Turner v Australia Post [2016] FWC 801 (2 March 2016) [2016] FWC 801 FAIR WORK COMMISSION DECISION Fair Work Act 2009 s.394 - Application for unfair dismissal remedy Mr Norman Turner v Australian Postal Corporation (U2015/13907) COMMISSIONER SAUNDERS NEWCASTLE, 2 MARCH 2016 Application for relief from unfair dismissal – jurisdictional objection – whether applicant employed by the respondent [1] Mr Norman Turner performed work for the benefit of Australian Postal Corporation (Australia Post) in the period from 1 December 2008 to 12 October 2015. Mr Turner alleges that he was employed by Australia Post during this time and his dismissal on 12 October 2015 was harsh, unjust and unreasonable. [2] Australia Post contends that Mr Turner was not, at any time, employed by Australia Post and, as a consequence, he was not dismissed within the meaning of section 386 of the Fair Work Act 2009 (Cth) (the Act). [3] This decision deals only with Australia Post’s jurisdictional objection to Mr Turner’s application. [4] A hearing was held in relation to Australia Post’s jurisdictional objection on 5 February 2016. At that hearing evidence was given by Mr Turner and Mr Mark Annan, Manager of NSW/ACT Mail Contract Management, for Australia Post. Relevant facts [5] There is no real dispute between the parties in relation to the facts relevant to Australia Post’s jurisdictional objection. Those facts may be summarised as follows. [6] Coomba Park Couriers Pty Ltd (CPC) was incorporated in October 2008. It has been registered for GST since about 8 October 2008. CPC has also had an Australian Business Number at all relevant times. [7] Mr Turner has at all times been the sole director, company secretary and shareholder of CPC. [8] Prior to 1 December 2008, Australia Post contracted with Tedo Holdings Pty Ltd (Tedo Holdings) in relation to the provision of roadside mail delivery services (Mail Service) for the Forster-Tarbuck Bay-Coomba Park region (Delivery Area) in New South Wales (Tedo Holdings Contract). [9] By letter dated 16 October 2008, Australia Post informed CPC that the first stage of the assignment of the Tedo Holdings Contract to CPC had been approved. The letter also informed Mr Turner that he was required to attend a “personal interview” in relation to the proposed assignment. Mr Turner attended such an interview with Australia Post and was told that he had to have a company in order for the assignment of the Tedo Holdings Contract to take place. [10] Mr Turner signed, in his capacity as a director of CPC, a letter of acknowledgement on 28 October 2008 in which he, amongst other things, acknowledged that he had: (a) received, read and been given a reasonable opportunity to understand the relevant contractor agreement prior to entering into it; and (b) been advised by Australia Post that he should seek independent legal and financial advice. [11] Prior to the assignment of the Tedo Holdings Contract to CPC, Mr Turner obtained independent financial advice but did not obtain any legal advice. [12] With effect from 1 December 2008, Tedo Holdings assigned its contractual rights and obligations under the Tedo Holdings Contract to CPC. No payment was made by CPC to Tedo Holdings or Australia Post in relation to the assignment of the Tedo Holdings Contract to CPC. [13] In the period from 1 December 2008 until 30 June 2010, CPC provided the Mail Service in the Delivery Area to Australia Post pursuant to terms and conditions of the Tedo Holdings Contract, which had been assigned to CPC. [14] In early 2010, with the impending expiry of the Tedo Holdings Contract, CPC tendered for a further contract to provide the Mail Service in the Delivery Area. In support of its tender, CPC provided Australia Post with a “Tenderer and Contract Fee Summary” in which the tenderer was stated to be a company, namely CPC, Mr Turner was included as the “contact person” for CPC, and Mr Turner signed the document in his capacity as a director of CPC. The document asked Mr Turner to acknowledge that he had been given the opportunity to obtain independent legal and financial advice. Again, CPC and Mr Turner elected not to obtain any legal advice. [15] CPC also provided Australia Post with an “Operational and Contingency Plan” in connection with its tender for the Mail Service in early 2010. The Operational and Contingency Plan states that “the operators are Coomba Park Couriers Pty Ltd. Norman Turner is the director and driver, with partner Cheryl Burke and Thomas Sneddon (the previous contractor) as backup drivers.” Mr Turner signed the Operational and Contingency Plan in his capacity as a director of CPC. [16] CPC was successful in its tender. As a result, on 21 June 2010 CPC and Australia Post entered into a written contractor agreement in respect of the provision of the Mail Service in the Delivery Area (CPC Mail Contractor Agreement). The parties to the CPC Mail Contractor Agreement are recorded as Australia Post and CPC. Mr Turner is identified in the CPC Mail Contractor Agreement as the “Contractor Representative”. Mr Turner signed the CPC Mail Contractor Agreement in his capacity as director and company secretary of CPC. Relevant terms of the CPC Mail Contractor Agreement include the following: (a) the agreement commences on 1 July 2010 and is for an initial term of five years; (b) CPC must comply with Australia Post’s Our Ethics booklet (clauses 1.1 & 2.6(b)(iv)). The Our Ethics booklet applies to “employees and everyone who represents Australia Post and all its businesses and brands, including StarTrack”; (c) CPC must “procure each of its servants, agents, consultants, Subcontractors and suppliers to sign execute and deliver all such documents, instruments and writings and procure to be done all such acts, matters and things including the provision of relevant information in a timely manner as may be necessary or desirable to give full effect to this Agreement” (clause 2.6(c)); (d) CPC is “an independent contractor and must not for any purpose in connection with the provision of Services or otherwise represent or hold itself out to be, acting as, or deemed to be an employee or agent of Australia Post. Nothing in this Agreement either express or implied will give rise to the relationship of employer and employee, principal and agent, or partnership between Australia Post and” CPC (clause 4.1); (e) CPC acknowledges and accepts that (clause 4.2): “The Contractor and its Personnel are not employees or agents of Australia Post and have no authority to act as agent of or in any way bind or commit Australia Post to any obligation of any kind; its Personnel are employees, Subcontractors or agents of the Contractor for taxation and other purposes; Australia Post is not responsible for payments of Employer Obligations or Employee Benefits and the Contractor indemnifies and must keep indemnified Australia Post against any payments by Australia Post of Employer Obligations or Employee Benefits; and The Contractor is responsible for payments of Employer Obligations and Employee Benefits.” (f) CPC “must not, without the prior consent in writing of Australia Post, sell, assign, mortgage, charge or encumber, or purport to do so, this Agreement or any of the money payable or to become payable under this Agreement” (clause 12.1); (g) CPC “must not subcontract any of its obligations under this Agreement without the prior written consent of Australia Post. Where such consent is provided and the Contractor uses Subcontractors, the Contractor agrees that he will at all times remain responsible for all actions of the subcontractor and the complete and timely performance of all obligations under this Agreement” (clause 13.1); (h) CPC “must at all times maintain one of its Personnel nominated as the Contractor’s Representative for the purpose of liaison between the Contractor and Australia Post” (clause 17.1); (i) CPC “may, subject to compliance with clause 21 [security checks], employ Personnel to perform the Services…” (clause 17.3); (j) CPC “must provide all Tools of Trade and maintain them in sound working order and good condition, at its own cost, and use them only in a proper and safe manner strictly in accordance with manufacturers specifications and all Relevant Laws” (clause 20.2). “Tools of Trade” are defined to mean “all materials, parts, labour, Vehicles or other means of transport, tools, instruments and other equipment necessary and suitable for the performance of the Services …” (clause 1.1); (k) CPC is entitled to undertake for the benefit of third parties work similar to the services it performed for Australia Post provided such work did not interfere with its performance requirements under the CPC Mail Contractor Agreement (clause 34.1); (l) CPC “must ensure that its Personnel carry and display such identification from time to time required and provided by Australia Post at all times when performing the Services and maintain such identification secure and in good order and condition and immediately report any loss or destruction to Australia Post (clause 36.1); and (m) CPC “agrees that Australia Post may from time to time require: the Contractor’s Personnel to wear work attire; and/or Vehicles to display signage which has been approved by Australia Post …” (clause 36.2) [17] CPC was required by Australia Post to provide a four wheel drive vehicle under five years old and under 400,000km for the purpose of providing the Mail Service in the Delivery Area. CPC purchased a Toyota RAV 4x4 and later a number of Toyota Prados for the purpose of providing the Mail Service to Australia Post. Neither CPC nor Mr Turner used those vehicles for any other purpose. Further, the vehicles were registered as “commercial” and were insured to carry mail and parcels for Australia Post and not for any other purpose. [18] The term of the CPC Mail Contractor Agreement was extended for an additional two years by a written agreement signed by CPC on October 2014 and by Australia Post on 16 October 2014. The only other variation to the CPC Mail Contractor Agreement was pursuant to a variation agreement dated 6 June 2014, in which the parties agreed that CPC could opt to accept bulk insurance policies for contractors, which Australia Post had negotiated with Marsh Insurance. The cost of this insurance was deducted from the monthly contract fee paid by Australia Post to CPC from 17 September 2014. [19] Australia Post paid CPC a fixed contract fee each year for the provision of the Mail Service in the Delivery Area, regardless of how many hours it took CPC to provide the service. The annual contract fee was paid by Australia Post by monthly instalments into a bank account in the name of CPC. [20] Mr Turner gave evidence as to his belief that he was the “sole employee of CPC”, and he received payments from CPC in respect of the work he did for CPC under the CPC Mail Contractor Agreement. I note there is nothing to prevent a person being a director, shareholder and employee of the same company. 1 [21] The CPC Mail Contractor Agreement requires that any personnel working on the contract have a security check which clears them to perform work as personnel of a mail contractor (clauses 17.3 and 21). In addition to Mr Turner, three individuals were cleared by way of a security check to perform Australia Post work under the CPC Mail Contractor Agreement: (a) Cheryl Burke, Mr Turner’s partner, assisted Mr Turner from time to time by emptying mailboxes, but did not do any work delivering mail. Ms Burke was not paid for that work; (b) Richard Green did some work for CPC from time to time in driving CPC’s vehicle and providing the Mail Service to Australia Post in the Delivery Area. For example, Mr Turner called in Mr Green to undertake work for CPC when Mr Turner was ill. Mr Green was not paid any money for that work. In exchange for the assistance provided by Mr Green, Mr Turner assisted Mr Green from time to time in his computer business; and (c) Diane Greene was cleared to undertake work on the CPC Mail Contractor Agreement for CPC but did not do so. [22] Australia Post provided Mr Turner with Australia Post jackets, Australia Post long trousers and shorts, two Australia Post caps and insignias, truck stickers, a scanner, and a registered receipt book. Mr Turner wore the Australia Post clothing and used the other materials provided to him in the performance of his work pursuant to the CPC Mail Contractor Agreement. Australia Post also provided CPC with a module sorting frame, for a rental fee of $35 per month. [23] Mr Turner usually commenced work pursuant to the CPC Mail Contractor Agreement at about 5:45am each day. Australia Post determined the start times for CPC each day. CPC was required to follow a set run to deliver mail in the Delivery Area. The time at which Mr Turner finished work each day varied from between about 1pm until about 5:30pm, depending on the volume of mail and the services CPC was required to provide. [24] Mr Turner did not undertake any work for any third parties during the period of time that CPC contracted with Australia Post to provide the Mail Service in the Delivery Area. [25] Australia Post did not, at any time, pay workers’ compensation insurance, tax, superannuation, wages or other employment benefits to or in respect of Mr Turner or any personnel of CPC. CPC paid its own workers’ compensation insurance. [26] At no time did Australia Post make any payments direct to Mr Turner or any personnel engaged by CPC to undertake work on the CPC Mail Contractor Agreement. [27] Australia Post provided Mr Turner with cards containing the contact details for Australia Post’s Employee Assistance Program. Mr Annan gave evidence that he believed Australia Post managers had a discretion to offer contractors access to Australia Post’s Employee Assistance Program in appropriate circumstances. [28] By notice dated 12 October 2015, Australia Post terminated the CPC Mail Contractor Agreement with immediate effect. I make no comment or findings as to the fairness or otherwise of the termination of the CPC Mail Contractor Agreement. Legal principles [29] It is important to bear in mind that there can be no employment without a contract. 2 In order to determine whether a contract has come into being, the common law requires that there be agreement, consideration, and an intention to create legal relations. Whether or not there is agreement is determined by the rules of offer and acceptance. However, the rigidity of offer and acceptance is sometimes ill suited to what people actually do. As McHugh JA (with whom Hope and Mahoney JJA agreed) said in an often cited passage from Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd : 3 “It is often difficult to fit a commercial arrangement into the common lawyers’ analysis of a contractual arrangement. Commercial discussions are often too unrefined to fit easily into the slots of “offer”, “acceptance”, “consideration” and “intention to create a legal relationship” which are the benchmarks of the contract of classical theory. In classical theory, the typical contract is a bilateral one and consists of an exchange of promises by means of an offer and its acceptance together with an intention to create a binding legal relationship… Moreover, in an ongoing relationship, it is not always easy to point to the precise moment when the legal criteria of a contract have been fulfilled. Agreements concerning terms and conditions which might be too uncertain or too illusory to enforce at a particular time in the relationship may by reason of the parties’ subsequent conduct become sufficiently specific to give rise to legal rights and duties. In any dynamic commercial relationship new terms will be added or will supersede older terms. It is necessary therefore to look at the whole relationship and not only at what was said and done when the relationship was first formed.” [30] The existence of an intention to create contractual relations, offer, acceptance and consideration may be evinced from conduct, with post–contractual conduct being admissible on the question of whether a contract was formed. 4 [31] An employment relationship involves a wage/work bargain in which the time, skill and effort of a natural person is provided to and paid for by another. 5 However, not every circumstance in which a natural person provides his or her labour to another in exchange for payment involves the creation of an employment relationship. Labour can legitimately be provided by one person to another in a range of other circumstances. 6 For example, a person may be self-employed in his or her own business and through that business provide their labour to another person, or a triangular contracting arrangement may be used to provide labour or services to end-users. 7 The use of such arrangements may be real or artificial. Where such arrangements are real, no employment relationship is created between the natural person and the end-user. Where such arrangements are artificial, the “external form, appearance or presentation of the relations between the parties cloak or conceal either an underlying employment relationship or the identity of the true employer”. 8 This is commonly referred to as disguised employment. [32] Determining whether an arrangement is real or artificial requires a “focus on the real substance, practical reality or true nature of the relationship in question”. 9 Ultimately, the search for the reality or truth of what has been agreed, is a search for the common intention of the parties. 10 The common intention must be determined objectively by reference to what a reasonable person would have understood the parties to mean and requires consideration not only of what is recorded on the face of a contract, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction. 11 It is necessary to ensure that the conclusion reached “coheres with applicable principles of contract law”. 12 By way of example, that means parties to a written agreement will be held to the obligations which they have assumed by that agreement unless there is a proper basis to depart from the terms of the written agreement. 13 [33] In some circumstances, the disparity between what is presented on the face of the contractual documents and the reality of what has truly been agreed is explained by the existence of a sham or a pretence. 14 A sham at common law is an agreement or a term of the agreement that is not intended by the parties to have substantive, as opposed to apparent, legal effect and which is the product of the common intention of the parties to deliberately deceive third parties. 15 A sham is difficult to establish in the context of employment relationships because the alleged employee is “usually either ignorant of the deceit or a victim of it”, in which case there will be no common intention of the parties to deceive others. 16 [34] In other cases, the disparity between what is recorded on the face of the contractual documents and what is demonstrated to have occurred by reference to the subsequent conduct of the parties may be explained by the existence of an implied contract of employment between the worker and the end-user. 17 In the context of triangular contracting arrangements, the parties may demonstrate, by their conduct, that an initial contract made between the worker and an intermediary company was ineffective or inoperative and the existence of a contract of employment between the worker and the end-user is to be implied from their conduct. 18 [35] In the event that an implied contract is found and there is a question as to the proper characterisation of the contractual relationship, a “multi–factorial assessment is required in evaluating whether a person providing personal services is an employee or alternatively an independent contractor”. 19 Application of the legal principles [36] Mr Turner believes that he was an employee of Australia Post because he says he was engaged to undertake a particular job, was directed to use a certain vehicle and accessories, was required to wear an Australia Post uniform, was required to have a company to contract with Australia Post, was required to have “all items available for inspection at all times, all for the exclusive use of Australia Post, and at no time did I perform any such duties outside these boundaries”. 20 In addition, Mr Turner points to the fact that he was provided with Australia Post’s Our Ethics booklet and was given the contact details for the Australia Post Employee Assistance Program. [37] There is no evidence of an express written or oral contract of employment between Mr Turner and Australia Post. For Mr Turner to succeed in establishing the existence of an implied contract of employment between himself and Australia Post, it is first necessary for him to establish that the written contractual arrangements on which Australia Post relies 21 were ineffective and do not explain the basis on which Mr Turner provided his labour to the benefit of Australia Post. 22 [38] I am satisfied that the contractual arrangements made between Australia Post and CPC were not a sham or a pretence. The evidence does not support a conclusion that Australia Post intended the CPC Mail Contractor Agreement, or any term of it, not to have substantive legal effect, or that Australia Post intended to deliberately deceive any third parties in relation to its contract with CPC and the engagement by CPC of Mr Turner to undertake work for the benefit of Australia Post under the terms of the CPC Mail Contractor Agreement. Similarly, the evidence does not support a finding that CPC or Mr Turner had such an intention. The evidence summarised in paragraphs [6] to [28] above demonstrates that each of Australia Post, CPC and Mr Turner intended that, under the terms of the CPC Mail Contractor Agreement, CPC would provide the Mail Services in the Delivery Area, for a fixed contract fee paid by Australia Post to CPC, and that in order to provide those services CPC would use its own personnel, including Mr Turner. Not only was that the intention of the parties, it is what occurred. [39] Unlike cases such as Quest and Damevski v Giudice, 23 in which there was found to be an implied contract of employment, the contractual arrangements between Australia Post, CPC and Mr Turner were consistent. At no time was there any “restructure” to interpose an intermediary entity between Mr Turner and Australia Post. At all material times Australia Post contracted with a corporate entity (initially Tedo Holdings and later CPC) for the provision of the Mail Services in the Delivery Area. [40] Further, I am satisfied that the triangular arrangements recorded on the face of the contracts between Australia Post and CPC 24 were genuine and when implemented accurately represented the actual relationship between the parties. There is no evidence of any words or conduct which would entitle me to conclude that the contractual arrangements between Australia Post and CPC 25 no longer dictated or adequately reflected how the work was actually being performed, and that the reality of the relationship was only consistent with the implication of an employment contract between Mr Turner and Australia Post. 26 In particular: (a) Australia Post engaged CPC to provide the Mail Services in the Delivery Area. CPC purchased, at its capital and running cost, the equipment necessary to provide such services, including a motor vehicle acquired for the sole purpose of providing the services. CPC usually engaged Mr Turner to drive the vehicle and undertake the work the subject of the CPC Mail Contractor Agreement, but CPC also arranged for other (unpaid) personnel 27 to undertake such work, or assist in its performance, when Mr Turner was unable to work or needed assistance. Australia Post paid CPC the fixed contract sum, regardless of the hours taken to provide the Mail Services in the Delivery Area, and did not make any payment to Mr Turner. CPC made payments to Mr Turner for the work he undertook; (b) Australia Post did not make an offer of employment to Mr Turner, nor did he accept, or purport to accept, such an offer. There was no consideration for any agreement between Mr Turner and Australia Post. Further, the evidence summarised in paragraphs [6] to [28] above demonstrates that Mr Turner and Australia Post did not, by their conduct, evince an objective intention to create legal relations. 28 None of the elements of a contract can be inferred from the pre or post-contractual conduct of Mr Turner and Australia Post; (c) the fact that Mr Turner was required to, and did, (i) wear an Australia Post uniform, (ii) include Australia Post signage on CPC’s vehicle, (iii) attend Australia Post’s distribution centre each morning at the time determined by Australia Post, (iv) deliver mail in the Delivery Area in accordance with the instructions given by Australia Post, and (v) work the hours necessary to deliver mail in the Delivery Area, is explained on the basis that such duties and obligations were required of CPC by the terms of the CPC Mail Contractor Agreement. CPC could have engaged any employee(s) or contractor(s) to undertake that work, provided such employee(s) or contractor(s) had the necessary security clearance and the other relevant terms of the CPC Mail Contractor Agreement were complied with. In addition, Mr Turner could have undertaken other work outside the scope of the CPC Mail Contractor Agreement; and (d) CPC was contractually obliged by the CPC Mail Contractor Agreement to ensure compliance with Australia Post’s Our Ethics booklet. Accordingly, the fact that Australia Post provided a copy of its Our Ethics booklet to Mr Turner, in his capacity as the contractor representative of CPC, and told him to comply with it does not establish, or (without more) support, the existence of an employment contract between Australia Post and Mr Turner. Similarly, such a conclusion is not supported by the mere fact that Mr Turner was provided with the contact details for Australia Post’s Employee Assistance Program, because managers of Australia Post, like many other employers, have a discretion to extend the operation of its Employee Assistance Program to other persons such as contractors. [41] I am satisfied, for the reasons set out above, that there was no contract between Australia Post and Mr Turner. Accordingly, there is no basis for me to undertake a “multi–factorial assessment” to determine whether the character of any contract between Mr Turner and Australia Post (if it existed) was a contract of employment or alternatively a contract of some other character – usually, a contract between principal and independent contractor. 29 Conclusion [42] For the reasons set out above, I am satisfied that Mr Turner was not employed by Australia Post at the time he ceased providing services to the benefit of Australia Post (12 October 2015), or at any other time in the period from 1 December 2008 to 12 October 2015. It follows that Mr Turner was not “dismissed” by Australia Post within the meaning of section 386 of the Act. Accordingly, the Commission does not have jurisdiction to determine the merits of Mr Turner’s claim that his dismissal was harsh, unjust or unreasonable. Mr Turner’s unfair dismissal application is therefore dismissed. COMMISSIONER Appearances : Mr N Turner on his own behalf; Mr B Avallone of counsel, together with Mr J Remington , on behalf of Australia Post. Hearing details: 2016. Newcastle: February, 5. 1 Lee v Lee’s Air Farming Ltd [1961] AC 12 2 Lister v Romford Ice and Cold Storage Co Ltd [1956] UKHL 6 ; [1957] AC 555 at 587; R v Brown; Ex parte Amalgamated Metal Workers and Shipwrights’ Union [1980] HCA 42 ; (1980) 144 CLR 462 at 475 3 (1988) 5 BPR 11,110 at 11,117-8 4 Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd [2015] FCAFC 37 ; (2015) 228 FCR 346 ( Quest ) at [158] 5 Quest at [134] 6 Quest at [134] 7 Quest at [134]-[136] 8 Quest at [137] 9 Quest at [142] 10 Quest at [150] 11 Quest at [150] 12 Quest at [143] 13 Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55 ; (2004) 218 CLR 471 at 483-4 14 Quest at [144] 15 Quest at [144] 16 Quest at [145] 17 Quest at [149] 18 Quest at [149] 19 Quest at [176] 20 Applicant’s statement/submission (Ex A4) at page 3 21 The CPC Mail Contractor Agreement 22 Quest at [187]-[188] 23 [2003] FCAFC 252 ; (2003) 133 FCR 438 24 The CPC Mail Contractor Agreement 25 The CPC Mail Contractor Agreement 26 Quest at [169] 27 Ms Burke and Mr Green 28 Ermogenous v v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 at [25] 29 Lister v Romford Ice and Cold Storage Co Ltd [1956] UKHL 6 ; [1957] AC 555 at 587; R v Brown; Ex parte Amalgamated Metal Workers and Shipwrights’ Union [1980] HCA 42 ; (1980) 144 CLR 462 at 475; Quest at [176]. 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