance Award and the Building and Construction Industry Award in respect to Colin Johns. [2] This matter was listed for hearing (conciliation conference) on 26 October 2005, and for hearing on 30 November 2005 and 1 December 2005. Mr W White appeared for the CFMEU. Mr T Brady, with Ms K McIver, of the Tasmanian Chamber of Commerce and Industry Limited, and Mr D Stacey, appeared for Crossroads. Overview [3] The business of Crossroads Civil Contracting (Crossroads) was formed in 1995 by current owner and director, Mr Dale Stacey. [4] The business of Crossroads is civil construction, including kerb and channel reconstruction, sewer mains, water mains, stormwater mains and road building. [5] Prior to 2001 the asphalt component of any civil works project was subcontracted to another provider. The Launceston City Council (LCC) has been and remains a major customer of Crossroads. [6] In July 2001 Mr Johns approached Mr Stacey concerning employment. Mr Johns had hitherto been employed by an asphalting business (Tarmak). [7] Following discussions it was agreed that Crossroads would engage Mr Johns for the purpose of establishing an asphalt component of the business. [8] Mr Stacey at that point had no knowledge or experience of the asphalt industry. [9] Equipment was purchased and potential clients were approached. A crew of asphalt workers was engaged. [10] Mr Johns played a pivotal role in setting up this aspect of the business. [11] Crossroads was successful in gaining its first asphalt contract from Civil Construction Corporation (CCC). [12] The asphalting component of civil projects, which had previously been contracted out, was now undertaken by Crossroads' own resources. In addition, the business was successful in gaining ongoing stand-alone asphalt contracts, principally from CCC. It would seem that the CCC work was the major client of the asphalt business, with the asphalt component of civil works contracts with the LCC also being a major part of the business. [13] The asphalt business operated successfully as a division of Crossroads for the next three and a half years. Mr Johns was clearly in charge of the division. It was common ground, however, that Mr Johns had a "hands on" role and spent a significant proportion of his time working "on the tools". [14] In February 2005 Mr Johns resigned. Subsequently he submitted a claim, through the CFMEU, alleging substantial underpayments of wages in accordance with the award. The Commission has not been provided with particulars of this claim, which, according to the evidence, is in the order of $70000. [15] The applicant asserts that he was employed as a "foreperson" under the Building and Construction Industry Award. [16] The respondent maintains that Mr Johns was engaged and employed as a manager and therefore not subject to award regulation. [17] In this matter the Commission is asked to determine whether or not the award has application to the work performed by Mr Johns. Evidence [18] Sworn evidence was taken from the following witnesses: · Gary John Blenkhorn, managing director of Blenkhorn Plumbing Services. · Nicole Margaret Johns, daughter of the applicant. · Michael Basuik, formerly a foreman supervisor with CCC. · Anthony Geoffrey Walters, independent contractor. · David Keith Gillies, a former employee of Crossroads in the asphalt division. · Douglas John Gardner, concrete finisher employed by Crossroads. · Timothy Charles O'Sullivan, retired solicitor. · John Arthur Bailey, former employee of Crossroads in the asphalt division. · David John Jones, employee of Crossroads since March 2005. · Colin David Johns, the applicant. · John David Randall, transport operator. · Dale John Stacey, owner of Crossroads. [19] In addition numerous statements from individuals were tendered. [20] In a number of material areas there was conflict in the evidence. Whilst certain aspects of the evidence were unsatisfactory, I have found no reason to make any adverse findings as to witness credit. Where necessary, conflict in the evidence has been determined on the basis of the balance of probability. The Award [21] Clause 2 Scope prescribes that the award is established in respect of the Building and Construction Industry, which, relevantly, includes:
[22] The Crossroads business fits squarely within this definition. [23] Clause 13(d) prescribes classifications for Civil Construction and Maintenance Workers. [24] A Construction and Maintenance Worker Grade 2 includes the sub classification of bitumen workers, which in turn is defined as:
[25] The current rate for a Construction and Maintenance Worker Grade 2 is $575.60 (does not include in charge of plant allowance). [26] Clause 13(j) prescribes that a foreperson in charge of a complete project shall be paid not less than $18.80 per day extra. [27] Foreperson is defined as:
[28] There can be no doubt that, subject to any alternative coverage, the crew employed in the asphalt division would be covered by the Grade 2 classification, and possibly higher classifications, depending on the nature of plant operated. [29] The question to be determined is whether Mr Johns could properly be described as a foreperson. The Engagement of Mr Johns [30] Mr Stacey described the circumstances under which Mr Johns was engaged as follows:1
[31] The evidence of Mr Johns was consistent with this, save that Mr Johns "thought the $500 net was for a 40 hour week."2 What Followed [32] Mr Stacey sent Mr Johns to Brisbane with the objective of purchasing a second-hand paving machine. Mr Johns inspected four machines and recommended one to Mr Stacey, who in turn arranged payment for the machine. Mr Johns arranged to have the paver freighted back to Launceston. [33] Mr Johns played an advisory role in the purchase of other equipment essential to the asphalt operation. [34] Mr Johns of his own initiative arranged a meeting with CCC project managers. He had previously identified a niche market in "milling" and thought this offered the best opportunity to gain work from CCC. Mr Stacey also attended the meeting but it was clear that it was Mr Johns who conducted the sales spiel. [35] Mr Johns arranged similar meetings with Dorset Council, Georgetown Council, Total Workforce and Shaw Contracting. [36] It was from this first meeting with CCC that resulted in an invitation to tender. This tender was successful and underpinned the venture into the asphalt business. Mr Johns' Employment Package [37] At the time of resignation, Mr Johns was paid a salary of $40144 pa. He was provided with a fully maintained vehicle, which was available for private use. [38] Mobile phone costs were paid by the employer. [39] On at least one, and possibly two occasions, Mr Stacey provided Mr Johns with interest free loans. [40] The respondent maintains that on several occasions cash bonuses were paid to Mr Johns. This was disputed, but in any event is not a determinative issue. [41] Mr Brady asserted that Mr Johns enjoyed unlimited sick leave, although this was not supported by direct evidence. However Mr Johns was not expected to provide medical evidence of illness when taking sick leave. Day-to-Day Duties [42] From the evidence the following picture emerges as to the day-to-day work performed by Mr Johns. [43] At least up until the construction of the depot, most of the asphalt plant and equipment was stored at Mr Johns' residence. This was the starting point where the asphalt crew commenced work on a daily basis. Mr Johns determined the start and finish times for his crew, which varied according to the circumstances. [44] Mr Bailey described Mr Johns' work as follows:3
[45] It is clear that Mr Johns spent a significant amount of time "on the tools". According to the evidence, this might have been as high as 90% of his total work time. Mr Johns said he was expected to be on the job.4 [46] In relation to this Mr Stacey said:5
Time Keeping and Payment of Wages [47] Mr Johns kept a daily record of the hours worked by each of his crew. This record was maintained on his own computer program. The details of this record was telephoned to Mr Stacey each Wednesday evening, who in turn arranged for payment of wages on the Thursday morning. [48] It is in dispute whether Mr Johns provided gross wages as well as hours, or just the hours worked. I think it more likely than not that the former was the position, although this issue in itself is not determinative of the question before the Commission. The Right to Hire and Fire [49] In the initial set-up stage Mr Johns was instrumental in engaging the labour. Mr Stacey said:6
[50] On this subject Mr Johns said:7
[51] I conclude that on most, but not all, occasions hiring decisions were "run past" Mr Stacey, although whether this was for approval or purely administrative purposes is unclear. [52] Mr Stacey said Mr Johns could have paid the asphalt crew "what he liked".8 Whilst I accept that Mr Johns had some discretion in this area, I have difficulty in accepting that this discretion was unlimited. [53] From the evidence I am satisfied that Mr Johns was authorised, where necessary, to obtain additional labour from labour hire firms. This was particularly pertinent on remote country jobs. [54] Mr Stacey said Mr Johns had the right to fire, although on the only occasion Mr Johns sought to exercise this right, he was over-ruled by Mr Stacey. I suspect the true position is that firing decisions on Mr Johns' part, were subject to approval by Mr Stacey. Pricing and Quotations [55] Mr Johns acknowledged that on commencement, he was the only one in the business "who really knew anything about hot mix". Mr Stacey agreed that he had "no idea" about asphalting rates. [56] From the evidence it is clear that on numerous occasions clients directly approached Mr Johns seeking a price for a job. There were also occasions when Mr Stacey would be approached. When this occurred he would contact Mr Johns, get a price and then call the client back. [57] Mr Johns described the pricing process in the following terms:9
[58] Mr Stacey's comment in relation to the pricing issue was:10
[59] And later:11
[60] There was evidence of one occasion only whereby Mr Stacey varied a rate submitted by Mr Johns. On that occasion Mr Stacey, for his own reasons, increased the price for every component, including asphalt, of a major civil contract. [61] Mr Stacey said that Mr Johns had been instrumental in negotiating two CCC contracts worth in excess of $800000.12 [62] As a director of the company Mr Stacey would invariably sign formal tender documents. At least in the case of the LCC, this was a requirement of the Council, irrespective of who formulated the price components. Supervision [63] The work of the asphalt crew can be conveniently divided into two components: (1) LCC civil projects, whereby asphalt was one component of a complete project, which might include stormwater, sewer, water mains, road construction, kerb and gutter, and finally, asphalt finish. (2) Asphalt work outside of Launceston, usually for CCC. [64] In relation to the first category, Mr Stacey would invariably visit the site on a daily basis, as he had control of the whole project. Mr Stacey said that when it came to the asphalt component, Mr Johns would usually liase directly with the relevant LCC officer. [65] In relation to work outside of Launceston, Mr Stacey was effectively never present (one visit in four years according to the evidence). Mr Johns was solely responsible for the supervision and planning of the work, including timing, set out and hours worked by the crew. Hours Worked by Mr Johns/ Entrepreneurial Aspects [66] It would seem from the evidence that Mr Johns regularly worked in excess of 38/40 hours per week. However the evidence of Mr Johns as to how this was to be remunerated was contradictory. [67] It is accepted that the parties entered into a salary arrangement, although Mr Johns did say that he thought the arrangement was for a 40-hour week. [68] Mr Johns said that "he got sick of arguing over all these hours and not getting paid", and as a consequence changed his working arrangements.13 However, under cross-examination, Mr Johns was unable to identify any occasion when he raised the hours issue with Mr Stacey. [69] Mr Stacey said he was never approached by Mr Johns concerning the payment of overtime.14 [70] Later Mr Johns said that he did not have an expectation of being paid for overtime, up until June 2004. [71] To understand this apparent contradiction, a further aspect of the evidence is particularly pertinent. Mr Johns was clearly under the impression that the asphalt business would ultimately belong to him. He said:15
[72] Mr Johns described his understanding of the arrangement thus:16
[73] It would seem that the issue of overtime arose in June 2004 as a result of what Mr Johns considered to be a back down from the understanding on Mr Stacey's part:17
[74] Mr Johns also said in evidence that he had approached CCC to ascertain whether they would accept Mr Johns in his own right as an independent contractor. He had also approached some of the crew to go with him, in the event that he established his own business. [75] Mr Stacey denied that there was an agreement to sell the business but he did acknowledge that Mr Johns had raised the issue.18 External Representation [76] The respondent contended that Mr Johns was the manager of the asphalt division. [77] There was however very little evidence to support the contention that he had that title, or indeed any other title. [78] Mr Garrigan (CCC) said in an unsworn statement, that "Mr Johns was presented to me as the manager of Crossroads asphalt division". Mr Garrigan was not however presented as a witness and subjected to cross-examination. [79] There was no evidence by way of business card, company structure, or telephone directory entry, that Mr Johns had any title. Indeed this is not inconsistent with Mr Stacey's approach to corporate management in that he did not assign any title to himself on official correspondence etc. [80] A Tasbuild enrolment form completed some months after Mr Johns' resignation apparently described Mr Johns as a "supervisor/foreman". Mr Stacey said that an office manager who did not know Mr Johns had completed this form. Mr Stacey agreed that he had signed the form but said this was consistent with his approach to paperwork.19 [81] An unsworn statement from Mr Ponting (CCC) states:20
[82] Whilst Mr Ponting was not subject to cross-examination, Mr Johns said in relation to the statement:21
[83] Statements from Malcolm Rayner (CCC) and Sara Amundsen (Top of the Town Hotel) make reference to being under the impression that Mr Johns was a part owner of Crossroads. [84] Mr Johns denied that he had said he was part owner, but had told people that he was "going to be a part owner".22 [85] Mr Arnold said that he was "led to believe that Colin was the owner of Crossroads"23 and that Mr Johns had recently spent $300000 on a new paving machine.24 It transpires that this alleged conversation took place some months after Mr Johns' resignation. Mr Johns denied that he said this to Mr Arnold.25 Authorities [86] The Commission was referred to a number of authorities including: · Stanley Lea Holt v Musketts Timber Sales Pty Ltd T18 of 1993 Fed No. 137/94 · San Remo [Southland] Pty Ltd v Farrell 22 IR 291 · Helen Mary Dillon v SM International Pty Ltd t/a City View Motel T10855 of 2003 · Kingmill [Australia] Pty Ltd t/a Thrifty Car Rental v Marshall [1999] SAIRC 2 [3 February 1999] · Wyatt v John Dunnicliff, Grassy Pastoral Co. T8867 and T8869 of 2000 · Rogers v Branch and Associates T10785 of 2003 [87] Whilst each case must turn on their own particular circumstances, the following general principles emerge from the authorities cited above. [88] The use of a title as an indicator as to the nature of an employment contract is not something that should be ignored, but it is the work actually performed which is the determinative factor. [89] The performance of some work which fits with award classification descriptors does not in itself mean that the employment contract is subject to award coverage. It is the purpose of the engagement which is critical, and whilst the amount of work of an award or non award nature may be a consideration, it is nonetheless subservient to the overall purpose test. Findings [90] It is clear that the parties entered into a salary package arrangement, which for ordinary hours at least, was comfortably in excess of that which would result from award prescription. This in itself does not oust the award, but, in the absence of duress, is indicative at least of the parties' intentions. [91] I am inclined to accept Mr White's submission that the title manager was designated some time after Mr Johns submitted his resignation. The evidence suggests that Mr Johns had not been designated any particular title during his actual period of employment. References to manager (Garrigan) and Supervisor/foreman (Tasbuild), are inconclusive and tend to cancel each other out. It follows that this matter is determined by the nature of the work actually performed, with titles, if any, being a neutral factor. [92] I am quite satisfied that much of the work performed by Mr Johns on a day-to-day basis falls comfortably within the award classification descriptors. Clearly working on the tools in such activities as raking and plant operation fall within the classification of a Construction and Maintenance Worker Grade 2. [93] Whilst the definition of a Foreperson in the award is limited, I have formed the view that the following activities performed by Mr Johns sit comfortably within that definition: · Supervision of the asphalt crew. · Time keeping, including in the instant circumstances, calculation of gross pays. · Set out of work. · Supervision of the program of work. [94] There are other aspects of Mr Johns' work which fit more comfortably with that of a manager. [95] It is clear that Mr Johns was granted substantial day-to-day autonomy as to how the asphalt division operated. He determined the working hours of the crew and in large measure liased directly with the client. [96] I am satisfied that Mr Johns' role in pricing was pivotal, with any references to Mr Stacey more a matter of form and courtesy, rather than for the purposes of serious review. [97] Mr Johns had a major, in some cases unfettered role in hiring (but perhaps not firing) staff. [98] Decisions as to what duties Mr Johns actually performed on a day-to-day basis were determined by him, on the basis of doing what was necessary to get the job done. I would accept however, that Mr Stacey would have been broadly aware of what Mr Johns was doing, even if he did not specifically direct him to perform any specific task or work any particular hours. [99] There is a further dimension to the role of Mr Johns. [100] Rightly or wrongly, Mr Johns believed that ultimately he would own the asphalt business. [101] From the evidence it was this belief that motivated Mr Johns to manage the division as if it was his own. He used his own contacts to generate business. He played a major role in the purchase of plant and equipment. He used his expertise to formulate a pricing regime which contributed to the success of the business. These are characteristics of a management role, rather than project supervision duties typically associated with a foreperson. [102] If Mr Johns worked excessive hours, it was, on his own admission, because of the carrot of building up a business that he would ultimately own. It was only when this carrot disappeared that overtime became an issue. [103] Whether there was ever an arrangement for the business to pass to Mr Johns, is something only the parties would know. It is however abundantly clear that Mr Johns believed that such an arrangement was in place, and as a consequence, of his own initiative, he exhibited entrepreneurial traits which would not typically be expected at a foreperson level. [104] What then was the purpose of Mr Johns' engagement by Crossroads? [105] I am unable to conclude that Mr Johns was engaged for the purpose of being foreperson of an asphalt crew. Such a crew did not exist. Crossroads was not in the asphalt business and, it would seem, Mr Stacey had no plans to get into the business. [106] An important consideration is that Mr Johns approached Mr Stacey, not vice versa. It was Mr Johns who planted the seeds of an idea, which Mr Stacey ultimately decided to back. [107] In my view the purpose of the engagement of Mr Johns was to successfully establish an asphalt division. This Mr Johns managed to do, despite Mr Stacey's initial scepticism. In doing so Mr Johns exhibited all or most of the traits expected of a manager. It is true that a substantial proportion of his time was spent on award related activities, but these activities were a consequence of the real purpose of his engagement, not the purpose of the engagement itself. [108] I am not satisfied that the work performed by Mr Johns is subject to the award. Accordingly, the application is dismissed. I so order.
Tim Abey Appearances: Date and place of hearing: 1 Transcript PN 2017/2020
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