Respondents Seek Statutory Entitlements as Employees
ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2 (9 February 2022)
The respondents previously employed by company as truck drivers. The respondents agreed to "become contractors" and purchase own trucks. Each respondent set up partnership with spouse. The partnerships executed contract with company for provision of delivery service. The respondents then sought declarations in respect of statutory entitlements alleged to be owed to them as employees of the company.
Facts:
The respondents were engaged as truck drivers by the second appellant's predecessors in business and subsequently by the second appellant itself.
The business has undergone several changes of ownership during the period of the respondents' engagements.
From the respondents' commencement in 1977 until 1986, the business was owned by Associated Lighting Industries Pty Ltd. In 2015, there was a corporate restructure by which Thorn Lighting Pty Ltd was renamed ZG Operations Australia Pty Ltd ("ZG Operations") and responsibility for the sales division of the business, which included the arrangements with the respondents' partnerships, was transferred to the second appellant, ZG Lighting Pty Ltd ("ZG Lighting").
ZG Lighting engaged the partnerships until the date of their termination on 20 January 2017.
The respondents were initially engaged as employees of the company and drove trucks provided by the company. However, in late 1985 or early 1986, the company insisted that it would no longer employ the respondents, and would continue to use their services only if they purchased their trucks and entered into contracts to carry goods for the company. The respondents agreed to the new arrangement and each of Mr Jamsek and Mr Whitby set up a partnership with his wife.
Those partnerships purchased trucks from the company and executed a written agreement with the company for the provision of delivery services. Thereafter, the respondents made deliveries as requested by the company. Part of the revenue earned was used to meet the partnerships' costs of operating the trucks. The agreement between the partnerships and the company was terminated in 2017.
The respondents commenced proceedings in the Federal Court of Australia seeking declarations in respect of statutory entitlements alleged to be owed to them as employees of the company pursuant to the Fair Work Act 2009 (Cth) ("the FW Act"), the Superannuation Guarantee (Administration) Act 1992 (Cth) ("the SGA Act") and the Long Service Leave Act 1955 (NSW) ("the LSL Act"). The primary judge (Thawley J) concluded that the respondents were not employees of the company, and instead were independent contractors. The Full Court of the Federal Court of Australia (Perram, Wigney and Anderson JJ) allowed the respondents' appeal, holding that the respondents were employees of the company.
Issue:
Whether or not the respondents employees of company.
Applicable law:
Fair Work Act 2009 (Cth) ("the FW Act") - variously deploys the terms "employee" and "national system employee", depending on the context.
Superannuation Guarantee (Administration) Act 1992 (Cth) ("the SGA Act") - pursuant to which the parties worked under a contract that was wholly or principally for their labour should be remitted to be determined according to law.
Long Service Leave Act 1955 (NSW) ("the LSL Act") - defines "worker" so as to enliven an entitlement to long service leave and payment for untaken long service leave.
Partnership Act 1892 (NSW) - provides that a partnership, being the relation which exists between persons carrying on their own business with a view of profit cannot, with respect to the activities of the partnership, be contracted to work in another's business or enterprise.
Jamsek v ZG Operations Australia Pty Ltd [2020] FCAFC 119 - where in the case of the Jamsek partnership, the finance for the acquisition in 1990 was paid back over a period of 10 years.
Whitby v ZG Operations Australia Pty Ltd [2018] FCA 1934 - where the primary judge (Thawley J) concluded that the respondents were not employees of the company, and instead were independent contractors.
WorkPac Pty Ltd v Rossato [2021] HCA 23 - where the expansive approach taken to determining the "substance and reality" of the relationship between the parties involves an unjustified departure from orthodox contractual analysis.
On Call Interpreters and Translators Agency Pty Ltd v Federal Commissioner of Taxation [No 3] [2011] FCA 366 - where it is said that clause 2.1(g) did not exclude the possibility of engaging alternative drivers with the company's approval, the company's right to grant or withhold approval recognising its interest in the safe transport of its goods because of the observation by the Full Court that the respondents did not engage in "entrepreneurial or profit motivated activity", which was "a hallmark of an independent business".
Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 - provides that on the orthodox approach to the interpretation of contracts, regard may be had to the circumstances surrounding the making of a contract.
Humberstone v Northern Timber Mills [1949] HCA 49 - provides that the provision of the services provided by the partnerships involved has consistently been held, both in Australia and in England, to have been characteristic of independent contractors, not employees.
Neale v Atlas Products (Vic) Pty Ltd [1955] HCA 18 - supports what has become the "conventional view" that "owners of expensive equipment, such as [a truck], are independent contractors".
CFMMEU [2022] HCA 1 - consistent to the principles herein it was both relevant and admissible to adduce evidence to establish, in the case of the Whitby Partnership and Mr Whitby, that the 2008 Contract was discharged, that a new contract was formed and what the terms of that contract were.
Analysis:
The reasons of the Full Court suffered from two errors of approach. The first was the significant attention devoted by that Court (and indeed the primary judge) to the manner in which the parties actually conducted themselves over the decades of their relationship.
That was thought to be necessary because those courts took the view that a proper characterisation of the totality of the relationship required a consideration of how the parties' contract played out in practice. The second was the Full Court's reasoning that the disparity in bargaining power between the parties affected the contract pursuant to which the partnerships were engaged, so that the "reality" of the relationship between the company and each respondent was one of employment.
Conclusion:
The appeal should be allowed, and the orders made by the Full Court on 16 July 2020 be set aside. The issues raised by the notice of cross-appeal be remitted to the Full Court of the Federal Court of Australia for determination, and the Full Court to otherwise make orders in accordance with the reasons of this Court.#Employment
