WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION. Industrial Relations Act 1979. Glenn Sproule and Boyanup Capel Dardanup Football Club Inc (Boyanup Tavern). No. 1646 of 1998. COMMISSIONER J F GREGOR. 22 December 1998. Reasons for Decision. COMMISSIONER J F GREGOR: On 31 August 1998, Glenn Sproule (the applicant) applied to the Commission for an or- der pursuant to s.29 of the Industrial Relations Act, 1979 (the Act), on the grounds that he alleged to be in a relationship of an employee and employer with Boyanup Capel Dardanup Football Club Inc (Boyanup Tavern) (the respondent), and that relationship was terminated in a manner which is harsh or unfair. The applicant also sought contractual benefits. The Commission conducted a conference on this matter in Bunbury on 8 October 1998. At that conference the question of the standing of the applicant to make an application under s.29 of the Industrial Relations Act, 1979, was raised. It was suggested by the respondent that the applicant never enjoyed a relationship of employer/employee with the respondent and therefore he was unable to enliven the jurisdiction set out in s.29 of the Act. This lead to the Commission listing the matter to be heard on 12 November 1998, to determine the question of jurisdic- tion. Fundamentally, the respondent conceded that the applicant was engaged as a Tavern Manager but he was never in any real sense described as an employee or a contractor for that matter. There was never any firm discussion or clarity reached as to his status and that can only be gleaned from examination of the relationship as it proceeded during the 2 years that it existed. What the respondent says is that the applicant for all intents and purposes was an independent contractor. He had to get approval from the respondent for major capital expenditures but in relation to normal operational matters, the applicant had complete discretion on how to deal with those. He was never required to report to anyone on a regular basis about the op- erations of the tavern. The reports were restricted to members of the committee or the tavern Director whenever there was something that arose that needed to be discussed or approved at that higher level. The applicant and his wife were engaged by the respondent to manage the tavern as an effective team. They did so, but how was a matter for them. In relation to starting hours there WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 297 79 W.A.I.G. was never any direction given to them as to when they should start or finish. If they worked longer or shorter hours, they would still receive the same payment per week. They simply received $1,260.00 per week. That payment was never adjusted according to the hours they worked. They were obliged to pay out of that $1,260.00, the wages of employees that they en- gaged to work in the bar or in the kitchen, which was leased to them and over which the respondent had no control. The cheques for the weekly payment were all made out to G & C Sproule, which is the applicant and his wife. In essence, the respondent engaged a partnership, be it legally recognisable in that sense or not and not individual persons. The applicant and his wife both worked and resided at the tavern premises and the applicant never questioned the way the payments were made. There was no deduction of tax from that payment nor was there any workers’ compensation insurance paid, because the respondent’s insurer reached a conclusion that the appli- cant was a contractor not an employee. It was the respondent’s obligation to pay the group tax of employees that he engaged. These people were engaged by the applicant’s own name and paid out of the $1,260.00 pay- ment a week. The applicant and his wife leased the kitchen area from the respondent. They owned all of the food and a proportion of the equipment. They also employed a chef and operated the kitchen as a business in its own right. There was no controller in the sense, set out in the authorities because the applicant and his wife conducted the business however they sought fit, subject to the overriding requirement that they man- aged the tavern properly. It was argued that the Commission cannot conclude that either of the two persons were employ- ees because control over the day to day activities simply did not exist. They were only required to run the tavern properly and how they did that was entirely there own prerogative. In addition, Mr Scurria (Counsel for the respondent), says in his written submissions that the parties did not at any stage describe the nature of their relationship. There was no provi- sion for overtime. There was no superannuation paid. The applicant carried on another business during the course of his engagement at the tavern. The applicant and his own bank were unsure as to his status. The applicant and his wife did not account for their income as employees, they appeared to be unsure of their status. Mr Scurria says that the applicant is obliged to show that he is an employee. When deciding whether a person is in the sta- tus of an employee, the Commission must look at all the facts and circumstances and apply those facts to the various tests that have been established over the years in order to determine the true relationship. The most prominent test is the right to control. The importance lies not so much in its actual exist- ence as to the right to exercise it. There is a clear difference between control of administrative nature and control as to how the work is to be performed. In this context, the most signifi- cant factors regarding control are as follows— 1. That the applicant and his wife had been engaged to act as Tavern Managers in partnership with each other. 2. The partnership reported to the bookkeeper, only to receive pay, which was made out to them jointly and to report on financial matters. 3. The Tavern Director said, “the club relied on the skills and expertise of the applicant and his wife to run the tavern”. 4. There was no regular control or supervision exer- cised by the Board or the Tavern Director. 5. When the President sought to exercise control, the applicant resisted these efforts. 6. The applicant and his wife had an independent dis- cretion regarding employment of staff and ordering of stock. 7. There was no fixed hours. 8. The applicant and his wife ran a business in the kitchen and the conduct of the business was entirely up to their discretion. In response, the applicant through its Counsel, Mr Devlin says, that the applicant and his wife were never jointly en- gaged to run the position of Manager. The applicant was employed not his wife. There is no dispute of salary and wages which were made to G & C Sproule, but it is contested that the applicant and his wife were ever employed as a partnership. The running of the kitchen does not and cannot be cast into the category of a separate business. It was part of the contractual relations made in respect of the lease and the use of the kitchen at the premises of the tavern was part of those arrangements. They are all part of the where the liqueur licence applies. Mr Devlin argues that there are a number of reasons which should cause the Commission to find that there was a relation- ship of employer and employee. There is no dispute that a gross payment was made to Mr Sproule on a regular basis. That payment was made to husband and wife cannot be said to be a partnership. There was no prescribed payment system for taxation in place. There was just simply a gross payment made and the applicant would look after his own taxation. There was a provision for 3 months notice of termination of employ- ment on both sides. Although there was no workers’ compensation taken out, there was accident cover for which for all intents and purposes was designed to cover issues which might arise which were compensatable. There was no discus- sion about that point at the time that the contracts were made. The applicant was not told to go and take out his own policy to cover himself. There is no right to delegate or appoint another approved Manager by the applicant under the Liquor Licens- ing Act. Provision was made for payment of holiday pay. The applicant, even though he ran another business, was tied to the Football Club as approved Manager. There were significant levels of control and the applicant was answerable to a Board and that occurred on regular occasions. The applicant received a bonus for his work in 1996. Finally, the engagement has been a long term one. Mr Devlin, in his written submission, advises the Commis- sion, that in the view of the applicant there are more factors pointing towards him being an employee, than there are which would suggest that he was an independent contractor. He was paid regular periodic payments which is more indicative of a contract or service than a contract of services. He worked hours fixed in accordance with requirements with the Liquor Licens- ing Act. He was tied to the respondent as an employee. This is an indication more consistent with a contract of employment. He was unable to delegate performance of his contractual du- ties which is consistent with the existence of an employment contract. That he was paid holiday pay and bonus is a clear indication of the intention to create an employment relation- ship. It is clear from the definition of employer and employee in s.7 of the Act, that for the Commission to have any power, it must deal with issues that affect employers and employees. It cannot deal with relationships of independent contractor, that is, deal with a contract for services. The Commission has a duty to establish its jurisdiction to deal with an application before it and by s.29 of the Act, an applicant can only enliven the jurisdiction in that section if he or she fits within the defi- nition of employee as it is set out in s.7 of the Act. There have been various tests devised to determine the true natures of employment relationships. An essential element in whichever way it is expressed is that, there is a degree of control by the employer. Not only in the directing of the work but in the manner which work is to be done. This has been called a con- trol test. In modern case law, strict application of this test is not considered appropriate. When many decisions about how to carry out tasks are best left to skilled workers and highly qualified employees themselves. These matters were exam- ined by the High Court in Stephens v. Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 at 24). The ratio of which, is the existence of control is significant it is not the sole criterion on which to determine the true nature of the relationship. A broader view of the control aspect has been taken and one needs to examine the surrounding elements of a contract itself. The Commission is obliged to undertake a fact finding exer- cise not only in the exact way in which the work was carried out and supervised but into other matters including the power to dismiss, the manner in which payments are made, deduc- tion of income tax, freedom to work for another person and other terms expressed or implied on the contract. None of these are exclusive in themselves but they may serve as pointers one way or the other as to the true nature of the relationship. The need for a wide range of inquiries into these types of rela- tionships has lead to the Courts devising other tests such as WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 79 W.A.I.G. 298 the consistency test. This basically requires an inquiry into whether the facts are consistent with a contract of service. Another test is essentially an evaluation of whether the em- ployee is part and parcel of an organisation or whether on the contrary the work is an integral part of the organisation and not merely an ancillary. This test is sometimes known as the integration or organisational test. Although these tests exist, in Australian industrial jurisprudence, places more emphasis on the control test. There are many authorities which address these issues. The decision of the Industrial Appeals Court in Transport Work- ers’ Union of Australia, WA Branch v. Ready Mix Group WA (1981) 61 WAIG 1705, sometimes known as the Owner/driv- ers case is an example. It lists many of these authorities. Since that case the Full Bench in Construction Mining Energy Work- ers Union of Australian v. Williamson (1988) 68 WAIG 1015, contains another survey of the authorities. I have had to opportunity to listen to the evidence in this case from Mr Sproule and Mr Preston Henry Cain. I have been also favoured with evidence from Mr Pelusey on behalf of the respondent and Mr D W Potter. There is no need to recite that evidence. I am able to make findings concerning the relationship between the parties. I find that the relation- ship was not documented in writing. The applicant and his wife were engaged to act as Managers of the Tavern. On the evidence, it appears that they are in a partnership, although that partnership may not have any formal shape under relevant Corporation Law. The partnership between Mr Sproule and his wife was paid a gross sum per week from which taxation was not deducted but from which they were to pay employees of theirs to work in the tavern. There may have been an obli- gation upon them to make appropriate deductions for income tax from the earnings of those employees because those em- ployees were never employees of the respondent in this matter. They were more likely than not employees of the applicant and his wife. For most of the time there was no regular control or supervision exercised by the Board or the Tavern Director. There is a difference between the supervision of a contract for services as opposed to a contract of service. In the former, the principal with whom the contract is made is entitled to ensure that the contract is being carried out in accordance with its terms and to apply any penalties for breach contained in the contract, however, that does not give the principal the right to direct employees of the contractor, that is, exercise control over the party of the contract in the same way as an employer would under a contract of service. In this case, the respondent had no ability to exercise control in a way that an employer might over an employee. Even though the applicant and his wife had independent discretion whom they employed in the kitchen and the stock that they bought for the kitchen. They were under no obligation to provide any specific accounting about those activities to the respondent. The applicant was able to take leave or receive bonuses is not indicative of itself of a contract of service. Such benefits could well arise under a contract for services. In my view, the indicia that the arrangement between the applicant and respondent was one of a contract for service is overwhelming. There is no doubt in my mind that a contract of that a nature existed and there is no room to reach a conclu- sion that there was a contract of service. That being the case, the Commission has no jurisdiction. The application will be dismissed for want of jurisdiction. Appearance Mr M Devlin, of Counsel, appeared on behalf of the applicant. Mr Scurria, of Counsel, appeared on behalf of the respond- ent.