100320057

WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATE’S COURT

PARTIES PHIL WILKES

CLAIMANT

 -v-

 AIR AUSTRALIA INTERNATIONAL PTY LTD

RESPONDENT

CORAM MAGISTRATE IG BROWN IM

DATE FRIDAY, 31 OCTOBER 2003

CLAIM NO M 252 OF 2002

CITATION NO. 2003 WAIRC 10009

_______________________________________________________________________________

Representation

Claimant The Claimant appeared in person

Respondent Mr D Clarke of Senate Pty Ltd appeared as agent

_______________________________________________________________________________

Reasons for Decision

1         This matter was brought to this Court on 20 August 2002 by way of an application pursuant to sections 170CT, 179C and 179D of the Commonwealth Workplace Relations Act 1996, i.e. the small claims procedure was chosen by the Claimant.

2         The allegation is that the Respondent breached the terms of the Pilots (General Aviation) Award 1984 and as a result the Claimant was underpaid $3,802.36.  The Court subsequently gave leave to amend the claim so that the amount sought is now $4,183.64.  The Claimant also seeks that upon conviction a penalty be imposed together with costs.  In my view the term “conviction” is inappropriate.  If an alleged breach of an award is proven a penalty may be imposed, but no reference to “conviction” appears in the relevant sections of the Act.

3         The Claimant filed the following particulars of claim:

1.   The Respondent was, at all material times, a company incorporated in Western Australia.

2.   The Respondent employed the Claimant at its Jandakot premises during the period 3rd December 1997 and 10 August 1998.

3.   During the period of employment, the Respondent was, by being a party “roped into the award with effect from 26 October 1992” bound by the federal Pilots (General Aviation) Award 1984.

4.   During the period of employment, the Claimant’s employment was subject to the provisions of the federal Pilots (General Aviation) Award 1984.

5.   The Claimant was, during the period of his employment with the Respondent, employed in the positions of flying instructor, charter pilot and operations manager.

6.   For the purposes of this claim, only those hours that the Claimant flew in the aircraft as the pilot or as an instructor have been taken into account in calculating the outstanding amount due.

7.   As a consequence of the irregular flying periods, the Claimants status was that of a “Casual” as defined in Clause 3.4 -Definitions of the award.

8.   During the period of employment, the Respondent failed to pay the Claimant the minimum hourly rates of pay as prescribed in Part B, Clause 1 and Clause 36(i)(iii-iv) of the Award.

9.   The Respondent alleges that the Claimant was not an employee but rather an independent contractor who provided services to the Respondent.

10.  It is the Claimant’s view that, while he may have signed a written contract on 10th day of August 1998 stating that he was employed in the capacity of Contractor to the Respondent, it is his belief that he was always an employee, as his duties did not vary from the date of commencing work on 3rd December 1997.

11.  In support of the Claimant’s assertion that he was always an employee, he believes that the Respondent always had the “right to control” as to the hours of work and the duties carried out; there was “no opportunity to gain a profit or suffer a loss” from his relationship with the Respondent; he used equipment provided by the Respondent and also carried out administrative tasks on three days of each week for and on behalf of the Respondent.

4         In support of his claim Mr Wilkes gave evidence.  In addition Mr Logan-Scales, an industrial inspector for the past 15 years, gave evidence.  The only evidence called on behalf of the Respondent was from Mr Charles Gates McElwey, the managing director of the Respondent.  There were various documentary exhibits admitted in evidence.

5         In all contested matters in this Court it is my primary duty to determine the facts.  As in all cases some facts are not in dispute, but where facts are disputed the Court is required to assess the credibility of all witnesses, weigh the evidence and give reasons as to why one version is preferred over another.  At all times the civil burden of proof applies in these proceedings i.e. on the balance of probabilities.

6         It is convenient to set out the facts not in dispute as background before addressing the matters in contest; accordingly I find as fact that:

1. Wilkes is currently employed as a pilot, a second officer, with Qantas.
2. Before working for the Respondent he was a pilot with the RAAF from 1987.
3. He came to Perth looking for work as a pilot in late 1997 and made contact with Mr McElwey at Jandakot airport.
4. The Respondent is a corporation which was registered on 24 December 1991 as Air Sea Aviation Pty Ltd (see exhibit C1), and on 3 March 1992 subsequently changed its name to the present name.  Mr McElwey has been managing director since that time i.e. 24 December 1991.
5. After discussions between Wilkes and McElwey an oral agreement was reached on or about 19 November 1997.  The terms of that agreement are in dispute and, although some discussions were also held with the Respondent’s chief pilot at the time, he was not called as a witness in these proceedings.
6. Wilkes signed a written agreement with the Respondent on 10 August 1998 (see exhibit C3).  Wilkes ceased working with the Respondent eight days later i.e. 18 August 1998.
7. The Pilots (General Aviation) Award 1984 is exhibit C4, as varied by exhibits C5, C6, C7 and C8.
8. During the “relevant period” i.e. 20 November 1997 to 18 August 1998, Wilkes flew various aircraft on trips set out in the schedule marked as exhibit C2.  Some details on that schedule are in dispute and will be the subject of comment later in these reasons.

The Issue of Whether the Respondent is a Party to the Award

7         The Respondent maintains that it is not a Respondent to the Pilots (General Aviation) Award 1984, as amended.  It is common ground that the onus is on the Claimant to establish that fact.

8         The Claimant produced exhibit C4 which is a copy of the consolidated Pilots (General Aviation) Award 1984.  Schedule “A” to the document is a list of respondents in each State and in Western Australia there is no reference to the Respondent company.

9         As I understand the Claimant’s case he relies on exhibit C5 together with exhibit C1 to establish respondency.  Exhibit C5 is the Pilots’ (General Aviation) Roping-in No 2 Award 1992.  Clause 4 of the award provides that the award came into force from the first pay period on or after 27 October 1992 and shall remain in force for a period of six months i.e. until 27 April 1993.

10     Clause 2 of that award provides that the award shall be binding on the employers listed in Appendix “A”.  The Appendix includes reference to both Air Sea Aviation Pty Ltd of Hangar 112 Jandakot and Air Australia International of Hangar 112 Jandakot.  It is clear from exhibit C1 that Air Australia International Pty Ltd was previously known as Air Sea Aviation Pty Ltd between 24 December 1991 (when it was first incorporated) and 3 March 1992.  It was simply a change of name and Charles McElwey was a director from 24 December 1991 and remains a director.

11     In the circumstances of this case I am satisfied that the absence of “Pty Ltd” after the name “Air Australia International” in Appendix “A” is of no great significance.  I am satisfied on the evidence available that the Respondent company was a named respondent to the award up to 27 April 1993.  The real difficulty for the Claimant is to establish that such respondency continued beyond 27 April 1993.  An employer may be “roped-in” but in this case the Respondent was only roped-in for a fixed period as I read the award.  None of the other exhibits, in particular exhibits C6, C7 or C4 make reference to the Respondent company.  The alleged breaches of the award occurred in 1997-1998 and I am not satisfied on the balance of probabilities that the Respondent company was a respondent to the award in that period.

12     That finding is fatal to the Claimant’s case.

13     In the event that my finding is held to be wrong I have chosen to make findings on the other issues raised because of the delay and unfairness to all concerned if the claim had to be reheard.

14     I now turn to the task of determining the disputed facts.

The Evidence of Wilkes

15     He says that the original offer of employment was three days a week in the office at the Jandakot airport performing the duties of operations manager at a flat rate of $100.00 per day until 26 February 1998 when the flat rate was increased to $125.00 per day.

16     He says that in addition he was to undertake flying duties, including charter flights and instructing flights on the days he was not employed as operations manager.

17     He says that for flying duties he was to be paid $30.00 per hour for charter flights, $15.00 for aerobatic flights and $65.00 for special trips to the Southwest of the State.

18     As to working hours, he said the office was open seven days a week from around 8.00 to 9.00 am until around 5.00 pm.  He did not fly outside those hours, as shown by exhibit C9, except on rare occasions.

19     When he was at the office his duties were to interview new clients and assign the instructors to each new client and make bookings for flying lessons.  He also booked charter flights and assigned pilots.  He did some office work in relation to accounts, used the computer and phone as expected of the operations manager.

20     He agreed no tax was deducted from the amounts which he was paid.  The actual sum he received in the relevant period is as shown on the bottom of the handwritten fortnightly invoices (exhibit C17) which he submitted to McElwey.

21     He said that his employer held an Air Operators Certificate under the Civil Aviation Act and that he did not hold such a certificate.  He believes that if he was working as an independent contractor he would need his own certificate and also his own “Operations Manual” which is required by Air Navigation Regulations.  He referred to Order 20.11 and Civil Aviation Order 40.1.7 which relates to proficiency checks but it is my understanding that these regulations would need to be satisfied whether or not he was an employee or independent contractor to the Respondent.

22     He said he did not maintain a personal flying log whilst employed by the Respondent as such records were kept by the Respondent.  In my view this fact carries little weight in the context of this case.  It would have been helpful to have an independent witness from the Civil Aviation Authority to assist the Court in this case.

23     The Claimant said no uniform was supplied to him except a set of “Air Australia Wings” to be attached to a uniform which he supplied himself.

24     He said there was no agreement as to sick leave or holidays as he regarded the employment as casual.  He said he did take an unpaid holiday after consultation with his employer.

25     He flew only aircraft owned or leased by the Respondent.  He did provide his own navigation calculator/ruler but said this is common in the industry and also occurred at Qantas where he now works.  He said the Respondent provided head sets to pilots but he supplied his own, which was of superior quality, because he had suffered prior industrial deafness from flying in the RAAF.

26     He said the Respondent did not make payments on his behalf to a superannuation fund pursuant to the Commonwealth Superannuation Guarantee legislation.

27     In summary he said that apart from the three days a week he was in the office as the operations manager he did flying tasks at the direction of the chief pilot and had no real control over what tasks he was allocated.

28     Under cross-examination the Claimant agreed that on some days which are recorded as “office days” on his invoice he actually flew for two other aviation companies which paid the Respondent for his services.  He maintained he personally received no payment from anyone except the Respondent company during the relevant period.

29     The one unusual event he described was when he was paid by a friend to do some of his flying shifts at a company named Australia West Air.

30     He also said there were between five to ten days when he flew for that company on what would otherwise have been an “office day”, i.e. a planned office day became a non-office day.  His actual words were:

“…It's hard to say because some days I actually flew for Australia West Air but Australia West - - because it was my office day, then Australia West Air invoiced Air Australia - - sorry.  Air Australia invoiced Australia West Air and said "This guy is supposed to be working in our office today.  We'll let you use him but you have to pay us because we're paying him".  So I'd get my office rates for that day and Australia West Air would pay Chuck for me to go and work for them on those days.  But there were some other days when I didn't have any flying on for Air Australia, on my non-office days, where my friend - - because it was - - like, my best friend, he'd say "Look, you know, I've got something on tonight.  Would you mind doing my run for me?" and then he just paid me out of what he would get paid and - - because he was the chief pilot and so I just got his rate for the day and I just put it onto my tax as another flight.”

(Transcript page 33)

31     After further examination the Claimant sought to explain that on some designated “office days” he did fly, either for other companies (at the request of his chief pilot) or would do a flying lesson for another pilot who was unavailable on the day.  It seems common ground that on the days he was rostered in the office he was able to claim and was paid $100.00 (or $125.00) as a flat rate with no payment for the flying.  He received no direct payments from other parties except from his friend.  In my assessment the payment by his friend for flying on non-office days is the equivalent of a doctor agreeing to fill in for a friend who is rostered to do a night shift or a locum i.e. it is work done outside the terms of the employment contract.  He was unable to specify on what days he “filled in” for his friend and I infer that it would have been on his days off i.e. exhibit C17 reveals a pattern of 3/4 days off each fortnight during 1998.

32     The Claimant also conceded that as he did not have a copy of his invoice for the first period of employment i.e. up to 3 December 1997, he could not dispute that he claimed $200.00 on his invoice and was paid that amount.  At page 42 of the transcript he said it was probably correct that he flew to Leeuwin Estate on 3 December 1997 as an extra pilot on what was regarded as an “office day”.

33     The Claimant agreed he received a total of $17,300.00 odd during his employment and was now claiming an additional $4183.64 based on the rates in the award for a casual pilot.

34     In my assessment Mr Wilkes is a young man of a somewhat pedantic nature, which is probably a good feature for a pilot.  He had made a very conscientious effort to prepare his case, with the assistance of Mr Logan-Scales.  I have no reservations about his integrity or reliability as a witness, except that his evidence was extremely self-serving i.e. he tried, understandably, to put a gloss on the facts to assist his case and deliberately tried to conceal facts which did not serve his cause.  The difficulty in this case is that his interpretation of the award and its application to his personal circumstances is under challenge.

The Evidence of McElwey

35     Mr McElwey has been the managing director of the Respondent since 24 December 1991.  As to the employment of Mr Wilkes he said that after an interview “we made him a package offer which we felt we must offer to keep a man of his skills in the company.  He covered administration work and flying”.

36     When asked if he was paid as an employee at all he said “Negative, No”.

37     As to the method of payment he said that each fortnight Mr Wilkes presented him with a handwritten invoice detailing the amounts he considered he should be paid.  He said that the bundle of documents in exhibit C17 were the original invoices from Mr Wilkes for the fortnights ending 17 December 1997 through to 26 August 1998, plus the odd days up to 6 September 1998.

38     It is not disputed by Wilkes that he personally prepared these documents and handed them to McElwey and that he received the amount claimed each fortnight and that no tax instalments were deducted.  The suggestion by McElwey is that Wilkes was an independent contractor, rather than an employee and that he rendered an invoice each fortnight and was paid pursuant to a contract for services.

39     McElwey said that the invoice for the fortnight ending 17 December 1997 was typical in that it included a claim for some flying tasks and for some days spent at the office as follows:

4/12      UQU      2-4      Leeuwin      $65

5/12      Office                                    $100

6/12      BEZ      3-7      Denmark       30/Hr      $111

8/12      Office                                    $100

9/12      Office                                    $100

10/12    Office                                    $100

11/12    Office                                    $100

12/12    Office                                    $100

13/12    Office                                    $100

17/12    UQU      2-5      Southcorp (to Leeuwin)      $65

                                                        ================

                                                                 $941

40     McElwey said that the agreement with Wilkes was that he would take care of his own “taxation and insurance”, by which I infer he meant workers compensation cover (because it is an offence pursuant to section 170 of the Workers Compensation and Rehabilitation Act 1981 for an employer not to have workers compensation cover for every employee).

41     On the days when Wilkes was at the office McElwey said in chief that “he pretty much set his own time to come in”.  He started as early as 6.00 am on some days and would work until some time between 5.00 pm and 5.30 pm.  He said the flat rate of $100.00 (and later $125.00) per hour was paid irrespective of the hours Wilkes actually spent at the office each day.

42     McElwey conceded that on some days when the invoice showed “office - $100”, Wilkes actually did some flying.  He explained that this occurred when Wilkes was at the office and no other pilot was available so he did the flight.  On some occasions, McElwey said, other pilots were in the office and said to Wilkes “Take it – I’ll watch the phones”.

43     McElwey said the agreement with Wilkes did not prevent him taking work for any other company “as long as he showed up when he said he would be at my company on the days he said”.  He said that on about 80 “office days” Wilkes was actually flying.  He recalled Wilkes often flew for “Australia West” and that Australia West would pay his company for his services.  I observe that no documentation was produced to verify this evidence.

44     He said that in the first month he trained Mr Wilkes in the duties of operations manager, and was hoping he could progressively step back from his role as manager.  That job involved assigning flying tasks to all pilots, and making sure all paperwork was done including the rendering of accounts and collection of money.  After one month he felt that Wilkes was competent to do these tasks.

45     Mr McElwey said that at the time the Respondent had about fifteen pilots engaged as contractors and that the chief flying instructor was also a contractor but his contract adopted the award conditions.

46     He further maintains that his company is not a named respondent to the Federal award.

47     As to the degree of control he exercised over Wilkes he said that his only direction was that the flying work be shared fairly between all pilots, so long as they were qualified for the flights.

48     He said the Respondent is required to have a master library of manuals which are not to be removed and that Wilkes chose to supply his own equipment and publications.

49     Perhaps the most critical statement on oath from McElwey was that it was agreed between he and Wilkes that when he flew on “office days” he would not charge the Respondent.  He elaborated on this by saying the idea was that Wilkes would take potential clients on an introductory flight with a view to them becoming trainee pilots and such flights would not be charged for.

50     It is significant that the documents created by Wilkes throughout his involvement with the Respondent are entirely consistent with McElwey’s evidence on this point.

51     Under cross-examination McElwey said that for the contract with his chief flying instructor he used the award as a guideline, but did not concede that any worker was paid the award rates or that the Respondent was named in the award.

52     As to the critical issue of whether he was an independent contractor or not, Wilkes did suggest in cross-examination that due to the fact that fortnightly cheques were made out to him personally, and not to a business name, he was not an independent contractor.  McElwey gave a quite adequate response by saying his company dealt with many sole traders and that he regarded Wilkes as a sole trader contractor.  In my view the issue of whether an individual operates under his or her own name, or has a registered business name, is not of great weight in any determination of the over-riding issue i.e. an individual may be an employee or an independent contractor.

53     The only other matters challenged by Wilkes in his cross-examination of McElwey were in regard to the provision of aircraft by the Respondent, the life jackets for passengers and the office furniture and equipment.  McElwey agreed all these were provided by the Respondent.

54     In regard to the flights to Leeuwin Estate on 16 and 17 January 1998 McElwey said that the person who booked the flight had said “We will provide the pilot’s overnight accommodation”.  He denied that he personally had organised a tent for the pilot to use as overnight accommodation.

55     In my assessment the evidence of McElwey as to the terms of the original agreement is reliable.  However at no time did he or Wilkes discuss whether he was to be an employee or a subcontractor i.e. the issue now in dispute was not discussed.  Nor did they discuss whether he was a casual pilot or not.  In an overall sense I consider McElwey to be a slippery customer in that he negotiated a contract to serve the best interests of his company and later persuaded Wilkes to sign exhibit C3.  I do not believe he has misled the Court.  Like Wilkes he has tried to put a spin on his evidence to serve his best interests.

The Evidence of Logan-Scales

56     Given the conclusion I have reached it is unnecessary to summarise or comment on Mr Logan-Scales’ evidence.

Was the Claimant an Employee or an Independent Contractor?

57     The principles to be applied when considering this question were conveniently set out by the Full Bench of the Western Australian Industrial Relations Commission in United Constructions Pty Ltd v Birighitti 82 WAIG 2409, a decision delivered on 19 August 2002, as follows:

“First it is necessary to refer to a number of principles which govern the determination of the question of whether he was an employee as defined in the LSL Act (op cit).

(a) Whether a worker is an employee is a mixed question of fact and law.

(b) Ascertaining the terms of the contract and the correct inferences to be drawn from those terms, are questions of fact.  Whether or not the relationship arising from those terms is an employment relationship is a question of law (see Commissioner of Taxation (Cth) v J Walter Thompson (Australia) Pty Ltd [1944] 69 CLR 227 and Marshall v Whittakers Building Supply Co [1963] 109 CLR 210 at 216-217 per Windeyer J and also Australian Timber Workers’ Union v Monaro Sawmills Pty Ltd (1980) 29 ALR 322 (FC) per J B Sweeney and Evatt JJ at pages 323-324).

(c)     (i)     The nature of a contract of employment is to be ascertained from its terms, except when those terms are ambiguous or perhaps when they are a sham.

(ii) The nature of the relationship between an employer and a worker is determined by a proper characterisation of the contract between them.

(iii) Evidence relating to the subsequent conduct of the parties is admissible for the purpose of determining if the contract has been varied (see Australia Mutual Providence Society v Allan (1978) 52 ALJR 407 (PC) which was followed in Narich Pty Ltd v Commissioner of Payroll Tax (1983) 58 ALJR 30 (PC)).

(d) As many contracts to perform work are informal or not reduced to writing, it is often necessary to consider the totality of the relationship to ascertain the true nature of the contract (see Connelly v Wells (1994) 55 IR 73 (CA) per Gleeson CJ at pages 74-75).

(e) If the true parties to the contract are the employer and either a partnership or an employee corporation then it is very unlikely that the contract is an employment contract (see Australia Mutual Providence Society v Allan (op cit) (PC) at pages 410-411).

However, if the alleged partnership (or the attempted “incorporation” of the worker) is a sham or was divorced from the reality of the relationship then it will not be a bar to a finding of an employment contract (see Cam & Sons Ltd v Sargent (1940) 14 ALJR 162).

Remuneration of a worker need not be paid to the worker directly (see BWIU v Odco Pty Ltd (1991) AILR 239).

(f) An express term in a contract indicating the nature of the relationship created by it will carry weight in determining whether the relationship is one of employment (see Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 and Australia Mutual Providence Society v Allan (op cit) (PC)).

This is especially true if the contract and relationship are otherwise ambiguous (see Australia Mutual Providence Society v Allan (op cit) (PC) and Narich Pty Ltd v Commissioner of Payroll Tax (op cit) (PC)).

(g) However, a statement in a contract categorising the relationship as either one of employment or not does not determine the issue (see Cam & Sons Pty Ltd v Sargent (op cit)).

(h) If the expressed intention of the parties are a sham, or the evidence clearly establishes that the term categorising the relationship is misleading and contrary to the established facts then the term will be ineffectual (see Cam & Sons Pty Ltd v Sargent (op cit) at page 162 and also Neale v Atlas Products Pty Ltd [1955] 94 CLR 419 and also see Australia Mutual Providence Society v Allan (op cit) (PC)).

(i) The parties cannot alter the substance or true nature of their relationship by such an express term (see Cam & Sons Pty Ltd v Sargent (op cit)).

(j) An employee can arrange for remuneration to be paid by the employer to a partnership or a corporation without such arrangement affecting the nature of the relationship between the employee and the employee (see Burke v Reander Pty Ltd (1996) 69 IR 346 and Ellis v Saks Design Pty Ltd (1997) AILR 2963).

(k)     (i) In determining whether an employment relationship exists there is no single test to be applied.

(ii) The correct approach is to consider a wide range of indicia, none of which is determinative by itself (see Stevens v Brodribb Sawmilling Co Pty Ltd (op cit) per Mason CJ, Brennan J, Wilson and Dawson JJ and Deane J) (see also Hollis v Vabu Pty Ltd (Trading as Crisis Couriers) (2001) 181 ALR 263 (HC)) (see also Augustyn v Vistadale Pty Ltd as trustee for the Ranger Family Trust trading as Ranger Contracting (2002) 82 WAIG 939 (FB)).

(iii) A considerable amount of discretion is left in the hands of the court determining the issue (see Articulate Restorations and Development Pty Ltd v Crawford (1994) 57 IR 371).

(iv) It is fair to say that the courts engage in balancing a number of factors (see Stevens v Brodribb Sawmilling Co Pty Ltd (op cit)).

(l) In ascertaining whether an employment relationship exists, the control test is “significant” and “remains the surest guide” (see again Stevens v Brodribb Sawmilling Co Pty Ltd (op cit)).  That test, however, is not the sole criteria and is not in itself sufficient to conclusively determine the nature of the relationship (see Queensland Stations Pty Ltd v Commissioner of Taxation (Cth) [1945] 70 CLR 539).

(m) The mode of remuneration is one of the factors to be taken into account when determining if an employment relationship exists, but it is not alone determinative of that fact (see Stevens v Brodribb Sawmilling Co Pty Ltd (op cit) at pages 24 and 37, and see Queensland Stations Pty Ltd v Commissioner of Taxation (Cth) (op cit) also).

(n) The provision of benefits commonly provided to an employee is relevant in determining if an employment relationship exists ((eg) holiday pay, long service leave, PAYE tax, etc).

(o) Whether or not a worker is in business on his or her own account is irrelevant indicium in determining whether an employment relationship exists (see Marshall v Whittakers Building Supply Co (op cit)).

(p) Whether or not a worker is “part and parcel” of an organisation is a factor to be taken into account when determining if an employment relationship exists (see Commissioner of Taxation (Cth) v Barrett [1973] 129 CLR 395).

Put another way the question is whether the worker is an integral part of the business of he employer (see Commissioner of Taxation (Cth) v Barrett (op cit)).

(q) Whether tax deductions are or are not made from the remuneration paid to a worker and the type of tax that is deducted from that remuneration is relevant in determining whether an employment relationship exists (see Stevens v Brodribb Sawmilling Co Pty Ltd (op cit) and Climaze Holdings Pty Ltd v Dyson (1995) 13 WAR 487).

(r) These factors are not determinative ((ie) whether tax is deducted on a PAYE basis or not) (see Stevens v Brodribb Sawmilling Co Pty Ltd (op cit) per Wilson and Dawson JJ).

(s) In certain circumstances it has been held that the weight given to those factors is slight (see Connelly v Wells (op cit) (CA) and see Re Porter; Transport Workers’ Union (1989) 34 IR 179 per Gray J, and see also Australian Timber Workers’ Union v Monaro Sawmills Pty Ltd (op cit)).

For example, if the parties have adopted a particular tax position based on advice from others, and if weight is to be placed on this indicium, then the court is assuming that the parties are complying with the laws (see Australian Timber Workers’ Union v Monaro Sawmills Pty Ltd (op cit) at pages 378-379).

(t) Given the uncertainty of that assumption, heavy reliance should not be placed on those factors (see Re Porter; Transport Workers’ Union (op cit) per Gray J).

On the other hand courts have been critical of workers who seek to claim the benefits of income tax laws by representing themselves as independent contractors yet who represent themselves as employees for the purpose of claiming a statutory or other benefits (see Barro Group Pty Ltd v Fraser [1985] VR 577 at 180, but see also Jennings Industries Ltd v Negri (1982) 44 ACTR 9 per Kelly J).”

(at pages 2414 and 2415)

58     For my part I would add that whilst regard can be had to whether the parties regarded their contractual relationship one of employee/employer or independent contractor, if the evidence shows otherwise the parties cannot alter the truth of that relationship by putting another label on it (Massey v Crown Life Insurance Co [1978] 1 WLR 676 and Narich Pty Ltd v Commissioner of Pay-Roll Tax (1983) 2 NSWLR 597).

59     In applying the above principles to the facts of this case it is recognised that there is no single test which is to be applied.  While the control test is to be given significant weight, it is never to be the sole criterion and it is necessary to consider all the various principles.  It presents this Court with a difficult, time consuming and perplexing task.

60     Throughout the majority of the relevant period there was no written agreement between the parties.  The written agreement dated 10 August 1998 (exhibit C3) was signed, according to the Claimant when he was about to leave and he signed without applying his mind to its content or its title.  The document is clearly titled “Standard Agreement for a Contractor of Air Australia International”, and Mr Wilkes is described as “the contractor” in the document.  The Respondent submits the document should be accepted as a true reflection of what had previously been the oral arrangement.

61     In my view the document should be treated as a fresh agreement effective from 10 August 1998 and binding on both parties from that time.  There is no reference in the document to the prior period, by way of recital or otherwise.  There is no specific reference to the arrangement made orally as to Wilkes being operations manager which both parties agree was in place originally.  It is a standard form of contract which clearly establishes that Wilkes was a contractor from that date.

62     It is noted that the document includes a number of amendments which have been initialled by the Claimant and it is not accepted that the Claimant, who presents as an articulate and intelligent individual, did not fully understand and accept that from the time he signed that document he was a contractor and not an employee.  To the extent that his claim involves the period on or after 10 August 1998 the claim would therefore be dismissed.

63     It is my conclusion that the Claimant was an employee of the Respondent up to 9 August 1998.  The terms of the oral contract were as follows:

(1)    he was to attend the office at Jandakot on three days a week and be paid a flat $100.00 for each day (later increased to $125.00 a day.

(2)    he was to be trained in the duties of operations manager (and within four weeks he was trained) which involved running the office, taking phone bookings for flying lessons, allocating instructors to trainees, doing related paper work and computer processing.

(3)    the hours of work on the “office days” were to be from between 8.00 – 9.00 am through to 5.00 pm on the understanding that on days when early flights were booked he may have to attend as early as 6.00 am.  No particular days of the week were specified.

(4)    on the other days of the week he was able to undertake flying duties as an instructor or work for other aviation companies on the basis that the Respondent would pay the Claimant and the Respondent would then bill the other company.  In addition the agreement was that if no instructor was available to fly on his “office days” the Claimant could undertake flying duties, but for no additional remuneration.

(5)    he was to keep a note of his “office days” and any flights taken and submit a claim for payment each fortnight showing all details.  These notes were referred to as “invoices” – see exhibit C17.

(6)    the Claimant was responsible for his own taxation obligations i.e. no instalments were deducted, and no superannuation guarantee contributions were to be made by the Respondent.

(7)    the Claimant was able to rearrange his regular three “office days” to suit the workload and convenience of the employer i.e. a careful examination of exhibit C17 shows there is no regular pattern to the “office days”.

(8)    he supplied his own uniform (which was not described in any detail) but was supplied with a badge with wings saying “Air Australia International”.  He chose to use his own headphones and navigation calculator rather than those provided by the company.

(9)    on his days off i.e. weekends, public holidays, he was free to fly for other companies and be paid by them.  He did that for a friend on odd occasions.  Otherwise he was not to fly for other air navigation companies without the approval of Mr McElwey.

(10)  he did not receive holidays or sick leave.

64     I respectfully adopt the following passage from the majority of the High Court in Hollis v Vabu Pty Ltd [2001] HCA 44 at [43-44]; (2001) 181 ALR 263 at 276; where Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ observed:

"… In Humberstone [62], Dixon J observed that the regulation of industrial conditions and other statutes had made more difficult of application the classic test, whether the contract placed the supposed employee subject to the command of the employer.  Moreover, as has been pointed out [63]:

'The control test was the product of a predominantly agricultural society.  It was first devised in an age untroubled by the complexities of a modern industrial society placing its accent on the division of functions and extreme specialisation.  At the time when the courts first formulated the distinction between employees and independent contractors by reference to the test of control, an employer could be expected to know as much about the job as his employee.  Moreover, the employer would usually work with the employee and the test of control and supervision was then a real one to distinguish between the employee and the independent contractor.  With the invention and growth of the limited liability company and the great advances of science and technology, the conditions which gave rise to the control test largely disappeared.  Moreover, with the advent into industry of professional men and other occupations performing services which by their nature could not be subject to supervision, the distinction between employees and independent contractors often seemed a vague one.'

It was against that background that in Brodribb [64] Mason J said that, whilst these criticisms might readily be acknowledged:

'the common law has been sufficiently flexible to adapt to changing social conditions by shifting the emphasis in the control test from the actual exercise of control to the right to exercise it, 'so far as there is scope for it', even if it be 'only in incidental or collateral matters': Zuijs v Wirth Brothers Pty Ltd [65].  Furthermore, control is not now regarded as the only relevant factor.  Rather it is the totality of the relationship between the parties which must be considered.' "

65     This is obviously not a clear cut case.  However the above features, in my view, are strongly indicative of an employee/employer relationship, albeit a flexible working arrangement to suit the needs of the employer.  The Court notes that the totality of their working relationship shows that the employer had an appropriate degree of control over Wilkes, given his senior position.

Was the Claimant Employed as a Casual Pilot Under the Award?

66     It is necessary to set out the terms of clause 36(i) of the award before discussing this issue.  The clause is headed “Casual hire” and reads as follows:

36 (i) (i) Casual pilots may be employed where it can be demonstrated by the employer (if required) that the employment by him of an additional pilot cannot be justified, provided that a pilot who is out of work due to retrenchment by that employer shall be offered such casual employment first on the basis of merit and the requirements of the position.

  (ii) An employer may utilise pilots engaged on casual hire to fly up to an absolute maximum of 300 flying hours in the aggregate in any period of one year except in ANR 201/203 or SAL operations where an absolute maximum of 200 flying hours in the aggregate in any period of one year shall apply.

  (iii) A pilot on casual hire shall be paid for each flying hour or part thereof an hourly rate which shall be calculated in accordance with the following formula:

   By dividing the third year annual salary in the salary scale appropriate to the work in question as determined by clauses 1, 2, and 3 of Part B of this award, by the figure of 800 and adding to the resultant amount a loading of 25% to compensate for the casual nature of the engagement. The resultant figure shall be the hourly rate of pay for a pilot on casual hire and shall, subject to paragraph (iv) of this subclause, be paid for each flying hour or part thereof.

   Provided that in the case of a pilot employed on casual flight instruction the dividend salary for the purpose of the above formula shall be the salary applicable to the pilot’s year of service determined from the date the pilot was first employed by the employer as a Flight Instructor.

  (iv) A pilot who is to be employed on a casual basis shall be paid a minimum of four hours flying pay at the rate prescribed in paragraph (iii) of this subclause for each tour of duty. Provided that where the duration of the tour of duty is four hours or less, a minimum of two hours flying shall apply.

 Provided that a pilot employed for casual flight instruction shall be engaged for four hour periods in any one period of 24 hours and shall be paid a minimum of two hours flying pay for each such four hour period.

67     It is critical to the Claimant’s case that he was eligible for payment as a casual pilot under the award.  It is my assessment that he was at no time employed as a casual pilot.  The reality is that he was offered a position which involved a basic requirement of being at the office three days each week together with the opportunity to undertake either charter flying for the employer or instructing flights for the employer on the other days.  I am satisfied as fact that Wilkes agreed and understood that if he was for some reason required to fly on “office days” he would not be paid above the flat $100.00 or $125.00.

68     This was an employment contract designed to give Wilkes a guaranteed income of $300.00 per week with the option of increasing that income by undertaking flying duties on other days.  In those circumstances I do not accept that he was at any time hired as a casual pilot for the purposes of clause 36 of the award.

69     Mr Wilkes was not “out of work” from the time he commenced employment.  He was employed on the terms set out above.  I accept that he, like the other thirteen pilots, could accept or swap flights with trainees to suit his convenience, but in my view it is not appropriate to split his contract into an arrangement whereby he was employed part-time i.e. for three days a week, and as a casual pilot on the other days.  This was a “package” situation and I am satisfied that neither Wilkes or McElwey, at the relevant time, regarded the situation as being one where he was a casual pilot on the days other than “office days”.  The invoices (exhibit C17) simply list the “office days” and the flying trips without any attempt to suggest it was other than as I have found.

70     The authorities provide some guidance as to whether a particular relationship is one of a “casual employee” or not.  It is always a question of fact and no two cases will be the same.  The essence of casual work is that it is irregular, uncertain and arranged on an informal basis between the two parties.  In this case an objective examination of exhibit C17 reveals that the flying duties undertaken by Wilkes during the relevant period can be properly regarded as regular.

71     I would also adopt, with respect, the observations of Sharkey P in Serco (Australia) Pty Ltd v Moreno (1996) 76 WAIG 937 at 939, as follows:

“The concept of casual employment within the common law of employment, untrammelled by award prescription, is generally taken to connote an employee who works under a series of separate and distinct contracts of employment entered into for a fixed period to meet the exigencies of particular work requirements of an employer, rather than under a single and ongoing contract of indefinite duration.”

72     It seems to me that the Claimant has, after the event, ascertained that if he had become a casual pilot at that time his remuneration under the award would have been greater.  The evidence adduced in this hearing does not support a finding that the Claimant was hired as a casual pilot by the Respondent.

73     For all of the above reasons this claim must be dismissed and I order accordingly.

74     As indicated to the parties, these reasons for decision will be posted to each party by the Clerk of the Court.  There is liberty to apply on the question of costs if costs cannot be agreed by the parties within the next 28 days.

IG Brown

Industrial Magistrate