FEDERAL COURT OF AUSTRALIA
Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd (No 2) [2013] FCA 582
IN THE FEDERAL COURT OF AUSTRALIA | |
DATE OF ORDER: | |
WHERE MADE: |
THE COURT ORDERS THAT:
1. Within 14 days the applicant file and serve submissions on final orders.
2. Thereafter within 14 days the represented respondents file and serve submissions on final orders.
3. The final orders be determined on the papers.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011
WESTERN AUSTRALIA DISTRICT REGISTRY | |
FAIR WORK DIVISION | WAD 185 of 2011 |
BETWEEN: | FAIR WORK OMBUDSMAN Applicant
|
AND: | QUEST SOUTH PERTH HOLDINGS PTY LTD (ACN 109 090 531) First Respondent CONTRACTING SOLUTIONS PTY LTD (ACN 099 388 575) Second Respondent ASHVIN LUCHMAYA Third Respondent PAUL KONSTEK Fourth Respondent
|
JUDGE: | MCKERRACHER J |
DATE: | 14 JUNE 2013 |
PLACE: | PERTH |
REASONS FOR JUDGMENT
1.1 The allegations and response
1 This proceeding concerns staffing arrangements at serviced apartments in South Perth Western Australia.
2 The applicant contends that in 2009 the respondents were involved in setting up a scheme of sham arrangements or sham contracting for employees of that location. As the applicant notes, sham contracting occurs where an employer disguises an employment relationship as an independent contracting relationship. The vice of this conduct is that it unfairly deprives workers of the benefits of employment and undermines the effective operation of the system established by the Fair Work Act 2009 (Cth) (the FW Act) and other industrial legislation. Additionally, it arguably distorts competition to the disadvantage of employers who honour their statutory obligations. It constitutes an offence under the FW Act.
3 The second respondent (Contracting Solutions) and the fourth respondent (Mr Konstek) appeared at the trial. They contested the applicant’s contentions. They argue that certain employees who agreed to become engaged under independent contracts rather than under employment contracts did in fact become independent contractors, did so willingly and were better off in doing so. They were not forced to make that conversion but chose to do so because of the benefits available to them. Nor were any misrepresentations made to them as to their ‘conversion’ from employees to independent contractors.
4 The central thrust of the pleadings is twofold – either the employees were dismissed only to be re-employed doing the same tasks as independent contractors which would be a contravention or that it was represented to them that this was the case when at all times in truth they remained employees – also a contravention.
5 The first contention depends on a finding that the workers were unilaterally dismissed. I have found against this argument. The second depends on it being established that their status never changed. In my view this cannot be proven as the documents suggest otherwise and the pattern of conduct does not support this conclusion.
6 In my view, the evidence establishes that the workers concerned were talked into or persuaded, but, with one exception, not threatened with dismissal which was one of the pleaded FW Act contraventions. There is no doubt that absent the representations, the workers would have had no intention or interest in taking this course. Part of the persuasion included representations that they would be generally better off in a financial sense by being paid more than they were presently receiving and also by deriving other benefits. (In truth, most of those benefits were elusive, minimal or non-existent. But, as will be seen, the pleaded case does not complain about representations as to these benefits.)
7 It appears not to have been explained to the employees was that although their jobs would otherwise be unchanged, they would be, if they became independent contractors, deprived of the statutory benefits which employees are entitled to enjoy. The absence of a comprehensive explanation as to these changed circumstances may well have meant that the employees were being misled by their employer by its agents as to the full effect that the proposed change would bring. But, as indicated, this was not the pleaded case.
8 Whether there was a dismissal in order only to re-employ as an independent contractor (another pleaded FW Act contravention) is also, in my view, problematic. In my view, the employees did make a conscious choice to convert to independent contractor status albeit that they were misled as to the total consequences of that change. It was a positive decision taken by the employees. As such there was, with one exception, no dismissal and no threat of dismissal.
9 I do not consider there was any false claim that the employees became independent contractors. It seems that all concerned set about achieving that aim and achieved it, albeit that the employees were not given a full explanation as to the consequences of doing so.
10 The applicant has succeeded, however, against the first and third respondents on an allegation that they threatened one of the employees with dismissal if she did not become an independent contractor.
11 In 2009, the first respondent (QSP) carried on the business providing serviced apartment accommodation at ‘Quest on Arlington’ in South Perth (Quest South Perth). QSP employed a manager, the third respondent (Mr Luchmaya) who did not appear at the trial. It employed receptionists, including Ms Jessica Buttrum-Virco, who gave evidence at the trial and various housekeepers, including witnesses Ms Margaret Best and Ms Carol Roden. The second respondent (Contracting Solutions) describes its business as being one of ‘managing independent contractors’ using what is described as the ‘ODCO Contracting System’.
12 The applicant accepts that the ODCO Contracting System when correctly applied and followed is a system of labour hire under which the hirer arranges for workers to perform work for the client of the hirer without there being any contract of employment between the worker and either the hirer or the client. This process is described in Building Workers' Industrial Union of Australia v ODCO Pty Ltd (1991) 29 FCR 104. Under the ODCO Contracting System, when correctly implemented, workers will be truly independent contractors working under contracts for services as distinct from being employees under contracts of service.
13 In October 2009, QSP entered into an agreement with Contracting Solutions. The fourth respondent (Mr Konstek) together with his partner, Mr Steven Buiks, were engaged by Contracting Solutions to achieve an outcome thought to be consistent with that described by the Full Court (Wilcox, Burchett and Ryan JJ) in ODCO.
14 Contracting Solutions was to procure what it described as the ‘conversion’ of particular QSP employees. They were to become independent contractors under which the employment of those individuals would terminate. Thereafter, they would perform the same service for and under the control and direction still of QSP although they were described as independent contractors under contracts for services. Additionally, Contracting Solutions was to manage the conversion on behalf of QSP. QSP and Contracting Solutions would thereafter ensure that those employees who had undergone conversion would then perform the same work under the control and direction by QSP as they had performed as employees. They would be paid by Contracting Solutions which would invoice QSP for a quite different sum, resulting in, amongst other things, the profit it made for providing various services.
15 Both Contracting Solutions and Mr Konstek contend that the agreement made on 14 October 2009 was simply a labour hire agreement under which Contracting Solutions agreed to provide independent contractors to perform work for QSP.
16 In the course of the proceeding there was a deal of focus on negotiations or discussions leading up to the ‘conversion’. Evidence was called from Ms Buttrum-Virco, Ms Best and Ms Roden that in October or November 2009 each of them together with other receptionists and housekeepers employed by QSP at Quest South Perth attended meetings with representatives of Contracting Solutions including Mr Konstek where the proposed ‘conversion’ was explained to them.
17 The applicant puts its case on the basis that Ms Best and Ms Roden had no real option but to participate in a process of conversion whereby, as they were told, they were to be converted from employees to independent contractors by (1) resigning from their employment with QSP; and (2) entering into new contracts as independent contractors with Contracting Solutions if they wanted to continue working in their jobs at QSP. In substance the allegation is that Ms Best and Ms Roden had no choice if they wanted to keep working with QSP in the same capacity. In relation to Ms Buttrum-Virco she was excused from the process on the basis that she had intended to cease working with QSP in a short time in any event.
18 The applicant contends that the proper construction of the evidence from Ms Best and Ms Roden is that they executed ‘Contractor Applications’, being the initiating aspects to the ‘conversion’, because they each believed they had no option but to do so if they wanted to continue working in their jobs with QSP.
19 It does not appear to be in issue that after the ‘conversion’ Ms Best and Ms Roden performed the same work at Quest South Perth in the same way as they had always done. The only difference was that QSP regarded them as having ceased as employees. The work they were performing was carried out as independent contractors.
20 The respondents, on the other hand, treat the actions of Ms Best and Ms Roden in choosing to execute the ‘Contractor Applications’ as being voluntary acts of resignation on their part. The respondents point to certain benefits that would be derived by converted employees which they say, both objectively and subjectively on the evidence, attracted them to becoming independent contractors.
21 The reasons for the rules against sham contracting are discussed in the Introduction.
22 The proceedings are instituted pursuant to provisions contained in Div 6 of Pt 3-1 the FW Act. Section 357 of the FW Act deals with representations. Under s 357, an employer who proposes to employ an individual must not represent to that individual that the contract of employment under which the individual is to be employed by the employer is a contract for services under which the individual performs or would perform work as an independent contractor. However, this does not apply (by virtue of subs (2)) if the employer proves that when the representation was made, the employer did not know and was not reckless as to whether the contract was a contract of employment rather than a contract for services. Absence of recklessness is one of the alternative defences raised in this proceeding.
23 While s 357 of the FW Act deals with misrepresentations, s 358 concerns the situation of an employer dismissing an employee in order to engage the employee as an independent contractor. It provides that the employer must not dismiss, or threaten to dismiss, an individual who is an employee of the employer and who performs particular work for the employer in order to engage the individual as an independent contractor to perform the same or substantially the same work under a contract for services.
24 Division 6 of the FW Act is completed by s 359 which also concerns misrepresentations by an employer. It provides that an employer who employs, or has at any time employed, an individual to perform particular work must not make a statement that the employer knows is false in order to persuade or influence the individual to enter into a contract for services under which the individual will perform as an independent contractor the same or substantially the same work for the employer.
25 Each of the three sections is a civil remedy provision under Pt 4-1 of the FW Act. The standard of proof in relation to such a provision was discussed recently in Fair Work Ombudsman v Maclean Bay Pty Ltd (2012) 200 FCR 57 by Marshall J (at [7]-[8]) as follows:
Standard of proof
7 In examining each aspect of this proceeding the Court proceeds on the basis that it is dealing with a civil proceeding in which civil penalties are sought for contraventions of provisions of the WR Act and of the NAPSA. In accordance with s 140 of the Evidence Act 1995 (Cth) the applicant is required to make out his case on the balance of probabilities. In deciding whether the Court is satisfied that any aspect of the applicant's case is made out on the balance of probabilities the Court will take into account the nature of each cause of action and the defence to it. It will also take into account the nature of the subject matter of each aspect of the proceeding and the gravity of the matters alleged; see s 140(2) of the Evidence Act.
8 For reasons which follow, I am satisfied that all the allegations made by the applicant against the respondents are made out on the evidence before the Court. Apart from those alleging breaches of the NAPSA, the allegations are particularly serious ones. Nonetheless, the evidence in support of each such contravention is strong and in many aspects uncontradicted. This approach is consistent with that approved of by the Full Court in Qantas Airways Ltd v Gama (2008) 167 FCR 537; see at [110] where French and Jacobson JJ said:
“The so-called Briginshaw test does not create any third standard of proof between the civil and the criminal. The standard of proof remains the same, that is proof on the balance of probabilities. The degree of satisfaction that is required in determining that that standard has been discharged may vary according to the seriousness of the allegations of misconduct that are made. In our opinion, however, there was no indication in his Honour's reasons that the application of the Briginshaw test made any difference, adverse to Mr Gama, in his conclusions. We agree generally with what her Honour Branson J has to say about the Briginshaw test in her separate reasons for judgment. We would add that the observations of the New South Wales Court of Appeal in Amalgamated TV Services Pty Ltd v Marsden [2002] NSWCA 419 at [54]-[61], concerning the application of s 140(2)(c) of the Evidence Act are consistent with her Honour's reasons.”
See also at [139] where Branson J said:
As I have already indicated, I agree with the conclusion of French and Jacobson JJ that the federal magistrate's reasons for judgment do not disclose any error in the application of the applicable standard of proof to Mr Gama's allegations. However, in my view, for the reasons given above, references to, for example, ‘the Briginshaw standard’ or ‘the onerous Briginshaw test’ and, in that context, to racial discrimination being a serious matter not lightly to be inferred, have a tendency to lead a trier of facts into error. The correct approach to the standard of proof in a civil proceeding in a federal court is that for which s 140 of the Evidence Act provides. It is an approach which recognises, adopting the language of the High Court in Neat Holdings 67 ALJR 170; 110 ALR 449, that the strength of the evidence necessary to establish a fact in issue on the balance of probabilities will vary according to the nature of what is sought to be proved - and, I would add, the circumstances in which it is sought to be proved. (emphasis added)
(Although the orders in Mclean Bay were varied slightly on appeal in Wells v Fair Work Ombudsman [2013] FCAFC 47 by the Full Court (North, Cowdroy and McKerracher JJ), these observations at first instance were unaffected.)
26 By reason of s 360 of the FW Act, the applicant’s case will be established if only one of the reasons QSP dismissed the employees was in order to engage them to perform as independent contractors doing the same work that they had performed as employees.
27 The applicant also relies upon s 361 of the FW Act which relevantly provides as follows:
361 Reason for action to be presumed unless proved otherwise
(1) If:
(a) in an application in relation to a contravention of this Part, it is alleged that a person took, or is taking, action for a particular reason or with a particular intent; and
(b) taking that action for that reason or with that intent would constitute a contravention of this Part;
it is presumed, in proceedings arising from the application, that the action was, or is being, taken for that reason or with that intent, unless the person proves otherwise. (emphasis added)
…
28 The applicant contends that applying s 361, QSP has the onus of proving that its reasons for dismissing Ms Best and Ms Roden did not include engaging them to perform as independent contractors the same work that they had performed as employees. QSP, however, has ceased to take any effective part in the proceedings and has filed no evidence. That being so, the applicant says, it is impossible for QSP to discharge its onus. The applicant argues that none of the other respondents can discharge QSP’s onus on its behalf.
29 By its amended statement of claim (ASOC), the applicant contends (ASOC at [7]) that QSP, by Mr Luchmaya, threatened to dismiss Ms Buttrum-Virco in order to engage her as an independent contractor to perform the same work as a receptionist and that this threat was a contravention of s 358 of the FW Act in which Mr Luchmaya was involved (ASOC at [8]) within the meaning of s 550 of the FW Act. As will be seen, I have found this contention to have been established.
30 The applicant also pleads (ASOC at [9]) that QSP dismissed Ms Best and Ms Roden as employees to engage them as independent contractors to perform the same work and this was achieved at meetings in October and November 2009. In consequence it is said that QSP by Mr Konstek and Contracting Solutions repudiated the contracts whereby they employed Ms Best and Ms Roden. In consequence of (ASOC at [10]) it is said that QSP contravened s 358 of the FW Act and Contracting Solutions and Mr Konstek also contravened s 358 by virtue of s 550 of the FW Act.
31 As an alternative to ASOC [7], the applicant pleads (ASOC at [10A]) that on 1 December 2009, QSP dismissed Ms Buttrum-Virco in order to engage her as an independent contractor to perform the same work in breach of s 550 of the FW Act in which Contracting Solutions was involved and is also deemed by s 550 of the FW Act to have contravened through s 358.
32 The applicant also pleads various representations. By ASOC [11], it pleads that on various occasions in November 2009 QSP, Mr Konstek, acting for and on behalf of QSP and Contracting Solutions, represented to inter alia Ms Best and Ms Roden that if they underwent the conversion, they would thereafter be engaged under the contract for services under which they would perform work for QSP as independent contractors. The representations were said to be oral at meetings conducted by Mr Konstek in November 2009 and in writing. Firstly, in a document entitled ‘Quest – System Changes’ signed inter alia by Mr Konstek. Secondly, by the ‘Contractor Application’ each furnished to Ms Best and Ms Best by or at the direction of Mr Konstek and executed by them. Finally, in the case of Ms Roden, by a letter addressed to her under the letterhead of Contracting Solutions dated 30 November 2009.
33 However it is pleaded (ASOC at [11]) that on or about 15 November 2009, QSP, by a representative of Contracting Solutions acting for and on behalf of QSP and Contracting Solutions, represented to Ms Buttrum-Virco that if she underwent the conversion she would thereafter be engaged under a contract for services under which she would perform work for QSP as an independent contractor.
34 Similar representations were pleaded after November 2009 (ASOC at [12]) where it is pleaded that in fact they continued to carry out the same work. These facts are said (ASOC at [14]) to be a contravention of s 357 of the FW Act in which QSP was involved within the meaning of s 550 of the FW Act and in which (ASOC at [14A]) Mr Konstek was involved.
35 On the first day of the trial I ruled that the applicant should have leave to proceed against the non-appearing respondents, namely, QSP and Mr Luchmaya. There was ample affidavit material making it abundantly clear that each of those respondents had been informed of all relevant aspects of the proposed trial and had been served with all relevant material.
4.2 Disallowance of further amendment to statement of claim
36 On the first morning of the trial, the applicant sought to advance a further very late amendment to the statement of claim.
37 The amendment, in short, was to provide alternative particulars in relation to the ‘dismissal’ of Ms Roden, Ms Best and Ms Buttrum-Virco. The amendments also sought to include another document (the ‘Contractor Guide’) into the pleaded representations made by Mr Konstek for Quest and Contracting Solutions.
38 The amendment was opposed. I was satisfied that amendment should not be permitted given its lateness and that it had the capacity to cause prejudice to the respondents. I disallowed the amendment.
39 Evidence in chief was adduced by affidavit, supplemented as necessary and witnesses were, of course, cross-examined.
5. THE EVIDENCE FOR THE APPLICANT
40 Ms Buttrum-Virco was, in my view, an impressive witness. She struck me as being intelligent and truthful and was willing to make concessions where appropriate.
41 Ms Buttrum-Virco started work as a part-time receptionist at Quest South Perth on 18 March 2009. She had an interview with Mr Haayema and his friend ‘Pako’ who was the night caretaker at the time. She was sent paperwork. She worked at Quest South Perth thereafter while she was studying accounting and finance at university.
42 She worked 20 to 25 hours per week on average. When she commenced there was one full-time, senior receptionist who worked weekday daytime shifts from 7.00 am to 3.00 pm. There were four part-time receptionists including her who shared the morning, evening and weekend shifts. All the part-time receptionists were students who generally worked around their respective university timetables. The shifts were displayed on a fortnightly roster on a wall in reception.
43 When Ms Buttrum-Virco started at Quest South Perth, the senior receptionist prepared the rosters. Normally they were prepared a week in advance. She normally worked one or two evening shifts, 1.00 pm or 2.00 pm to 8.00 pm during the week and then alternate weekday shifts from 8.00 am to 4.00 pm. If she needed to change her shift, she would normally arrange to swap shifts with one of the other receptionists herself and then she would let Mr Haayema know before the relevant shift. Normally for an evening shift, she would arrive around lunchtime so there was some overlap with the full day receptionist. She had her own desk off to the side and so would not sit at the front desk with her.
44 There was a standard checklist at reception of the things that needed to be done every shift such as checking email and responding to queries, checking the pH levels in the spa and balancing the takings at the end of the shift. There was a big diary where reception staff would write things to be done later by the other receptionists. She would follow up on anything that had been written in that.
45 Ms Buttrum-Virco wore a QSP uniform for the entire time.
46 At the end of every week, she would fill out a timesheet detailing the hours she had worked that week and sign it. Each staff member had a clipboard for his or her own timesheet. The clipboard would be left behind the office door each week for Mr Hayeema ‘to do the pays’. She was paid fortnightly into her bank account, her normal pay rate being $15.63 per hour on weekdays and $23.45 per hour on weekends.
47 In the second half of 2009, Mr Haayema started to be less involved in managing at Quest South Perth. He hired Mr Luchmaya to be the onsite manager in mid-2009. He lived in one of the on-site apartments. When Ms Buttrum-Virco was working evening shifts he would normally come into reception to check how she was going at least once during the shift. Similarly, he would do so on the weekend. If any problems arose, she would call him on his mobile phone and he would come back to the premises.
48 Mr Luchmaya said to Ms Buttrum-Virco in November 2009 that Mr Haayema was getting too busy to do the pays so the payroll system was going to be outsourced to a company called Raykon. (It is accepted by the appearing respondents that Contracting Solutions is a subsidiary of Raykon.)
49 Mr Luchmaya said to Ms Buttrum-Virco that ‘They came in to have a meeting with most of the other staff during the week but you weren’t here so someone from Raykon is going to come back and talk to you about it today’. That day, a man from Raykon returned. He had ash blonde hair and gave her a document called a ‘Contractor Application’ which had a number of different sections in it. He said:
If you complete this form you will be an independent contractor for [QSP] rather than an employee. Nothing will change in terms of your roster of shifts and you will all get work at [Quest South Perth]. The pay rates are going to change so you’ll get one flat rate whenever your work but it will be higher than the base rate now. Independent contractors are independently liable for public liability so we have to take out one percent of your pay to cover public liability insurance.
50 Ms Buttrum-Virco responded that she was moving to Melbourne in a couple of months anyway so she would not be working ‘here after that’ to which he replied, ‘There is probably not much point in you doing this, it would be better for you to stay an employee’.
51 Ms Buttrum-Virco said that at this point she ‘felt a bit insecure’, in any event. So she decided to sign the form and gave it to Mr Luchmaya at her next shift. This was despite being told there was not much point in doing so. She did not speak to anyone at QSP or Raykon about her choice to not fill out the section about being an independent contractor. She was at that stage, in any event, in the middle of university exams and was concentrating on that.
52 At the time Ms Buttrum-Virco handed in her Contractor Application, she was already working fewer shifts than normal due to the university exam period and at her request. She had one more weekend shift on about 21 November 2009 and for that shift she worked in exactly the same way that had previously. She wore the same uniform, performed the same duties and completed the same timesheet. On 18 November 2009, Ms Buttrum-Virco received in her bank account her pay for the previous fortnight including that shift but this time it was from Raykon rather than from QSP.
53 At this stage, Ms Buttrum-Virco had finished her university exams and wanted more shifts at Quest South Perth. She called Mr Luchmaya a number of times but was unable to secure more shifts. She did not speak to Raykon about her shifts or the roster.
54 On about 29 November 2009, Ms Buttrum-Virco had a conversation with Mr Luchmaya in which he pointed out she had not completed the contractor application from Raykon. Her evidence, which I accept, is that he said words to the effect, ‘If you don’t fill out the last few pages you won’t get paid’. She queried this as she had already been paid by Raykon but he insisted that she needed to complete the Contractor Application ‘for payroll’.
55 Following that conversation, on 1 December 2009 she filled out the rest of the Contractor Application and signed it. She scanned it and emailed it to the Quest South Perth reception email address. She had exchanges the following day by text messages with Mr Luchmaya confirming that she had signed the form. Mr Luchmaya confirmed that while she was not on duty the next day she would be on the weekend and the following week.
56 This was immediately followed, on Saturday 5 December 2009, by a letter from Raykon saying that she had no more shifts at Quest South Perth.
57 Ms Buttrum-Virco was very upset when she received the letter. She called Raykon and had a conversation with ‘Clara’ who said it was ‘nothing personal’.
58 She visited Quest South Perth to speak to Mr Luchmaya. This endeavour was without success and on 7 December 2009 she rang the Employment Law Centre who advised her to approach the applicant to whom she submitted a claim on or about 15 December 2009.
59 On 21 December 2009, she sent an email to Mr Luchmaya asking when she would receive her accrued annual leave entitlements as she had not heard from anyone at Quest South Perth and had not received any money. She knew then that her entitlements would be over $1,000 at that stage. She received no response. On about 30 December 2009 she received a payment into her account from QSP for $1,451. This is discussed further below.
60 Ms Buttrum-Virco accepted in cross-examination that she was earning $19.37 per hour after the conversion compared with her previous weekly rate of $15.63 per hour prior to the conversion. She also accepted that she would have been told by someone at the time that it was up to her whether she wanted to be an independent contractor but she was also told (by Mr Luchmaya) that if she did not sign she was not going to get paid. Even though that was said, the reality was that she had been paid by Raykon at this time. She contacted Raykon because she understood that Contracting Solutions was part of Raykon. She spoke with Mr Konstek.
61 In March 2010, Ms Buttrum-Virco was contacted by Mr Robert Hutchinson after he spoke with her mother. He said to her that she had been signed up without the proper processes and that there should be compensation paid from November to February if she signed a Deed of Discharge. She signed the Deed and received the ‘compensation’. The Deed was entirely prepared by Raykon.
62 Although Ms Best struggled with some of the questioning, this is not particularly unusual for lay witnesses in the courtroom environment. I formed the view that her evidence was truthful to the best of her ability. She was willing to make concessions as to mistakes she had made when they were appropriately pointed out to her.
63 Despite being willing to make concessions where appropriate, she was adamant that she was informed that she was required to sign the Contractor Application immediately, ie, the day it was given to her. Notwithstanding this, it is clear that she was permitted to take the form away. She consulted other people before completing it.
64 Ms Best said in her evidence in chief that she only completed it because she was told that she had to or she would lose her job. I have doubt about her recollection on this topic. Her evidence on this key topic was not corroborated and was plausibly contradicted. Given that she was allowed to take away the unsigned form, it is more probable that any initial pressure to sign the Contractor Application forthwith was relaxed.
65 It does not seem to me that the FW Act would be directed either to an employee’s subjective perception, feelings or fears unless they are substantively induced by the employer’s conduct. In this instance, even if there had been an initial encouragement or even insistence as to immediate signing (and I do not make that finding), it is clear that such a form of persuasion or pressure was relaxed. I can accept that such persuasion should not occur at all, but I am not persuaded, having seen the relevant witnesses, that she was forced to sign the Contractor Application.
66 Ms Best had an interview at Quest South Perth in 2007. She was offered attractive hours of work as a housekeeper on a casual basis. She was given a uniform shirt to wear. She spent the first three weeks being taught by another housekeeper.
67 At the start of each shift, all the housekeepers would go through the reception into the spa room. That was where the housekeeping paperwork was kept unless there was someone using the spa. There was a folder there, full of timesheets. There was a new timesheet for each week. ‘Quest South Perth’ was written at the top of the timesheets. At the beginning of each shift Ms Best would sign in using the timesheet.
68 There was normally a printed out list of the apartments that needed to be cleaned and what kind of service they needed. There were normally four or five housekeepers working each shift during the week. At the beginning of the shift the housekeepers would look at the list of apartments and divide amongst themselves who was going to clean each apartment. She nearly always worked in a pair with another housekeeper. She described her work.
69 She would sign out on the timesheet at the end of each shift and leave it on the folder in the spa room. She received her wages from QSP into her bank account each fortnight. $17.95 an hour was paid. If she was called into work on a weekend, it was $21 per hour. The hourly rate was not discussed at her first meeting. She simply found out when she looked at her first payslip.
70 Ms Best regarded as Haayema as the ‘owner’ of Quest South Perth. He had an office at Quest South Perth and she often saw him in there but the door was closed. She did not normally talk to him during her shift. During 2009, Mr Haayema called the housekeepers into a meeting in the spa room. He introduced them to Mr Luchmaya saying words to the effect of ‘This is Ashvin. He’s your new boss. He’s going to buy the business. I’m selling the business to go into another new business’.
71 Ms Best gave evidence that in September or October 2009 Mr Luchmaya called the housekeepers into a meeting and introduced two men from Contracting Solutions. He explained they were going to make contracts for them all and that the process had been happening in QSP in Melbourne and ‘now it’s going to happen here’. He said:
It will be the best arrangement for you and me. You’ll get more money. They’re going to give you a contract to sign. You need to sign it today.
72 According to Ms Best, Mr Luchmaya then left the meeting and returned later on. In the meantime the men from Contracting Solutions talked to the housekeepers. The ‘bald man’ spoke first saying:
We’re here to help the workers and the bosses. We’re here to make the best contract solution for you and for Ashvin [Luchmaya]. It will be a contract you’ll be happy with. The pay rate is going up to $19 an hour. Contracting Solutions will handle all the pays and super. At the end of the financial year we can even organise to do your tax for you. There will also be a trust fund, where you can put money away for a rainy day. Once you sign the contract you won’t be working for [QSP] anymore. You’ll be working for Contracting Solutions but you’ll still work at [Quest South Perth]. If there’s any trouble with [QSP], Contracting Solutions will contact you. If there is ever a shortage of work at [Quest South Perth], we’ll find you work somewhere else.
73 Ms Best was confused about this because she did not understand how they would all still be working at Quest South Perth if they were not working for QSP. One of the housekeepers asked how this would work and one man explained, ‘You’ll still be housekeepers and will still do the same job. You just won’t be under [QSP] anymore’. They were told they would wear the same uniforms.
74 During this time they were given a contract and a document called a Contractor Guide. They were trying to read through the document at the same time they were being addressed by the Contracting Solutions representatives in the meeting.
75 Ms Best recalled that during this meeting ‘Carol’ asked the men, ‘What happens if you don’t sign the contract?’ One of the men said words to the effect, ‘There won’t be any jobs for you’. Mr Luchmaya was back in the room by this point but he did not say anything at that stage. Some of the housekeepers at that point, including Ms Best and ‘Carol’, wanted to take the papers away to read and think about it before they signed them.
76 Ms Best was concerned because her mother always taught her never to sign anything there and then. There was a bit of discussion about this, about whether there could be some delay in consultation about signing the form. One of the men said, ‘No it has to be signed today’. They were assured that the contract was the best ‘solution’ which could be given to them.
77 After the employees pressed Contracting Solutions to each take the form home, it was agreed that they could take the form home but the men would return the following morning to pick up the signed forms. The housekeepers pressed for more time, in the case of Ms Best, to discuss it with her brother on the weekend. One of the men agreed, saying, ‘Ok fine, we’ll be back next week’.
78 In a discussion which followed between Ms Best and Mr Luchmaya, he said words to the effect that the contracts were a good deal for them. She took the documents home and spoke to her brother about it. Following a discussion with her brother and a discussion with her friend, she signed the contract. She gave it to Mr Luchmaya when she went to work on the next occasion and said to him something along the lines that she was not happy with the situation. She did not keep a copy of the contract. She did not want to change to working under the contract as she was happy with the old working arrangements at Quest South Perth.
79 After she signed the Contractor Application and handed it in, she continued to work at Quest South Perth in entirely the same way. Her duties were the same. She wore the same uniform, worked the same hours and the rosters were the same. Mr Luchmaya was still the manager. The only thing that was different was that the timesheets looked slightly different. They no longer said ‘Quest’ at the top. It was blank where it used to say ‘Quest’. The timesheets were still kept in the same location in the spa room as they had been before.
80 No one from Contracting Solutions contacted her after she gave the contract to Mr Luchmaya. Subsequently, on 28 November 2009, on a Sunday, she had an accident at home. She had to go to hospital. She was certified fit to return to work on 7 January 2010. In the end she was not taken back for any further work at Quest South Perth.
81 Ms Best accepted in cross-examination that it was pointed out to her in the meeting that if work slowed down at Quest South Perth it would be advantageous to her to be able to work somewhere else. Ms Best said that she was mistaken about receiving documents she identified as being part of a Contractor Application pack. It was clear that the documents she received pre-dated those on which the applicant relied.
82 Ms Best also accepted that in cross-examination she had a choice as to whether or not she signed. The relevant section of the transcript (at 46) reads as follows:
Mr Lindsay: You, yourself, were determined obviously, to look at what was being put on offer to decide whether or not you wanted to sign up. Your mother had always told you, hadn’t she, that you’ve got to be careful about what you sign?
Ms Best: Yes, she did. You didn’t have to.
Mr Lindsay: So that’s what you did. You took away and the reality is, isn’t it, that you had a choice. You might have regarded it as a bit of a choice where you were going to have to make a decision in a hurry but it was a choice. You didn’t have to sign up?
Ms Best: No, I didn’t have to sign up but we – I made that choice. Yes, I did.
Mr Lindsay: Sorry?
Ms Best: Yes, I did. I made that choice.
83 Ms Best subsequently described it as being a bit of a ‘push’ choice.
84 She accepted that when she went to see Contracting Solutions at Raykon’s office and spoke with Ms Jaeger and explained of her injury. Ms Jaeger indicated that she would contact other clients to see if alternative work was available to work with QSP. Ms Best provided Ms Jaeger with her mobile telephone number. She accepted that Ms Jaeger may have made a call and left a message on her answer phone but could not recall that. Nor could Ms Best recall getting back to Raykon at a later time.
85 I generally accepted the evidence of Ms Roden and certainly accepted she was telling the truth as best she could but there were some discrepancies. My impression of her evidence rather accorded with the represented respondents’ position, namely, that she did have a choice but she thought she would be better off if she signed the form. She did sign the form and she was paid slightly more as a result of doing so.
86 Ms Roden started working at Quest South Perth in about 2007. She continued until about 2010. She was a casual housekeeper. Ms Roden’s daughter was working at Quest South Perth prior to her commencing. That was the reason Ms Roden decided to work at Quest South Perth. She had an interview with Mr Haayema, who introduced himself as ‘the owner’ and asked if she wanted the job as a housekeeper and if she wanted to be the supervisor. She said, ‘No I’ve just come here to work and that’s it’. He said, ‘Fine. You’ll be employed as a housekeeper’.
87 Ms Roden deposes that she has never taken out any insurances relating to her work, provided her own superannuation, advertised for work, had a business name or an office or had an Australian Business Number.
88 While at Quest South Perth she performed housekeeper duties, including cleaning apartment. She was trained by other housekeepers and, at a later time, provided training to new housekeepers. She gave similar evidence to the work rosters given by previous witnesses and similar evidence in relation to work requirements and control. She was paid in the same manner.
89 In about October 2009, Ms Roden was told by Mr Luchmaya, who had then commenced as manager, that a company called Contracting Solutions was coming in to talk about new contracts. Within about a month, Mr Konstek and another man whose name she could not recall visited. There were about four meetings in all with Mr Konstek. Each of those took about 20 minutes.
90 On one occasion, in October or November 2009, Mr Konstek attended Quest South Perth and had a meeting with Ms Roden and other housekeepers in an apartment. Mr Luchmaya entered the room with Mr Konstek and the other person and introduced them and left. Before the meeting, Mr Luchmaya informed Ms Roden that she had to attend it. He also said:
We’re bringing in this contracting company and it will be to your benefit if you sign up with them. You are not going to lose your jobs or anything like that but it would be to your benefit if you all signed up.
(emphasis added)
91 Mr Konstek said to those present that it would be better if they worked with Contracting Solutions because they would get a pay rise. They would get $20 an hour and 1% would go to public liability. He said the conditions ‘will be better’. He said that:
You will be self-employed as an independent contractor. You are going to be moving around to different places only if there is no work at [Quest South Perth]. [Quest South Perth] has the equipment and uniforms so you won’t have to pay for that. Your work won’t change. You’ll still get the same hours and you’ll still do the same work. You won’t lose your jobs if you sign. You’ll still be working at [Quest South Perth]. Contact us if you have any issues.
92 At one of the meetings Ms Roden also received a Contractor Application pack from Mr Konstek.
93 Ultimately, Ms Roden felt that despite what she had been informed, she had little choice other than to sign the Contractor Application and that if she did not sign it, she would lose her job. Her recollection was that this was because of all of the talk at the meetings with Mr Konstek. She said that nothing was ever said in those meetings about the possibility of not signing. Not signing was not presented as an option but this is clearly not entirely accurate on her own evidence.
94 She was told at one of the meetings by one of the men from Contracting Solutions that because they were working for themselves they could ‘claim a lot more things back’.
95 The evidence of Ms Roden was that she ‘felt’ that although they had been told that they would not be dismissed if they did not sign the contract with Contracting Solutions, she was not sure that she could trust that assurance. That, she said, was one of the reasons she signed the contract. But her evidence was that there had not been anything really said to them as to what would happen if they did not sign.
96 Ms Roden signed the Contractor Application form and after doing so, as with others, continued in precisely the same way as before. The only changes were that the payslips were provided by Contracting Solutions and she was paid by Contracting Solutions. After signing the Contractor Application she occasionally saw Mr Konstek at Quest South Perth for a month or so to have meetings. Not all QSP employees had signed the Contractor Application at that time. On one occasion when she had a question about her tax she phoned Mr Konstek at Contracting Solutions. He referred her to an accountant in Queensland and told her that the service was free.
97 Ms Roden said that at a time that she can not now remember, a new owner called ‘Sunny’ began managing Quest South Perth and soon after that, he started paying ‘us’ instead of Contracting Solutions. She said to him:
We’re not happy with Contracting Solutions and we don’t agree. We’ve never got anything from them. Why should you be paying for them when nothing’s been different or they’re not doing anything really?.
Sunny then said, ‘Well fine, fair enough. If you all get together and tell me that you’re not happy with them we’ll finish them and I’ll start paying you’. It was shortly following that time that Sunny started paying them.
98 Ms Roden reaffirmed in cross-examination that Mr Konstek had made it clear that there was a choice as to whether or not they would sign the forms. They would not lose their jobs if they chose to sign.
6. THE EVIDENCE FOR THE APPEARING RESPONDENTS
99 I formed the view that Mr Bheeroo was a straightforward and honest witness. I concluded from his account that he was not at the relevant meetings for all of the time but was there for a good part of the time.
100 In early 2009 he worked as an independent contractor with Contracting Solutions at an unrelated organisation. He knew Mr Luchmaya who also worked for that organisation. In mid-2009, Mr Luchmaya contacted Mr Bheeroo and offered him the role of a part-time supervisor for Quest South Perth. He worked as an employee of Quest South Perth from on or around July 2009 to March 2010 to supervise the housekeeping staff. In or around March 2010 to November 2010 he worked as an independent contractor with Contracting Solutions at Quest South Perth.
101 Quest South Perth stopped using independent contractors from Contracting Solutions in or around November 2010. He then worked as an employee for Quest South Perth until March 2011. Thereafter, he worked again as an independent contractor with Contracting Solutions at the organisation where he and Mr Luchmaya originally met.
102 While he was at Quest South Perth, Mr Bheeroo’s job was to supervise the housekeeping staff. There were usually four housekeepers working on any weekday. He also filled in at the reception desk when required.
103 Mr Bheeroo would be at work in the morning when the housekeepers arrived. There would be a list of rooms that had been vacated and required servicing. His role was principally to ensure that the work was done to the proper standard. He did not supervise the housekeepers’ work as it was being carried on but would usually be doing one room himself while the housekeepers were doing others. He would just check to ensure the rooms had been serviced properly. The housekeepers worked in pairs.
104 He recalled that in late October 2009, Mr Konstek and Mr Buiks came to Quest South Perth to see the housekeeping staff. A meeting was held between those persons. Mr Bheeroo attended the meeting. He was notified of the meeting by Mr Luchmaya who showed Mr Konstek and Mr Buiks into the room, introduced them and left.
105 Mr Luchmaya told Mr Bheeroo on or around that time that most of the people working at Quest South Perth would be given the opportunity to become a contractor with Contracting Solutions. Mr Luchmaya said that Mr Bheeroo would not be offered the opportunity to become a contractor but it may happen in the future. At the meeting Mr Bheeroo recalled Mr Konstek and Mr Buiks telling the housekeeping staff at Quest South Perth about the plans. They handed out contractor packs and went through the various sections explaining them. He recalled that there were concerns expressed about some of the sections in the contractor packs. Questions were asked by the housekeepers about why they should become contractors.
106 Mr Bheeroo recalled someone asking what would happen if they did not become a contractor. Mr Buiks or Mr Konstek said something to the effect that nothing would happen and they would stay on as employees. Mr Konstek or Mr Buiks said words to the effect that the workers did not have to sign today and that they could take the contractor packs away and talk about it with their families and make sure they understood what was said in the contractor packs. Either Mr Buiks or Mr Konstek said that the housekeeping staff could contact them to ask them any questions and gave the housekeepers a contact. He recalled that they also said to the housekeepers that they could come back onto the Quest South Perth premises to discuss any concerns they had. Mr Bheeroo recalled that the housekeepers were asked to complete the Contractor Applications and bring them back later if they wished to become contractors.
107 Mr Bheeroo said there were no words spoken at the meeting to the effect that if they did not become contractors they would not have a job. Mr Konstek and Mr Buiks returned to Quest South Perth on a few occasions. Mr Bheeroo is unable to recall whether Mr Luchmaya had explained that by using Contracting Solutions, QSP could relieve itself of the administrative burden of engaging, employing and paying its staff.
108 He agreed that at the meeting Mr Konstek and Mr Buiks were trying to sell the idea in favour of Contracting Solutions engaging the employees as independent contractors. They did not raise any argument in favour of the contrary position, that is, retaining the status quo.
109 Mr Bheeroo, who struck me as impartial, expressly rejected that anything was said at the meeting to the effect that if the employees did not sign up they would not have work. His evidence was that he would have stood up and said, ‘No that’s not going to happen because that’s not fair’. He recalled that it was also explained at the meeting that there were certain benefits that Contracting Solutions would give aside from any increase in pay.
110 I regret to say that I did not find Mr Haayema to be an impressive witness. I considered that his evidence was not particularly reliable, evasive and given somewhat belligerently.
111 Mr Haayema explained that he became a shareholder and director of QSP in about December 2006. Before becoming a director, he was a manager at QSP from September 2006 to December 2006. In around mid-October 2009, Mr Luchmaya who was at that time the manager at Quest South Perth provided Mr Haayema with a copy of the Proposal from Contracting Solutions and a copy of a Hiring Agreement.
112 He did not recall the exact dates the documents were provided to him or how exactly they were provided.
113 He recalled that the costs of using Contracting Solutions to provide services to QSP were about 20% higher than if QSP had not used Contracting Solutions. Mr Luchmaya provided him with a Proposal and the Hiring Agreement. His evidence was that he relied on what was said in the Proposal and the Hiring Agreement which was to the effect that the proposed system of contracting was a lawful and valid system of contracting. If the workers elected to become independent contractors with Contracting Solutions they would become bona fide contractors. He read over the Proposal and the Hiring Agreement and signed off on the Hiring Agreement on behalf of QSP on 14 October 2009. He produced the document.
114 Mr Haayema made it clear that it was Mr Luchmaya who introduced the name of Contracting Solutions to him. He could not recall whether the idea to use Contracting Solutions was his idea or Mr Luchmaya’s idea.
115 He did not recall that he carried out any inquiries into Contracting Solutions. He accepted that he relied on Mr Luchmaya as general manager of Quest South Perth that the information he had been provided by Contracting Solutions was true and correct. As part of his selection of the position as general manager, QSP went through Mr Luchmaya’s previous background. He was satisfied that Mr Luchmaya had a Bachelor of Business Diploma and a Diploma in Hospitality. He would have spoken to Mr Luchmaya’s referees which would have given a very clear indication that he was suitable for the job, otherwise he would not have been chose. He relied upon Mr Luchmaya and the fact that Contracting Solutions appeared to be a ‘valid’ company and that its conduct was lawful and ‘fair’. He did not make any additional inquiries because he relied on those factors. He had no recollection of becoming aware that the applicant was undertaking an investigation into QSP’s dealing with Contracting Solutions. Mr Haayema did accept at the time of giving evidence that, however, that it was a serious matter.
116 Mr Haayema was critical of Ms Buttrum-Virco as an employee. He describe her as an ‘alleged receptionist’ because of the tasks of the receptionist that sat beside her left knee in the checklist process which ‘she refused to follow on many occasions’. He said that ‘we tried our best to coach, train and educate [Ms Buttrum-Virco] but by the end of November 2009 [QSP] was not very happy with [her work]’.
117 It was put to Mr Haayema that he had in fact decided that Ms Buttrum-Virco should no longer be employed at Quest South Perth. He replied that was not his decision and it was up to Mr Luchmaya as he was the general manager. He was unable to speak for Mr Luchmaya as to why he made his final decisions. He did recall Mr Luchmaya reporting to him that he had come to the decision that she should not stay at Quest South Perth. It was not something that he was particularly interested in as it was general day to day running of the business, which was not his interest. He would not expect to be informed about such matters as a director only of QSP. He did recall later that Mr Luchmaya simply reported to him that Ms Buttrum-Virco would not be part of the work staff due to her poor attitude.
118 Even though he was only a director, he still purported to have his reservations about her work ability. Mr Haayema said that he had spent a lot of time training her and remembered giving her opportunities on more than one occasion despite misgivings.
119 I did not find his evidence on this topic persuasive. I consider it more probable that he was well aware that a purpose and benefit of ‘converting’ Ms Buttrum-Virco would be that she could be declined ongoing work with a minimum of attention to the legal entitlements she would have had she remained an employee.
120 Ms Jaeger has held the position of Client Manager of Contracting Solutions since October 2009. As a client manager she is responsible for dealing with Contracting Solutions’ clients on a day to day basis and liaising with contractors. Although slightly and understandably nervous, Ms Jaeger was an impressive, helpful and cooperative witness. I accepted her evidence.
121 Her evidence made it clear that QSP was still in charge of giving directions as to work to be carried out by the converted workers following their conversion from employees to independent contractors.
122 Ms Jaeger was taught in detail about the ODCO Contracting System when she began working for Raykon in October 2009. She was trained by Mrs Clara Konstek (wife of Mr Konstek) and two other persons. Mrs Konstek, at the time, was the office manager. Mrs Konstek instructed Ms Jaeger on the technical aspects of the ODCO System. Since October 2009 Ms Jaeger has been the person who signs workers up to become ODCO contractors. She did not, however, do this with QSP because QSP was a new client and sign ups for converting workers were usually done by the business development managers.
123 At the time when QSP became a client of Contracting Solutions, most of the workers did not sign up ‘correctly’. Ms Jaeger was provided with bundles of sign up packs by Mr Konstek. Of the 12 employees who signed up with the contracts, 11 failed to complete the sign up papers properly. She then prepared a schedule showing which persons had not completed the sign up papers correctly and provided it to Mr Konstek and Mr Hutchinson. The schedule was produced.
124 On several occasions in November 2009, she visited Quest South Perth to speak to the contractors and to obtain the missing information or signatures. In November 2009, she sent a number of emails to Mr Konstek (copied to Mr Luchmaya), asking him to assist in obtaining information. It took about three months to obtain all the missing information. Mr Luchmaya ceased being the contact person at Quest South Perth in December 2009 and from January 2010, she dealt with Mr Haayema or his wife while trying to get the documents completed.
125 On 25 November 2009, Mr Jaeger emailed Mr Luchmaya regarding contractors working at Quest South Perth including Ms Buttrum-Virco. She attached to that email a scanned copy of p 7 of the sign up pack that had not been completed by Ms Buttrum-Virco. She received an email back attaching a signed copy of it and printed a copy of the attachment and placed it on the ‘Jessica Buttrum-Virco file’. On 30 November 2009, Mr Luchmaya telephoned Ms Jaeger and told her that Quest South Perth no longer required the services of Ms Buttrum-Virco. Ms Jaeger then prepared a letter of notification to Ms Buttrum-Virco and gave the letter to Ms Konstek for sign off.
126 Ms Jaeger recalled Ms Best as she was the only contractor who completed her sign up pack fully and properly. A review of the payslip for Ms Best showed that the first payment for her went through on 19 November 2009 for the pay period covering 1 to 15 November 2009. Some time in January 2010, Ms Best came into the Contracting Solutions office. There was a discussion between the two of them. Ms Best explained that she had injured her ankle at home and that she had told QSP that she was not able to accept any work for about three weeks while the injury healed. Ms Best said that QSP had told her to let QSP know when she was available to work again. Ms Best explained to Ms Jaeger that after three or four weeks she contacted QSP to let them know that she was able to start work again but she was told by QSP that they would let her know when work was available. Ms Best said she contacted QSP a week or so after to see if any work was available. Ms Best said that QSP told her on each occasion there was no hours available yet but that they would contact her when there was. Ms Best said that after a number of weeks getting the same response, she thought that no hours were going to be made available to her so at this point she decided to come into Contracting Solutions’ office.
127 QSP did not request any housekeepers from Contracting Solutions in all of January 2010. Ms Jaeger told Ms Best that if there were other clients at Contracting Solutions that required cleaning services, she would contact different clients to source alternative work for her. Contracting Solutions has about 15 cleaning companies for whom it arranges workers. Ms Jaeger also spoke to Mr Hutchinson and asked him to come out and speak with Ms Best. She contacted a franchisee the same day and spoke with a supervisor offering Ms Best’s services. She then called Ms Best immediately on the two mobile telephone numbers Ms Best had left with Ms Jaeger.
128 Shortly after the conversation Ms Jaeger called Ms Best again to confirm details of position and rate of pay. Ms Jaeger called both mobile phone numbers but there was no answer. She left a voice mail message on one of the numbers.
129 Ms Jaeger made clear that the documents at tab 80 in the trial bundle entitled ‘Helpful FAQ for Independent Contractors’ and ‘I am injured in the workplace – what should I do? Whom do I notify?’ were not documents that were included or were included by her, in any event, in a contractor pack at that time. She said they were not included at all in an initial contractor pack prior to the contractor being signed up. After the application had been completed and processed, a welcome letter was sent out. The ‘FAQ’ sheet was sent out with that letter.
130 As at February 2010, Mrs Konstek was still office manager of Contracting Solutions. The term ‘conversion’ was used by Contracting Solutions to described the process by which a client’s employees were converted into independent contractors, being the process followed in October and November 2009 at Quest South Perth which was subsequently abandoned. She was not able to confirm that it was abandoned partly because ODCO took the view that the process of conversion adopted by Contracting Solutions did not accord with the ODCO System. The document at tab 81 of the trial bundle was not generated within Contracting Solutions. It was generated by Mr Konstek or Mr Buiks and entitled ‘Quest – System Changes’. It was used by them for the purposes of work that they did for Contracting Solutions. The letter was sent to workers prior to the conversion to advise them of the changes that were going to be made. On its terms it is clear that it was to be sent prior to the conversion.
131 Ms Jaeger’s recollection was that she received a bundle of Contractor Application forms from converted QSP employees on 16 November 2009. She then completed the checklists in respect of each of them. The checklist includes an agreed hourly rate which was information which came from Mr Konstek. She described further details to be included in this documentation. As at 17 November 2009, as far as Ms Jaeger was aware, there was no contract completed between Contracting Solutions and Ms Buttrum-Virco. It is likely that she was instructed to press on and enter Ms Buttrum-Virco into the system because all QSP workers had to be entered into the payroll system. Those instructions probably came from Mrs Konstek.
132 I considered that Mr Konstek was a truthful witness. He was not obstructive in any sense. While he had difficulty understanding some questions, that is not (as I have previously noted) particularly unusual in the courtroom environment.
133 Mr Konstek, amongst other things, confirmed that everything he did, he did with the approval of Contracting Solutions. The whole point of the exercise was to ‘convert’ the employees to independent contractors which was expressly what QSP had asked him to do. That was what he explained to the employees and what he told QSP and confirmed this in writing on several occasions.
134 Mr Konstek worked with Contracting Solutions from 2008 until the end of 2011. Prior to that he was managing director and sole shareholder of a telecommunications company. That company had at various stages up to 350 staff, some of whom were engaged as contractors with Contracting Solutions. The workers engaged with Contracting Solutions included members of the sales team, call centre workers and the administration team. Other workers were engaged by the company directly as employees.
135 In Mr Konstek’s opinion, good quality staff who can perform their duties well without supervision are always highly sought after. This includes workers in areas such as call centres and cleaners. Cleaners are often required to work without much supervision. His experience with Contracting Solutions, whilst managing director of the telecommunications company, was his first experience of the ODCO system. His brother was also, at a later stage, a director of Contracting Solutions and offered him a role with that organisation. He worked with Raykon as a business development manager obtaining clients for Raykon.
136 Mr Konstek went into business with Mr Buiks under the name Workforce Business Solutions in November 2009. That partnership provides business development services to Contracting Solutions and other entities. From his understanding, Contracting Solutions is a business which sources and provides workers to businesses as independent contractors. It is responsible for the payment of the contractors and administers all statutory and legal requirements relating to the contractors including PAYG tax, superannuation, workers’ compensation insurance, claims management and payroll tax. The only liability incurred by Contracting Solutions’ client is the payment of a fee to Contracting Solutions based on the work performed by the independent contractors.
137 In late July 2009, Mr Buiks referred QSP to Mr Konstek. His recollection was that Mr Buiks called him on the phone to say he had been contacted by Mr Luchmaya of QSP who wanted to know more about the ODCO Contracting System. A meeting was arranged between Mr Luchmaya and Mr Buiks and Mr Konstek. At that meeting there was discussion about the ODCO System and, in particular, issues such as:
what classifications of workers QSP used;
how the workers were engaged;
how much they were paid;
what role QSP saw for Contracting Solutions;
what QSP’s objectives were in considering Contracting Solutions to provide its workforce;
what industrial awards applied to its business;
whether they were currently compliant on all applicable rules and industrial legislation; and
how they managed the payroll.
138 Mr Konstek explained that the reason for requiring all that information was to confirm the level of understanding the management had of its industrial relations/human resource management obligations and because of Contracting Solutions’ policy that nobody working as a contractor through Contracting Solutions will get paid less than the casual award rate for the job, if there is one. During the discussions, Mr Luchmaya explained that he was interested in using Contracting Solutions to provide the workforce that QSP requested. QSP had 40 plus serviced apartments in South Perth, which are occupied on a short stay basis. It employed a number of casual housekeepers who were rostered on each day to clean the apartments. The employees were paid at an hourly rate depending on what day of the week they worked.
139 Mr Buiks and Mr Konstek requested Mr Luchmaya to provide information about the rates QSP was paying and the hours the staff were working so they could ascertain if they were paid at least the minimum award rates for the work and so that Mr Buiks and Mr Konstek could calculate the minimum rates that would need to be paid by Contracting Solutions. That work would not be carried out by Mr Konstek and Mr Buiks personally but would be delegated to staff within Contracting Solutions. The information was duly supplied by Mr Luchmaya by email on 15 September 2009. In that email Mr Luchmaya also made clear that he had ‘pitched’ Contracting Solutions to the owners of QSP and there might be something to look forward to at other QSP sites.
140 A copy of that email was provided to Mr Buiks by Mr Konstek and to other staff of Contracting Solutions. He requested that staff of Contracting Solutions prepare a document setting out the rates of pay necessary to pay the employees of QSP if they became contractors of Contracting Solutions. On 21 September 2009, he emailed Mr Luchmaya of Contracting Solutions that he had done some calculations and to try and arrange a further meeting. The rates calculated by Contracting Solutions were higher than the rates being paid by QSP. In addition, the rates to be offered had to include an additional 1%, representing the cost of public liability insurance that Contracting Solutions required the workers to hold as independent contractors. The premium was actually paid by the client of Contracting Solutions and could be claimed as a tax deduction by the contractor.
141 Following email exchanges, there was a meeting on 24 September 2009 at the office of Contracting Solutions in Burswood. On that occasion, Mr Buiks and Mr Konstek handed to Mr Luchmaya a letter dated 22 September 2009 with an attached table setting out the rates prepared by Contracting Solutions. From the review of the letter it stated the proposed rates payable to Contracting Solutions on any engagement would be 19.85% on top of the hourly rate plus a 1% public liability charge which would be loaded onto the contractors’ hourly rate. The letter set out the rates currently paid by QSP. It was explained that Contracting Solutions would not accept the workers at the rates being paid by QSP because the workers were being paid less than the minimum award rates at the time.
142 The letter also claimed the benefits of conversion in these terms:
Please find below a detailed comparison on what you should be paying your staff today, what you will pay on the modern award and also the minimum of what you could pay utilising Contracting Solutions.
As discussed our rate is 19.85% on top of the hourly rate and there are no other associated charges other than the 1% public liability that needs to be loaded on to the contractor’s hourly rate.
With our system we will convert all the current staff and also continue to sign up all new staff upon your request.
The benefits of utilising Contracting Solutions services and our ODCO license means you are not bound by Industrial legislation or awards etc. This allows you the business owner to develop flexible working arrangements with your workers and not be governed by IR law. Our systems gives you true flexibility.
You’ll no longer need to worry about the following employment related issues:
1. Award conditions (with a Modern Award due in January 2010)
2. Penalty / overtime rates
3. Unfair / unlawful dismissal
4. Union intervention
5. Industrial relations legislation
6. Confusion about employment status (i.e, full-time, part-time, or casual)
7. Annual leave
8. Sick leave
Contracting Solutions ensures all your statutory responsibilities are covered.
1. Public Liability Insurance
2. Workers Compensation Insurance
3. Superannuation contributions
4. Payroll tax
5. PAYG tax withholding
6. Common law obligations
143 Similar benefits were reiterated by email from Mr Konstek to Mr Luchmaya on 2 October 2009.
144 Following the meeting on 24 September 2009, there were further email exchanges. On 7 October Mr Konstek prepared a detailed submission for Mr Luchmaya. It is annexed to these reasons as Annexure A.
145 There was a further meeting with the same personnel on 8 October 2009 at which Mr Luchmaya said that he would recommend that Mr Haayema engage the services of Contracting Solutions. Mr Konstek’s evidence was that he specifically said to Mr Luchmaya that he could not force any employee to become a contractor and that QSP should not terminate anyone if they chose not to become an independent contractor. Mr Luchmaya did not express any concerns about that because Mr Konstek told him that employees who chose to stay as employees could be replaced with contractors over time due to natural attrition.
146 On 21 October 2009, Mr Konstek received an email from Mr Luchmaya attaching the Hiring Agreement signed by Mr Haayema. The Hiring Agreement reflected much of the content of the previous documents. It was signed by Mr Konstek and dated.
147 In late October and early November, Mr Buiks and Mr Konstek held two consecutive meetings with groups of the employees at a vacant apartment at the Quest South Perth premises to explain the ODCO System to them and to offer engagement with Contracting Solutions as independent contractors.
148 Each meeting was arranged by Mr Luchmaya. He was present at the commencement of the meetings and introduced Messrs Buiks and Konstek. He then left the meeting. During each of the meetings, Mr Konstek deposes that he said to the groups of employees words to the effect of:
Contracting Solutions wishes to offer each of you the opportunity to become an independent contractor, so that you can provide your services on a contractor basis. This will mean that you will receive a higher hourly rate. You will no longer be an employee. However, you will be contracted through Contracting Solutions and therefore capable of working for other businesses besides [Quest South Perth] if sufficient work is not available for you at [Quest South Perth].
149 Mr Konstek says he stressed the higher pay rate as part of the ‘sales pitch’ for them to become contractors although he cannot recall the particular words said.
150 He recalls ‘seeing and hearing’ Mr Buiks say that the employees had a choice whether to become an independent contractor. He said words the substance of which were, ‘This is your choice. You don’t have to do it. This is your choice’. At no stage did he say words to the effect of, ‘There won’t be any job for you’. Mr Konstek cannot recall whether any particular person asked what would happen if they chose not to be a contractor but the question is usually asked when a presentation is made and he always tells people nothing changes and that they will stay as an employee.
151 The employees were given the opportunity to take the documents away with them. A number of them did so. This, he says, is also standard practice. There was no change on this occasion.
152 Mr Konstek did not recall any specific discussion about whether the employees would need to resign from their existing employment with QSP. He did explain the benefits of contracting and stressed the higher rate of pay that the workers would receive than they were currently getting with QSP. Both the meetings lasted 30 to 40 minutes. Mr Konstek recalled that at the beginning of the meetings he handed out to the group of employees his business card and a sign up pack which incorporated all the information regarding ODCO and an application form which would allow employees to opt to become independent contractors. One of the objects of the meetings was to walk the employees through the documents in the sign up packs. He could not recall if anyone asked any particular questions about any of the sections. The sign up packs contained, amongst other things, the document entitled ‘The Contractor Application’ which addressed contractor-specific issues including insurances, PAYG tax details, workers’ compensation, public liability insurance and independent contractor status. The sign up pack also included the contractor pack and information about some of the additional services they could access such as free preparation of their tax returns.
153 A pro-forma uncompleted Contractor Application was in evidence. Including a section entitled ‘Contractor Guide’, it comprised some 28 pages. The document certainly purports to engage former employees of QSP as independent contractors with Contracting Solutions. Although there was some delay in completion of this document, ultimately the employee witnesses for the applicant all did so. Although this document does not constitute notice by either party terminating their former engagement, as casual employees, it must be taken in the context of all previous discussions and its content to have had that affect. There were other documents prepared at around this time including that at tabs 80 and 81 of the trial bundle. The provenance of these documents is unclear as the state of the evidence and in is my view little turns a item given that uncertainty. The Contractor Application and Guide however make it tolerably clear that the ‘conversion’ was achieved.
154 On about 3 November 2009, Mr Konstek sent an email to Mr Luchmaya to propose a time to meet with some of the remaining employees to whom he had not yet presented in order to discuss the offer by Contracting Solutions to engage them as independent contractors. That email attached a table containing the employees’ names, confirmation as to whether he had spoken to them in relation to the offer, further information required, safety induction completed and additional comments. At no time, to the best of his recollection, did he meet individually with Ms Buttrum-Virco.
155 On or about 6 November 2009, Mr Buiks and Mr Konstek met with the employees for a second time at a vacant apartment at Quest South Perth premises to collect sign up packs and answer any questions the employees had. During this meeting, Mr Konstek said to the employees that as an independent contractor they would be able to work at facilities other than Quest South Perth which meant that where there was no work at Quest South Perth, Contracting Solutions would do its best to find work elsewhere for them. No positive or negative views about that were expressed.
156 He noticed that not all the employees had completed all questions or fields in their sign up packs. He said to them words which, in substance, were:
Some of these sign up packs have not been fully completed. Where you haven’t completed these forms entirely we may need to contact you to obtain that information.
157 He did not follow up with the individual employees. That task was undertaken by Ms Jaeger. He collected all the sign up packs that had been provided by the employees at the meeting and gave them to Ms Jaeger. He then emailed Mr Luchmaya, on 17 November 2009, in relation to some incomplete information on those forms. He visited the Quest South Perth premises about 10 times over a period of six months.
158 From late October there were discussions about other QSP franchises and supply of the ODCO System through Raykon to those franchisees.
159 In clarification Mr Konstek confirmed that his recollection was that Mr Buiks said to the employees that they had a choice as to whether or not they would become independent contractors. He also confirmed that the document at tab 81 was not part of the contractor pack. As I have said, it is apparently incomplete.
160 Mr Konstek said in cross-examination that he was not really adopting a ‘sales pitch’ with the employees because he genuinely believed at the time that the offer was a good offer for them. He did, nevertheless, describe it as a sales pitch in his affidavit. He had no doubt that when he made the ‘sales pitch’, he was authorised by Contracting Solutions to do so and from the client’s point of view, in this case QSP, it would be relieved of the administrative burden of engaging, employing and paying their staff. This was Mr Luchmaya’s objective and particularly so in the case of housekeepers.
161 Mr Konstek did not recall, in the context of receptionists, Ms Buttrum-Virco being singled out. He did not have anything to do with her.
162 He continued to run two systems because not everyone would be converted. That was less efficient than everyone being converted. Mr Konstek accepted in cross-examination that logically, it would be more desirable if the housekeepers all went over to Contracting Solutions. He explained that while 100% conversion may not all happen at the same time it may have occurred eventually due to ‘natural attrition’.
163 He did not accept in cross-examination that after the housekeepers of QSP were converted, they would not really be independent contractors at all but continue to be employees.
164 Mr Konstek was emphatic that the employees had a choice as to whether or not they wanted to become independent contractors. He believed they should be. He encouraged them to do so.
165 He accepted that Mr Luchmaya approached them because he had worked with a company of a similar nature and views as Contracting Solutions before so he had a good prior knowledge of it. He accepted that Mr Luchmaya was relying upon him for advice as to how the process of conversion would work.
166 On no occasion did he discuss with Mr Luchmaya QSP doing anything to terminate contracts of employment of the employees. However, he believed that he did say that the workers would cease to be employees of QSP once they agreed to become independent contractors. He did not specifically recall that but that was his understanding and he expected that it was very likely that he would have given that advice to Mr Luchmaya. He agreed that he probably would have said that QSP would then no longer be an employer because that was the whole idea of the process.
167 He knew that QSP was telling the workers that once they became an independent contractor, they would no longer be an employee of QSP. One object of the exercise that QSP was discussing with Mr Konstek was that once QSP engaged Contracting Solutions, then Contracting Solutions would help it to retain its workforce. That is what Mr Konstek put to Mr Luchmaya in the proposal that he gave to him.
168 He did not understand there to be any impediment in their seeking work elsewhere while they were employed with QSP but they could also do so when they became independent contractors with Contracting Solutions. It may be easier to do that through Contracting Solutions rather than signing up as employees elsewhere. Mr Konstek was not able to offer much insight into what actually happened in terms of employees receiving greater benefits or otherwise or having options for other work or otherwise.
169 As with Mr Konstek, Mr Buiks was a little confused by some questions put to him in cross-examination. I do not consider that any of his evidence was untruthful or that he was prevaricating. I consider that generally his minor confusion with the questions being put was attributable to factors other than any intention to mislead the Court.
170 Mr Buiks recounted that prior to starting work with Contracting Solutions, he worked for an engineering company as a fabricator. He had previously owned and operated a business in the industries of retail and manufacturing for around eight years. In early 2008 he attended a social gathering where Mr Frank Konstek, one of the owners of Raykon, was also present. He had known Frank for a long time. They were discussing Mr Buiks’ desire to get into a new business. Following that discussion, Mr Buiks was engaged by Raykon to provide business development services. His role was to source new clients for Contracting Solutions as well as the other Raykon entities.
171 From 1 November 2009, he went in to partnership with Mr Paul Konstek trading as Workforce Business Solutions which was engaged to provide business development services to the entities in Raykon, including Contracting Solutions.
172 At this time Mr Buiks learned about the ODCO Contracting System. Most of the documentation he used was based on documentation which had previously been prepared by Contracting Solutions. This even included the standard letters that he or Mr Konstek used. He described his understanding of the work of Contracting Solutions and the ODCO System.
173 Mr Buiks referred to his first meeting with Mr Luchmaya of QSP. At some date in mid to late 2009 he was contacted by someone at Contracting Solutions who provided him with a telephone number for Mr Luchmaya, asking him to call in relation to Contracting Solutions services. Shortly after that he telephoned Mr Luchmaya who explained he was now working for QSP. He then met with Mr Luchmaya together with Mr Konstek.
174 The evidence of Mr Buiks was substantially similar to that of Mr Konstek and does not need detailed repetition. He particularly confirmed that at the meetings of the employees they were not told nor was it suggested that they would lose their job if they did not sign the documents or become independent contractors. This was the standard practice of Contracting Solutions and his personal practice when he met with workers. He was emphatic that at no stage did he say nor did he hear Mr Konstek say words to the effect of, ‘There won’t be any job for you if you do not sign the application’.
175 Mr Buiks did recall at one point during a meeting, one of the employees who he did not now recall, questioned whether she had to sign the form that day. Either he or Mr Konstek (he cannot now recall which) told the employee that this was certainly not the case and they should take the application home to read through. There was a question about working at other locations.
176 During the meeting either Mr Konstek or he (he did not now recall whom) said words to the effect that:
As an independent contractor you will be able to work at facilities other than [Quest South Perth] which means that when you do not receive work from [QSP] you are entitled to work elsewhere.
177 He recalled a worker, whose name he does not now know, asking whether she would be required to relocate to other QSP facilities to do work. Either he or Mr Konstek explained that they would not be forced to work at other locations if they did not want to.
178 After the meeting at which this discussion took place, Mr Buiks was requested by Mr Konstek to attend at Quest South Perth to meet with individual employees. He met with the employee who introduced herself to him as Ms Buttrum-Virco. The meeting was at the Quest South Perth premises. He said he was a bit annoyed at the meeting because, given the late hour of the day, he wanted to be with his family. However, it only lasted about five or ten minutes. He recalled that she said:
This stuff doesn’t really apply to me. I’m leaving [Quest South Perth] to go to Melbourne in a couple of months.
179 He replied:
OK there is no need for you to go through this and it would be better for you to stay as an employee. If your circumstances do change, then here is some information about the Contracting Solutions system so if you did move back to Western Australia we could get some work for you.
180 Mr Buiks’ view was that there was no point in signing her up with Contracting Solutions because they did not operate in Melbourne.
181 Mr Buiks accepted that statements such as those made in the contractor pack to the workers were never statements that the workers made to them. For example, there was a statement:
We are a professional agency working to maintain you independence and self-employed status as bona fide contractors who do not wish to be bound by the constraints of the award/wages system.
182 He accepted that he never heard any of the employees make such a statement to him. However, he did not agree with the proposition that everything the employees suggested to him was to the contrary. To this he replied, ‘Definitely not’. He had no doubt that when he attended the meetings he did so with the approval and at the request of Mr Luchmaya.
183 Although he never heard it said at any meeting that if workers did not sign the contract there would be no job, there was some confusion at the first meeting initially on the topic of whether or not the contracts should be signed that day.
184 It seemed to him that some workers may have thought that they had to sign the paperwork there and then but Mr Konstek made it clear that they did not.
185 He accepted that they were attempting to sell to the workers the benefits of becoming an independent contractor. There was no discussion about the disadvantages of doing so. That would not have suited their purpose. There was no discussion about the benefits of remaining an employee. Again, that would not have suited the purpose of persuading as many of the QSP workforce to sign up with Contracting Solutions as possible.
186 The interests of Mr Konstek and Mr Buiks were to be advanced by the employees converting because the remuneration of the partnership was in part determined by the number of workers who were signed up. The more employees they ‘signed up’, the more business there would be, the more money that the partnership would make and the more money Contracting Solutions would make.
187 Mr Buiks was unable to put his finger on any single change in the actual work and working conditions of any of the housekeepers after they were converted. There were no such changes to his knowledge but it had been contemplated that there would be benefits.
188 Mr Hutchinson is the CEO of Raykon, a position which he has held since October 2008. He succeeded Mr Frank Konstek (Mr Paul Konstek’s brother), who was the CEO prior to his appointment. He described the structure of Raykon as consisting of the four separate companies:
The Raykon Group Pty Ltd which is trustee for the Raykon Trust trading as the Raykon Group;
Workplace Relations & Management Consultants Pty Ltd which is an employer organisation that provides industrial relations advice, recruitment, labour hire and other services to its members;
Labour Plus Pty Ltd; and
Contracting Solutions.
The companies share office and some administrative staff. Clients of one company in Raykon are sometimes clients of another.
189 Shortly prior to his commencement with Raykon in October 2008, Raykon engaged the services of Mr Konstek. He described that process confirming the evidence given by Mr Konstek. He initially sought to give considerable amount of evidence concerning the ODCO System generally. I disallowed this evidence on the basis that what was relevant to this application was what actually took place rather than the general theoretical system applied in other place by other people.
190 He did point out that Contracting Solutions was not a small business. Based on his review of the financial records of Contracting Solutions in the financial year 2009/2010, Contracting Solutions paid:
more than $16 million to its independent contractors;
more than $1.4 million in contributions to various superannuation funds on behalf of those independent contractors;
more than $881,000 in payroll tax to State Revenue departments, more than $2.62 million in withheld income tax remittances to the Australian Taxation Office on a weekly basis; and
more than $313,000 in workers compensation premiums.
191 He explained the benefits to independent contractors in the same way that previous witnesses had done, stressing that the situation was different for each worker. The communications between Mr Konstek and Mr Buiks with Mr Luchmaya at Quest South Perth were reported to him as well as the outcome of the attempts to persuade employees to sign the paperwork to enable their conversion. He had been concerned about delays in completion of some of the paperwork for insurance and OHS reasons.
192 In mid to late February 2010, he became aware from Messrs Konstek and Buiks that the applicant was investigating QSP in relation to unpaid entitlements and alleged sham contracting. It had also requested engagement documents from QSP in relation to Ms Buttrum-Virco. Initially he was unsure as to the precise nature of the complaint and believed it related only to the actions of QSP. On his review of the documentation, Mr Hutchinson believed that Ms Buttrum-Virco was employed by QSP immediately prior to becoming an independent contractor through Contracting Solutions. He conducted inquiries with Messrs Buiks, Konstek and Ms Jaeger in relation to the change of Ms Buttrum-Virco from a QSP employee to an independent contractor.
193 As a result of his inquiries he formed the view that she should not have been recruited as a contractor because she had intended to move to Melbourne early in 2010 and had apparently just been given the Contractor Application pack without a full explanation as was required by the Contracting Solutions processes.
194 His inquiries established that while Ms Buttrum-Virco had executed parts of her paperwork on different dates, which Mr Hutchinson attributed to instructions to Contracting Solutions’ employees to ensure that all paperwork had been completed, the actual page of the agreement which referred to her becoming a contractor was only signed by her on 30 November 2009. Immediately thereafter QSP advised Contracting Solutions that it no longer wished to use her services. Mr Hutchinson’s inquiries showed that on 2 December 2009, Contracting Solutions advised Ms Buttrum-Virco that there were no further shifts available and that she was not advised that Contracting Solutions was in a position to seek to obtain other work for her.
195 Mr Hutchinson formed the view that Ms Buttrum-Virco had been unfairly treated. He explained that if Contracting Solutions had conducted due diligence on her as an employee and found that there were some performance issues or industrial relations problems, she would not have been recruited as a contractor until those issues has been resolved.
196 Mr Hutchinson was concerned that Contracting Solutions had not fully explained the nature of the relationship she would be entering into by become a contractor and had just left the Contractor Application pack with her.
197 He was of the impression that Ms Buttrum-Virco became a contractor in November 2009. He thought Contracting Solutions was at fault for allowing this to occur and she should be recompensed for any losses sustained after that period.
198 On about 8 March 2010, Mr Hutchinson contacted Ms Buttrum-Virco’s mother by telephone. He also spoke directly with Ms Buttrum-Virco by telephone on 9 March 2010. He ‘wanted to ensure that she was treated fairly’. He decided that Contracting Solutions should compensate her for the loss of income she had suffered by not being able to work between November 2009 and February 2010. He took the view that had Contracting Solutions made proper inquires, QSP would have continued as Ms Buttrum-Virco’s employer and Ms Buttrum-Virco would have continued to work at QSP until February 2010. He decided Contracting Solutions would enter an agreement with her under which she would be paid the money she would have received had she continued to work with QSP until February 2010. He directed that she be compensated for any loss that she had suffered by not being able to work as an employee of QSP or a contractor at Contracting Solutions for that period.
199 The sum that was paid to Ms Buttrum-Virco was simply a computation of the average payroll earnings up to the date on which she ceased to be an employee multiplied by the number of weeks she would have been at Quest South Perth until she went to Melbourne. Contracting Solutions paid the settlement amount rather than QSP because he thought Contracting Solutions was, in part, responsible having failed to make appropriate inquiries to ensure that QSP discharged all its legal obligations.
200 Mr Hutchinson directed Raykon’s senior advocate to draft a ‘Deed’ reflecting the agreement that Contracting Solutions had arrived at with Ms Buttrum-Virco. He explained that Ms Buttrum-Virco had mistakenly been signed up as a contractor and QSP had ceased to require her services. The advice given by Raykon’s senior advocate was to the effect that all parties should be involved in the settlement agreement. Accordingly, QSP was made part of the Deed because that was the advice Mr Hutchinson received at the time. He never requested QSP to make any contribution to the settlement sum paid to Ms Buttrum-Virco and it did not do so.
201 Mr Hutchinson was cross-examined extensively about the reasons for executing the Deed to enable payment to be made to Ms Buttrum-Virco, the central proposition being that he did so only because he was aware that she had initiated a complaint to the applicant and the applicant was investigating it and the matter was being pursued. The proposition was that this was the real reason rather than any desire to treat her fairly.
202 Mr Hutchinson accepted that he held the view at 23 April 2010 that Contracting Solutions was ‘under attack’ for allegations of sham contracting. He sought some advice from ODCO in relation to the Contracting Solutions forms and sign up processes to make sure they conformed with the ODCO System. He was told that they did for the greater part. He firmly rejected the suggestion that they were simply ‘dressing up’ employees as independent contractors.
203 While it seems to me to have limited apparent relevance to the pleaded issues, I am prepared to accept the applicant’s submission that at least one reason for entering into the Deed with Ms Buttrum-Virco was because of Contracting Solutions awareness of the investigation being conducted by the applicant at that stage as a result of Ms Buttrum-Virco’s complaints.
204 Although Mr Hutchinson would not agree with the proposition that it was nonsense that any of the workers wanted to contract their services to Contracting Solutions rather than remain employees, I find that they would not have done so had they not been induced to do so by Contracting Solutions. There was no suggestion at all that the workers would have changed any aspect of their circumstances in relation to employment with QSP had the overtures and representations not been made by Contracting Solutions at the instance of QSP.
7. THE APPLICANT’S submissions as to eFFect of the evidence
205 The purpose of both the proposal prepared by Mr Konstek for Contracting Solutions of 7 October 2009 (submitted to Mr Luchmaya for QSP) and the contract between QSP and Contracting Solutions of 14 October 2009 was to procure the conversion of certain of QSP’s existing employees into independent contractors.
206 The applicant contends and I accept, that on the evidence, as a result, the employment of those employees was to terminate and they would instead, after that time, perform the same work for and under the control and direction of QSP as independent contractors or purportedly independent contractors under contract of services. The applicant says the evidence shows that Contracting Solutions was to procure and manage the conversion on behalf of QSP. Following the conversion, although the employees would perform the same work under the control and direction of QSP, they would be paid by Contracting Solutions on behalf of QSP as its agent. This also does not appear to be in dispute.
207 However, the applicant contends that Ms Best and Ms Roden were constructively dismissed by QSP. The respondents on the other hand argue that Ms Best and Ms Roden were not and could not be dismissed because they were simply engaged by QSP as casual employees. The applicant says that this makes no difference. Ms Best and Ms Roden were shown on the evidence, the applicant says, to have been engaged by QSP as regular casuals and it was that capacity from which they were dismissed. The applicant relies on Maclean Bay (at [14]-[15]) which, again, was undisturbed on that point on appeal.
208 In relation to Ms Buttrum-Virco, the applicant relies upon the evidence that in November 2009, Mr Luchmaya told her that if she did not execute the contractor application she would not be paid. The applicant contends that if that evidence is accepted, as it should be (Mr Luchmaya did not participate in the trial), then his statement which was clearly on behalf of QSP constituted a threat to dismiss Ms Buttrum-Virco in order to engage her as an independent contractor which would be a contravention by QSP of s 358 of the FW Act. Mr Luchmaya would be accessorily liable for that contravention. I accept this submission.
209 The proper construction of the evidence, the applicant says, is that immediately after Ms Buttrum-Virco had executed the Contractor Application, Contracting Solutions purported to terminate its contract with her. As a result she never actually worked pursuant to the Contractor Application. The respondents however, correctly, note that she did receive one payment from Raykon or Contracting Solutions. But, in my view, this does not have a bearing on the making of the threat.
210 In summary, the applicant argues that each of the three employee witnesses, Ms Best, Ms Roden and Ms Buttrum-Virco were constructively dismissed. Thereafter, Ms Best and Ms Roden only continued to perform work for QSP in precisely the same way as they had before. The only difference in their conditions was that they were now paid by Contracting Solutions. In making payments to Ms Best and Ms Roden, Contracting Solutions was acting as QSP’s agent.
211 The applicant argues that for all these reasons the correct position was that Ms Best and Ms Roden were actually working for QSP under a contract with QSP implied by their conduct. It followed that the contracts were, in fact and in law, contracts of employment. It is common ground, however, that QSP, through Mr Luchmaya, Mr Konstek and Contracting Solutions represented to each of those three employees that they were or would be engaged under a contract for services as independent contractors. This was the point of the process of conversion. These representations, the applicant says, constituted a contravention by QSP of s 357 of the FW Act. In respect of that contravention, Mr Konstek and Contracting Solutions were accessorily liable. Although s 357(2) of the FW Act may excuse QSP if it can establish absence of knowledge without recklessness, it has the onus on that issue. Given that it has led no evidence, the applicant says that QSP has not discharged the onus and none of the other respondents can do so for it.
212 The applicant emphasises that the only extent to which there was an increase in payment was that the workers had previously been underpaid. The correct casual rate under the then prevailing award rate was $19.26 per hour which was exactly what Contracting Solutions’ rate. In other words, Contracting Solutions was paying the correct rate whereas QSP was slightly underpaying the employees. However, as a result of the change, they would not get penalty and overtime rates to which they may otherwise have been entitled while employed with QSP. The applicant emphasises that the case in relation to Ms Buttrum-Virco was not that she had been constructively dismissed (which is the applicant’s case in relation to Ms Best and Ms Roden). Rather, the case concerning Ms Buttrum-Virco was that she was the only receptionist singled out for conversion.
213 Additionally, the applicant emphasises that under the contracting agreement the work which is to be carried out by the new independent contractors is by virtue of cl 6 the ‘work that the contractor agrees to do through the agency of Contracting Solutions’. This, it says, is entirely artificial as none of the workers ever agreed to do any work through the agency of Contracting Solutions. The applicant suggests that there was no evidence and it should be inferred that it was not the case that Contracting Solutions ever discussed with QSP when the workers would be required to work or even knew when they would be working. The workers just worked as required by QSP with nothing changing in any practical sense. I would accept that this was established on the evidence.
214 Further, the Hiring Agreement was entirely unambiguous in saying that no contractor would be paid until Contracting Solutions was paid.
8. ISSUES RAISED IN THE SECOND AND FOURTH RESPONDENT’S CONTENTIONS
215 The appearing respondents have consistently asserted that the nature of the business engaged in by Contracting Solutions is one of providing a service to both business and workers; it is not a system designed to allow employers to disguise an employment relationship as an independent contracting relationship as the applicant alleges. Nor is it a system designed to deprive workers of the benefits of employment relationship or to otherwise undermine legislation. The respondents point to the fact that Contracting Solutions has the responsibility for provision of workers compensation insurance, superannuation contributions, payroll tax, PAYG withholding tax and public liability insurance. The respondents stressed that workers were paid rates set by reference to applicable modern award rates for casual employees and received a higher rate than they had received as employees of QSP. Additionally, Contracting Solutions provided services to the workers themselves such as preparation of tax returns at no cost to the worker. It was intended that Contracting Solutions would assist workers to find additional work if required. However, this is immaterial to my conclusions.
216 The argument for these respondents is that Contracting Solutions and Mr Konstek committed no accessorial breach as there was no breach of s 357 of the FW Act by QSP in the first place. The reason for this is that in the case of Ms Best and Ms Roden, once they entered into new contracts with Contracting Solutions there were no longer any contracts of employment between, on the one hand, Ms Best and Ms Roden and, on the other, QSP. In the case of Ms Buttrum-Virco, these respondents contend that she determined on her own if she was to become a contractor with Contracting Solutions and once she did so there was no longer any contract of employment between Ms Buttrum-Virco and QSP.
217 They also contend that even if it is found that there was a breach of s 357(1) of the FW Act by QSP, QSP did not know and was not reckless as to whether the contract was a contract of employment rather than a contract for services within the meaning of s 357(2) of the FW Act.
218 They argue that each of Ms Best and Ms Roden voluntarily ceased their employment with QSP and there was therefore no repudiation of the employment contracts by QSP. After they ceased employment with QSP, each of them was not engaged as independent contractors by QSP but rather entered into a contractual relationship with Contracting Solutions. QSP did not engage those persons as independent contractors. QSP contracted with Contracting Solutions to provide workers.
219 In any event, Contracting Solutions argues that there was no breach of s 358 of the FW Act by QSP in relation to Ms Buttrum-Virco as she had already completed most of the Contractor Application on or about 15 November 2009. She had commenced her engagement with Contracting Solutions on or about 2 November 2009 for which dates she was earning the contractor rates. She had therefore ceased her employment with QSP prior to the alleged threat to dismiss or the alleged dismissal on 29 November 2009.
220 As to the threat, those respondents also argue that, in any event, Contracting Solutions could not be accessorily liable in that it did not know of the words allegedly spoken by Mr Luchmaya. It was not part of the Hiring Agreement or any arrangement between Contracting Solutions and QSP that any employee be dismissed. It follows, these respondents say, that they cannot be accessorily liable under s 550 of the FW Act for the alleged contravention by QSP of s 357 as there was no breach by QSP of that section. Further, they cannot be accessorily liable under s 550 of the FW Act if there was no breach of s 358 by QSP for the reasons advanced.
221 In relation to those two provisions, these respondents raise further specific submissions.
222 The respondents also argue that in a real sense, aside from contractual documents, there was a benefit to the employers as independent contractors. Specifically the respondents argue:
the workers were free to refuse work and work elsewhere;
the workers genuinely had the right to work on a number of different projects with different principals;
the workers would receive benefits such as free tax returns;
Contracting Solutions met all regulatory requirements in respect of workers;
the workers had no right to employee entitlements such as paid leave but, in any event, as they were employed on a casual basis, Ms Roden and Ms Best had not received those entitlements, nor were they entitled to receive those entitlements from QSP.
223 Although in fact the supervision came from QSP after the engagement of the workers as independent contractors, that is not the relevant test. The respondents rely upon Zuijs v Wirth Brothers Pty Ltd (1955) 93 CLR 561 where Dixon CJ, Williams, Webb and Taylor JJ held (at 571) that ‘what matters is lawful authority to command so far as there is scope for it’. In this instance, QSP did not have lawful authority to command the workers after they became independent contractors but, rather, simply had an obligation to supervise. Accordingly, there was no employment relationship or any other contractual relationship between QSP and each of those workers once they became contractors with Contracting Solutions, apart from the requirement to maintain a safe working environment.
9.1 What was the purpose of the conversion?
224 The evidence reveals and I find that in September 2009, Mr Luchmaya commenced discussions with Mr Konstek. On 22 September 2009, he wrote to Mr Luchmaya to confirm that ‘with our system we will convert all the current staff’. He explained that the ‘benefits’ of using the services included that [QSP] would no longer ‘be governed by IR law’ and would ‘no longer need to worry about … employment related issues’ including penalty and overtime rates, ‘unfair/unlawful dismissal’, ‘industrial relations legislation’ and sick leave. While this may be an accurate description of the benefits, it raises and highlights the very issues underlying the purpose of the sham contracting legislation.
225 Confirmation of these benefits in a summary form was contained in a letter of 2 October 2009 from Mr Konstek again to Mr Luchmaya. Six days later, he provided Mr Luchmaya with a proposal for the introduction of Contracting Solutions’ system to QSP (the Proposal). Mr Luchmaya provided a copy to Mr Haayema, together with the Hiring Agreement. The Proposal was prepared by Mr Konstek using a template provided to him for the purpose by Contracting Solutions.
226 In my view, the circumstances in this case stand in the same category as those in ODCO (per Wilcox, Burchett and Ryan JJ) by which I am of course bound. Their Honours noted (at 114) in that case, on the evidence, there was no promise of payment of periodical sums by the builder to the worker, and no agreement between the builder and the worker as to what those sums should be. The builder’s only obligation was to pay Troubleshooters. The workers’ only entitlement was against Troubleshooters, and in accordance with a different measure.
9.2 Who was to control converted staff?
227 There was no suggestion in the discussion between Mr Konstek and Mr Luchmaya that the arrangements should be other than those contained in the Proposal. The discussions between them were directed to ensuring that those of QSP’s existing staff who were ‘converted’ from employees into independent contractors were to continue to work at Quest South Perth doing the same job in the same manner as they had done before. The only practical change was that they would receive their changed income from Contracting Solutions rather than from QSP.
228 Mr Haayema read the Proposal and following this, on 14 October 2009 on behalf of QSP, he decided to enter into the agreement with Contracting Solutions. He signed the Hiring Agreement and it was witnessed by Mr Konstek.
9.3 What independent inquiries were conducted by Mr Haayema?
229 The applicant submits and I accept that Mr Haayema of QSP did not otherwise undertake any inquiries about the accuracy and lawfulness of the content of the Proposal. He was content to rely upon the advice and experience of Mr Luchmaya and the contents of the Proposal itself. He was given an opportunity in cross-examination by senior counsel for the applicant to explain everything that he relied on in order to understand the terms of and consequences of both the Proposal and the Hiring Agreement. He made it clear that what he relied upon was the understanding of Mr Luchmaya following the discussions with Contracting Solutions.
9.4 Who would be converted and why?
230 After execution of the Hiring Agreement, a letter was sent to QSP from the Raykon Group welcoming QSP to Contracting Solutions and identifying contact personnel from that date onwards including Mr Konstek. The contents of Mr Konstek’s letter to Mr Luchmaya on 2 October 2009 taken with the Proposal accurately portrayed the arrangement between QSP and Contracting Solutions for the conversion of QSP staff and employees into independent contractors. Their legal status would be changed but little else. Contracting Solutions would arrange or procure the conversion and then would manage the conversion on behalf of QSP. After this had been achieved, QSP and Contracting Solutions would make sure that those of QSP’s employees who had undergone the conversion would nevertheless still perform the same work for, and under the control and direction of, QSP as they had performed as employees but they would be paid by Contracting Solutions on behalf of QSP, in reality, as its agent.
231 Not all of QSP’s employees were to be the subject of conversion. At some stage a decision appears to have been made that only its housekeepers together with only one of its several receptionists, Ms Buttrum-Virco, would actually be part of the conversion. The applicant argues that in the absence of any explanation, available inferences are that:
the housekeepers were selected for ‘conversion’ because the fact that they ordinarily work with very little supervision would make their conversion more plausible; and
Ms Buttrum-Virco was singled out for conversion from the rest of QSP’s receptionists because, in her case, QSP did not have to worry about unlawful dismissal and industrial relations legislation as outlined in the letter from Mr Konstek on 8 October 2009. It was clear by this stage that Mr Haayema was not satisfied with Ms Buttrum-Virco’s work.
I accept the second point.
9.5 Were any representations or threats made to achieve conversion?
232 There is an issue in relation to whether or not any of the employees was threatened with loss of employment if she did not complete the Contractor Application. It is central to the appearing respondents’ case that the employees were given a clear choice. Evidence from Mr Konstek and Mr Buiks supports this conclusion. This topic was of importance to all concerned. To conclude a threat of that nature was made, it would be inappropriate to disregard the express denials of witnesses whose evidence I accepted generally.
233 In contrast, Ms Best’s evidence was that she attended a meeting at which it was expressly said that ‘there won’t be any job’ if the Contractor Application was not signed. The applicant says she was not seriously challenged on this evidence.
234 In relation to Ms Roden, the applicant now does not contend that she was told she had no choice but to submit to conversion. The applicant does contend that she was not confident that she would still have a job at Quest South Perth if she did not sign a Contractor Application. The applicant submits that such insecurity was natural.
235 I can accept that the insecurity may be natural but I find that the evidence falls well short of any threat in relation to either Ms Roden or Ms Best. I do accept the applicant’s submission that both Mr Konstek and Mr Buiks were trying to ‘sell’ conversion to QSP’s employees. However, it is inherent in this submission itself that there was a choice as to whether or not to, in effect, buy what was on sale.
236 The applicant says that if Ms Roden’s evidence is accepted, this does not necessarily require that the evidence of Ms Best be rejected as there is no evidence that they were in attendance at the same meeting. The applicant argues that Ms Best was a credible witness with no interest in the proceedings and obviously firm on her recollection on the point. However, on the other hand, this requires rejection of the evidence on this key issue as given in the denials of Mr Konstek and Mr Buiks. I did not form the view that Mr Konstek and Mr Buiks gave untruthful evidence. I believe that under oath they were giving their testimony to the best of their ability. Equally I think that Ms Best gave evidence to the best of her ability and recollection, but in a relatively charged environment such as it was, her interpretation of what she was told may well have been coloured with the passage of time.
237 The applicant submits that if its primary submission (preferring Ms Best’s evidence to that of Mr Konstek and Mr Buiks) is not accepted:
[T]he alternative submission is that Ms Best was so impressed by [QSP’s] obvious commitment to conversion, and the zeal with which it was sold by Mr Konstek and Mr Buiks to the exclusion of the possibility of continuing to work at [Quest South Perth] as an employee, as to carry away from the meeting she attended a firm impression that she had no real choice, and that if she wanted to continue to work at [Quest South Perth] she had to sign a Contractor Application.
238 Once again, I can accept that this may have been the conclusion Ms Best reached but I am not prepared, on the evidence, to reach a conclusion against the sworn evidence of Mr Konstek and Mr Buiks that she was neither expressly or implicitly told she would have no job unless she signed the Contractor Application.
239 I do accept the applicant’s submission that Ms Best and Ms Roden at least believed that they had no or little option, if they wanted to continue working at Quest South Perth, other than each to sign a Contractor Application. But I do not accept that their belief was caused by threats or representations made to them.
9.7 What changes were there after conversion?
240 It is also quite clear on the evidence that thereafter Ms Best and Ms Roden performed precisely the same work at Quest South Perth in exactly the same way as they had always done. QSP regarded them as being no longer employed by it but performing work at Quest South Perth as independent contractors engaged by Contracting Solutions. Equally, Contracting Solutions regarded Ms Best and Ms Roden as having entered into independent contracts and treated them accordingly.
9.8 Was there constructive dismissal?
241 On this basis, the applicant says that Ms Best and Ms Roden were constructively dismissed. It submits that they did not voluntarily resign.
242 In support of the constructive dismissal contention, the question is whether having regard to everything that was said and done, Ms Best and Ms Roden were left without any real option if they wanted to continue to work at Quest South Perth they should sign a Contractor Application. The applicant says that explicitly or implicitly, depending on the evidentiary finding, signing was their only real option.
243 As an alternative submission, the applicant says that Ms Best and Ms Roden were constructively dismissed as a consequence of QSP’s conduct in purporting to treat them as no longer being employed by it. In this regard, the applicant says that whatever legal effect the Contractor Applications may have, it is clear that they were not in terms or implicitly instruments of resignation on the part of Ms Best and Ms Roden. I accept there was no such express term but, as I have observed, that can be the only purpose and effect of the choice that they exercised to sign the Contractor Application and become independent contractors.
244 The applicant goes on to contend that the evidence excludes the possibility of any other instrument or act on their part by which it could be said that they terminated their employment with QSP. As such, it follows that the determination that they would no longer be employed by QSP must have been made by QSP. By that determination, they were therefore constructively dismissed.
245 I cannot accept this submission. The applicant’s submission requires a conclusion that Ms Best and Ms Roden did not make a conscious decision. It is not apparent to me this is the only conclusion. I accept the fact that they were persuaded by ‘sales talk’. I accept the possibility that, notwithstanding the content of that sales talk, it was their belief that this was the only choice open to them. But this still falls short of the reality of conversion being the only available course. Having found, as I do, that there is no evidence that these two employees were expressly told that they would be without employment if they did not sign the Contractor Applications, it seems to me that the applicant’s case in the case of Mr Roden and Ms Best cannot succeed.
9.9 Was there a threat to Ms Buttrum-Virco?
246 In the case of Ms Buttrum-Virco, she did not initially execute a Contractor Application. Her evidence is that Mr Luchmaya told her that if she did not do so, then she would not be paid. I accept her evidence that that statement was made to her.
247 The applicant argues that this statement constituted a threat to dismiss her in order to engage her as an independent contractor to perform the same work. I accept it was a threat. Even if she was thinking of finishing and going to Melbourne in any event, she was given a Contractor Application in case she returned to Western Australia, which she duly signed.
248 The applicant’s construction of these events, however, is that immediately after she executed the Contractor Application, Contracting Solutions, on the instructions of Mr Luchmaya, initiated a process whereby she was told prematurely that she would have no more work at Quest South Perth. I consider that the contravention of s 358 is established.
249 The applicant’s argument that the process by which Ms Best, Ms Roden and Ms Buttrum-Virco were converted from employees to independent contractors was, in truth, a sham and legally ineffective is based on the submission by the applicant that each of the three employees was constructively dismissed.
250 I am unable to reach the conclusion that this was so given my conclusion that the employees did, in reality, have choices as to whether or not they signed the Contractor Applications. Sections 357 and 358 of the FW Act are civil penalty provisions. In my view, the applicant has not established a dismissal as it contends.
251 In relation to Ms Buttrum-Virco, Contracting Solutions cannot be held to have been involved in QSP’s alleged contravention of s 358 of the FW Act, according to these respondents. That involvement is said to arise as a consequence of the conversion agreement between QSP and Contracting Solutions and the fact that a representative of Contracting Solutions provided Ms Buttrum-Virco with a copy of a Contractor Application. That cannot be sufficient for accessorial liability as the alleged threat made by Mr Luchmaya to Ms Buttrum-Virco was not demonstrated to have been within the knowledge of Contracting Solutions, nor was it part of the arrangement between Contracting Solutions and QSP constituted by the Hiring Agreement. In order to attract accessorial liability, it is common ground that a person must have knowledge of the essential facts constituting the contravention, be knowingly concerned in the contravention, be an intentional participant in the contravention based on actual not constructive notice of the essential facts and need not know that the matters in question constituted a contravention: Yorke v Lucas (1985) 158 CLR 661 and Fair Work Ombudsman v Kentwood Industries Pty Ltd (No 2) (2010) 201 IR 234 (at [198].
252 The applicant contends (ASOC at [7]) that QSP, by Mr Luchmaya, on 29 November 2009 threatened to dismiss Ms Buttrum-Virco in order to engage her as an independent contractor to perform the same work as a receptionist and (ASOC at [8]) that this threat was a contravention of s 358 of the FW Act in which Mr Luchmaya was involved within the meaning of s 550 of the FW Act. Although Ms Buttrum-Virco had completed most of the Contractor Application and had been paid once by Contracting Solutions, the obvious purpose of the threat was to ensure that she was properly ‘converted’. Thus it was made at the time when she was an employee. It is unnecessary therefore to consider the further question of whether this constituted or could constitute a constructive dismissal (of a casual employee).
253 I consider that the entire conversion process in her case was an arrangement designed, amongst other purposes, and for whatever reasons, to make it easier to dispense with the services of Ms Buttrum-Virco. To that extent only I consider that the claim succeeds against QSP and Mr Luchmaya as its voice. There was no evidence that the appearing respondents were even aware of this threat let alone participated in it. The case against them fails.
254 In my view, the contention that QSP dismissed each of the three employees to engage them as independent contractors to perform the same work fails.
255 The applicant also pleads various representations. By ASOC at [11], it pleads that on various occasions in November 2009 QSP, by Mr Konstek acting for and on behalf of QSP and Contracting Solutions, represented inter alia to Ms Best and Ms Roden that if they underwent the conversion, they would thereafter be engaged under a contract for services under which they would perform work for QSP as independent contractors. The representations were said to be oral at meetings conducted by Mr Konstek in November 2009 and in writing in a document ‘Quest – System Changes’ signed inter alia by Mr Konstek and by the ‘Contractor Application’ each furnished to Ms Best and Ms Best by or at the direction of Mr Konstek and executed by them and finally, in the case of Ms Roden, by a letter addressed to her under the letterhead of Contracting Solutions dated 30 November 2009. The problem with this plea is that it does not set up any contravention of the FW Act. Assuming those representations were made, they only breach the FW Act if they are misleading on the basis that the employees concerned remain in truth employees and never became independent contractors. But the applicant’s primary case was that they did become independent contractors yet by force or threat rather than voluntarily. I have found they did become independent contractors but voluntarily.
256 As requested by the parties, I will refrain from making any further substantive orders until receiving written submissions from the applicant (within 14 days) and from the represented respondents within a further 14 days.
257 The following orders are made:
1. Within 14 days the applicant file and serve submissions on final orders.
2. Thereafter within 14 days the represented respondents file and serve submissions on final orders.
3. The final orders be determined on the papers.
I certify that the preceding two hundred and fifty-seven (257) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. |
Associate:
Submission prepared by Mr Konstek for Mr Luchmaya dated 7 October 2009
Contracting Solutions belongs to the Raykon Group of companies and manages a contracting system that has been in operation nationally in a variety of industries since the late 1970’s (sic) and in WA for over a decade.
Our main objective is to provide businesses with a superior system of worker engagement and workforce management which assists them to attract, retain and reward their workforce.
Our tried and tested system of worker engagement removes the risk associated with direct business/worker relationships, removes industrial relations legislation and provides many additional benefits.
Some businesses make the mistake of spending valuable time on worker administration to the detriment of their core business activities. Contracting Solutions manages the engagement of workers, ensures all statutory requirements are met and performs the vast majority of worker related administration. By doing this we assist businesses to work “on their business” rather than “work in it”.
THE ODCO SYSTEM
Contracting Solutions is an agency licensed under the ODCO system to engage workers as independent contractors who are on-hired to work with a specific client. (See http://www.ODCO.com.au)
In simple terms: workers sourced by you are registered as ODCO independent contractors and are on-hired to work exclusively with your business. By using this system, you retain 100% control over how and when contractors work without breaching legislation such as the Australian Tax Office 80/20 rule and Personal Services Income ruling.
The ODCO model is akin to a system of labour-hire, however, commercial contracts (“rather than contracts of employment”) govern the ‘tri-partite’ relationship between Contracting Solutions, the client and the contractor.
Our system of contracting is not only useful for contractors. Offering the ODCO system to existing employees assists businesses to attract, retain and reward their workforce with remuneration packages that legally can’t be offered via employment and industrial relations legislation.
Contracting Solutions removes the uncertainty and risk associated with direct contractor engagement and direct employment. Workers engaged as ODCO independent contractors operate outside state and federal industrial relations systems and gain validity through the Independent Contractors’ Act 2007 and Federal and High Court decisions. (see:1) The High Court Judgment Accident Compensation Commission v ODCO Pty Ltd Fl.C.l 90/40 of 22 October 1990 and (2) ODCO P/L v Building Workers’ Union of Aus (1989) No VG 15 of 1988)
These judgements have been challenged on occasion, however, when administered correctly have always been fond to be a legal method of contractor engagement. Contracting Solutions has a 100% success rate in this area which is further strengthened by its partnership with Workplace Relations & Management Consultants, the largest privately owned industrial relations firm in Western Australia.
Contracting Solutions contractors:
■ are bona fide independent contractors;
■ will not be deemed employees;
■ are not subject to industrial relations legislation, awards or other employment entitlements;
■ will have no contractual connection to your business;
■ are recognised by the ATO as contractors who are not required to obtain an ABN, register
for GST or submit BAS Statements regardless of how much they earn;
■ are subject to the Australian Superannuation Guarantee Levy and must have their contributions paid
into a superannuation fund.
CONTRACTING SOLUTIONS SERVICES
How are your staff are signed up with Contracting Solutions?
Contracting Solutions can attend your business premises to conduct an on-site information session, contractor sign-up and safety induction for your workers. This provides workers the opportunity of having questions answered by a Contracting Solutions consultant face-to-face.
Alternatively, you have the option of requesting contractors to complete this process over the phone, or at our premises, with a Contracting Solutions consultant.
On completion of the contractor sign-up, contractors are directed to your appropriate representative for their workplace induction.
What instrument are contractors engaged up under?
You’ll no longer have to worry about awards, agreements or contracts and making sure they comply with ever changing legislation in various jurisdictions. Contracting Solutions contractors are engaged under a commercial contract which has been tried and tested to the High Court of Australia.
Total Payroll Management
Contracting Solutions will perform all payroll functions and develop a tailored electronic timesheet for you to record the number of hours (or units) worked by each contractor weekly, fortnightly or monthly. At the end of end (sic) pay period, you need only input the number of hours (or units) worked by each contractor into the timesheet which can be faxed, emailed or submitted via our online portal to our payroll office for processing. Contracting Solutions will manage all changes to your timesheet including changes to contractor rates of pay, adding new contractors and removing old ones.
Following each pay run, Contracting Solutions will issue you with an ‘all inclusive’ invoice based on the relevant timesheet. Our invoices including all statutory costs (for contractors) plus our management fee which will assist you with budgeting as you will know your total costs for each unit of labour.
Contractors will be issued remittance slips, end of financial year payment summaries, have PAYG tax withheld and can request specific deductions to be made on their behalf (e.g. insurances and child support payments). Our payroll and administration centre can be contracted for payroll queries during business hours via a 1800 toll free number.
What happens in the event of a Workers Compensation claim?
Contracting Solutions removes all workers compensation liability in relation to all contractors registered under our system. Contracting Solutions holds the workers compensation insurance policy for contractors (along with the risk), manages all claims and assists with worker rehabilitation. You and Contracting Solutions will jointly be responsible for OSH obligations and must assist any injured contractors in their return to work as soon as medically fit to ensure workers compensation costs and premiums are minimised.
Our client charge includes workers compensation insurance and blanket principals’ indemnity for joint and several action under section 175 (2) of the Workers Compensation and Injury Management Act (excluding common law claims due to your, or your business representatives’, negligence).
Contacting Solutions ensures all statutory responsibilities are covered
Directly engaging contractors to work primarily for you is a relationship of risk. The same risks could exist for contractors offering their services through another sub-contractor.
Contracting Solutions will ensure the following contractor statutory requirements are met for all contractors registered under our system:
■ Public liability insurance
■ Workers compensation insurance
■ Superannuation contributions
■ Payroll tax
■ PAYG tax withholding
■ Industrial Relations & Common Law obligations
Payment and administration of the above statutory requirements are including in your management fee. You must simply provide a safe working environment and day-to-day supervision of contractors whilst they are on your site.
Discounted Occupational Safety and Health (OSH) Consultancy
Contracting Solutions will conduct OSH inductions for contractors on their engagement and assist you with site safety reviews free of charge. Occupational Safety & Health consultancy, assessments and accident investigations (in cases of reportable incidences) will be offered at discounted member rates via our sister company Workplace Relations & Management Consultants (WRMC).
Discounted Industrial Relations and Human Resource Consultancy
WRMC possesses experienced industrial relations and human resource specialists who will provide consultancy at discounted member rates in relation to all industrial relations and human resource issues.
Online Portal
You (and contractors) will gain secure access to our ‘Online Portal’ via a username and password. In addition to being an effective means of communication for all parties, the portal may be used to store, submit and view all your business and contractor information online. (E.g insurance policies and certificates of currency, client and contractor terms and conditions, taxation and superannuation information, pay slips and submit time sheets)
CONTRACTING SOLUTIONS SERVICES FOR CONTRACTORS
Worker entitlements are paid ‘up front’.
Our system enables your workers to be paid higher rates of pay then they would as employees due to the legal ‘casualisation’ of all paid leave entitlements.
No ABN’s (sic), BAS Statements or Invoicing
Due to a ruling by the ATO, ODCO contractors are not required to possess an ABN, register for GST or submit quarterly BAS statements. Contractors also have no need to invoice either you or Contracting Solutions.
Free Taxation Advice
Contactors administered by Contracting Solutions on a regular and systematic basis for a qualifying period of 6 months will have unlimited access to free tax advice (in 30 minute blocks) via a registered tax accountant.
Completion of Income Tax Returns
Contractors administered by Contracting Solutions on a regular and systematic basis for a qualifying period of 6 months may elect to have their annual tax return completed free of charge by a registered tax accountant who is familiar with the specific needs of independent contractors.
Eligibility for the Entrepreneurs Tax Offset
The Australian Tax Office currently offers ‘eligible’ contractors a tax discount known as the Entrepreneurs Tax Offset which can reduce the tax liability of a contractor by up to 25%. For example, contractor’s earning $50K per annum may be entitled to a discount of $2,793.00 per annum or $54.00 net per week.
Option to Select Tax Rates
Contractors will have their PAYG tax withheld and submitted to the ATO on their behalf. They may elect a marginal or flat tax rate (of either 20% or 25%) depending upon their financial position and individual requirements.
Business Tax Deductions
ODCO Contractors have access to business tax deductions subject to appropriate validation.
Product & Public Liability Insurance
Comprehensive product and public liability insurance is included for all contractors which is tax deductible.
Remittance Slips & Payroll Hotline
Contractors will be issued pay slips, have PAYG tax withheld and can request specific deductions to be made on their behalf (e.g. insurances and child support payments). Contractors will have access to our payroll and administration centre for payroll queries during business hours by calling our 1800 toll free number.
Multiple Bank Accounts
Contractors may elect to have their remuneration paid into multiple bank accounts to assist with financial planning. This may be extremely helpful if they wish to allocate funds to a separate account to cover sickness, holidays or unplanned expenses.
Guaranteed Payments
Contractors will receive a guarantee from Contracting Solutions that they will be paid for all work they perform and you verify.
THE CONTRACTING SOLUTIONS CLIENT FEE
Payments to contractors will generate an invoice inclusive of the following:
Statutory Fee: Management Fee:
■ Superannuation ■ Total payroll administration
■ Workers compensation insurance ■ Workers compensation claims administration
■ Public liability insurance ■ Workers compensation injured worker rehabilitation management
■ Payroll tax; and ■ Contractor inductions and sign up’s (sic)
■ ODCO licence fee ■ IR, HR and OSH advice via WRMC
We offer a commitment to provide the highest level of service at a cost effective price.
You can operate with peace of mind as to the legitimacy of your workers and offer the most competitive remuneration packages which will help you attract, retain and reward your staff. You’ll no longer need to worry about the following worker issues:
1. Confusion about legitimacy of contractors (i.e. contractor vs employee)
2. Confusion bout employment status (i.e. full-time, part-time or casual)
3. Award conditions
4. Penalty / overtime rates
5. Annual leave
6. Sick leave
7. Public holidays
8. Workers compensation
9. Payroll tax
10. Superannuation
11. Redundancy / severance entitlements
12. Unfair / unlawful dismissal
13. Industrial relations legislation
14. Union intervention
Engaging our services will relieve you from the burden of worker administration and remove the risks associated with direct worker engagement. Apart from occupational safety & health, your only requirement will be to set worker tasks, update timesheets and pay our all inclusive invoices.
I’m confident you’ll find our services to be valuable and look forward to further discussions with you.
Regards, Paul Konstek – Workplace Relations Manager
…
