The Latest in Workplace Law

Full Federal Court finds truck drivers who worked as ‘independent contractors’ for 40 years are employees

In Jamsek v ZG Operations Australia Pty Ltd [2020] FCAFC 119, the Full Federal Court upheld an appeal by two truck drivers who had worked exclusively for a company for nearly 40 years, finding that they were employees and not independent contractors, and were therefore entitled to be paid their unpaid leave and superannuation entitlements.

In the 2018 decision, a single judge of the Federal Court assessed the totality of the relationship of the workers and determined that the truck drivers were not employees.

In the Full Federal Court’s appeal decision, the Full Federal Court emphasised the importance of assessing the totality of the relationship between the parties, and that the relationship between parties should not be characterised merely by reference to the terms of a written contract.

Relevant factors considered included that the drivers worked full-time in the business for nearly 40 years; the work they performed for the business was their sole source of income; they worked regular hours with a consistent set of duties and work arrangements; the circumstances as to how the workers entered into a contracting arrangement with the company; their lack of capacity to generate goodwill; their representation of the company’s business by carrying the company’s logo on their trucks and clothes.

While there were factors indicating that the drivers operated an independent business, such as supplying their own trucks to perform the work, and possessing a degree of freedom as to the operation of their day-to-day activities, these were outweighed by attributes of the longstanding relationship between the parties, including that the drivers had little opportunity to perform work for others, and did not do so.

Fair Work Commission orders costs against Applicant and legal representative

In what is a traditionally a 'no-cost' jurisdiction, the Fair Work Commission (FWC) made a costs order against an Applicant for commencing and continuing a claim that was “brought vexatiously and without reasonable cause”. Costs were also ordered against his lawyers for failing to warn him of the prospects for success (or lack thereof).

In Anthony Stuckey v Prosegur Australia Pty Limited and Campbell Law [2020] FWC 3586, an order for costs was sought against the Applicant and his legal representatives following the FWC’s dismissal of the Applicant’s unfair dismissal application where the FWC determined that his dismissal was valid on the basis of his lack of capacity to fulfil the inherent requirements of his role, and found that his dismissal was not harsh, unjust or unreasonable.

In ordering costs against the Applicant, the FWC relied on evidence that the unfair dismissal application was used by the Applicant as ‘leverage’ to secure resolution of a separately run underpayment claim in the South Australian Employment Tribunal, particularly “in light of the facts and the lack of prospects of success of his claim”. The FWC also found that the Applicant’s legal representatives did not provide him with advice as to the prospects of success of his claim, which was “extraordinary” and an “unreasonable omission”, which enlivened the FWC’s discretion to also award costs against the legal representatives.

Full Federal Court orders the payment of redundancy entitlements despite argument that loss of major contract amounted to ‘ordinary and customary turnover of labour’

In Berkeley Challenge Pty Ltd v United Voice [2020] FCAFC 113 a full bench of the Federal Court ordered two employers, a services company and a subsidiary, to pay employees redundancy entitlements after the employees were made redundant following the loss of a major contract.

The major contract to provide shopping centre services was held for 14 years by Spotless Group of Companies (Spotless), whilst the subsidiary, Berkeley Challenge Pty Ltd (Berkeley), employed the staff. When Spotless lost the contract, they notified the affected employees that they may be redeployed yet ultimately, the employees were dismissed. Given the loss of the contract, Berkeley claimed the employees, many of whom were long-serving, were not entitled to redundancy pay due to the exception in section 119(1)(a) of the Fair Work Act 2009 (Cth) which states that “an employee is entitled to redundancy pay by the employer if the employment is terminated at the employer's initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour” (our emphasis).

The Full Federal Court considered the origin of when the “ordinary and customary turnover of labour” exception would apply and relied upon a previous distinction[1] between an employment relationship in which an employer ordinarily and customarily was entitled to terminate an employee as a consequence of, amongst other reasons, market forces or the loss of a contract, from that in which both parties to the employment relationship expected that it was one of continued employment. Redundancy pay would not be due to those employees in the former category, whereas an employee in career or long-term employment, in which there is a reasonable expectation of continued employment – as was the case with the employees of Berkley – would not fall within the exception of section 119(1)(a) and would therefore be entitled to redundancy pay.

Giving the words ‘ordinary’ and customary’ have their ordinary meaning, the Full Federal Court decided in favour of the employees, stating that for the exception to apply, “in the usual course of the employment relationship from its inception (or perhaps as it evolves into a long-term job), there had to be a practice akin to a custom that the parties to that relationship would not expect that the employer would be liable to make a redundancy payment to the employee when the contract came to an end”.

Considering that some of the employees of Berkeley had been employed for over 20 years, they would have had a reasonable expectation of continued employment and would therefore have had the expectation of being compensated when that employment was terminated at the initiative of the employer.

High Court of Australia set to deliberate on calculation of personal leave entitlements

The High Court has heard the appeal of Mondelez v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers Union (AMWU) [2019] FCAFC 138 (Mondelez Decision) and the decision is pending. This means that presently, whilst we await the High Court’s decision, the Mondelez Decision of the Full Federal Court remains law.

The Mondelez Decision concerned the calculation of the entitlement to paid personal/carer’s leave (which includes ‘sick leave’) under the Fair Work Act 2009 (Cth) in comparison to the entitlement under the relevant enterprise agreement that covered particular employees. The employees in question were two shift workers who each worked 3 shifts a week of 12 hours per shift.

Under the applicable enterprise agreement, the employees accrued a maximum of 96 hours of paid personal/carer’s leave per year of service. When they took paid personal/carer’s leave for entire 12-hour shifts, Mondelez would deduct 12 hours from their accrued personal/carer’s leave balance. Under this approach, the employees only accrued enough leave over the course of a year to cover absences from work for eight 12-hour shifts i.e. paid personal/carer’s leave was dealt with in terms of hours as opposed to days.

Section 96 of the Fair Work Act 2009 (Cth) provides that “for each year of service with his or her employer, an employee is entitled to 10 days of paid personal/carer’s leave”. The employees in question worked shifts of 12 hours, meaning that 10 days of paid personal/carer’s leave a year would equate to 120 hours of paid personal/carer’s leave as opposed to 96 hours which is what the enterprise agreement provided for.

In interpreting section 96, the Full Federal Court decided that paid personal/carer’s leave is to be calculated in working days, not hours and that both full-time and part-time employees are entitled to 10 working days of paid personal/carer’s leave for each year of employment. The Full Federal Court decided that a ‘working day’ for the purposes of the Fair Work Act 2009 (Cth) meant the portion of a 24-hour period that would otherwise be allocated to work.

In recognising that part of the purpose of paid personal/carer’s leave is to protect the income of employees when they are sick/injured or need to care for a family member, the Full Federal Court said that:

“whether an employee works 7.2 hours every day over five days, or 12-hour shifts over three days, under the ‘working day’ construction, both will be paid at their base rate for the ordinary hours they would have worked if not for the illness or injury. Neither will lose that income. Further the leave balance for each will be debited with one ‘working day’ for each day of leave taken. The effect of this construction is that...no employee who is unable to work because of illness or injury will lose income.”

Whilst we await the High Court’s decision, the impact of the Mondelez Decision, as it stands, is that accrual of paid personal/carer’s leave is to be calculated in working days and not hours, which begins to accrue from the date of employment. Consequently, if an employee is absent for an entire day, then a day will be deducted from that employee’s leave balance and if an employee is absent for a portion of a day, for example six hours of twelve hour shift, then that portion (half) of a day will be deducted from the employee’s balance.

NSW Government warns employers of penalties for breaches of Public Health Orders if workplaces aren’t COVIDSafe

Under section 7 of the Public Health Act 2010 (NSW), the NSW Minister for Health and Medical Research, Brad Hazzard MP, has frequently been making Public Health Orders to impose restrictions in the wake of COVID-19.

As the situation continues to develop, information from the NSW Government states that “it is mandatory for some types of businesses to complete a COVID-19 Safety Plan and register as a COVID Safe business”. As at 23 July 2020, the Public Health (COVID-19 Restrictions on Gatherings and Movement) Order (No 4) Amendment Order (No 2) 2020 (Amendment Order) specifies the businesses that are required to have a COVID-19 Safety Plan in place and register as a COVID Safe business, including but not limited to auction houses, nail, beauty, waxing, and tanning salons, casinos, community centres (including community sporting activities), cinemas, theatres, pubs and clubs (including small bars and cellar doors) food courts, places of public worship and public swimming pools.

For businesses that are not listed in the Amendment Order, including those conducted in an office environment, they are encouraged to develop a COVID-19 Safety Plan to ensure workplaces are COVID Safe, and are encouraged to register as a COVID Safe business.

Non-compliance with Public Health Orders is an offence, with businesses that fail to comply with directions given under the Public Health Orders potentially liable for:

  • an initial fine of $55,000; and

  • an additional $27,500 for each day that the offence continues.

Given the fines that may be given, it is imperative that businesses develop a COVID-19 Safety Plan and register as a COVID Safe business.

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