Leigh Martin -v- Michael MoloneyWildflower Electrical and Refrigeration Services Pty Ltd

Document Type: Decision

Matter Number: B 189/2013

Matter Description: Order s.29(1)(b)(ii) Contract Entitlement

Industry: Electricity and Gas Supply

Jurisdiction: Single Commissioner

Member/Magistrate name: Senior Commissioner S J Kenner

Delivery Date: 10 May 2019

Result: Application dismissed

Citation: 2019 WAIRC 00232

WAIG Reference: 99 WAIG 567

DOCX | 46kB
2019 WAIRC 00232

WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

CITATION : 2019 WAIRC 00232

CORAM
: SENIOR COMMISSIONER S J KENNER

HEARD
:
THURSDAY, 14 FEBRUARY 2019

DELIVERED : FRIDAY, 10 MAY 2019

FILE NO. : B 189 OF 2013

BETWEEN
:
LEIGH MARTIN
Applicant

AND

MICHAEL MOLONEY
WILDFLOWER ELECTRICAL AND REFRIGERATION SERVICES PTY LTD
Respondent

Catchwords : Industrial Relations Law (WA) - Contractual benefits claim - Claim for underpayment of salary - Whether applicant was an independent contractor or employee - Whether a separate contract of service and training contract existed -Whether an apprentice under the Vocational Education and Training Act 1996 (WA) can be an independent contractor - Whether a collateral contract existed for payment above award rate - Principles applied – Applicant was an employee for work performed under training contract - Separate contract of service did not exist - Agreed rate of pay above award rate formed collateral contract - Applicant's claims do not constitute contractual benefits within Commission's jurisdiction - If separate contract did exist no benefit has been denied - Claim for underpayment of salary refused - Order issued
Legislation : Industrial Relations Act 1979 (WA)     
Bankruptcy Act 1966 (Cth) ss 60(2), 86
Vocational Education, Employment and Training Act 1994 (SA)
Vocational Education and Training Act 1996 (WA)
Result : Application dismissed
REPRESENTATION:

Counsel:
APPLICANT : IN PERSON
RESPONDENT : MR D KIEL OF COUNSEL
Solicitors:
RESPONDENT : DLA PIPER

Case(s) referred to in reasons:
AHERN V AFTPI (1999) 79 WAIG 1867
Automatic Fire Sprinklers v Watson (1946) 72 CLR 435

Coxon v Kat [2009] SASC 28

Csomore v Public Service Board of New South Wales (1987) 10 NSWLR 587

Ford v Lismore City Council (1989) 28 IR 68

Heilbut Symons and Co v Buckleton [1912] AC 30

HOTCOPPER AUSTRALIA LTD V SAAB (2001) 81 WAIG 2704
Nokes v Doncaster Amalgamated Collieries Ltd [1940] AC 1014; [1940] 3 All ER 549

Oates v Sanders Executive Pty Ltd t/a L J Hooker Morley (1999) 79 WAIG 1192

Personnel Contracting Pty Ltd t/as Tricord Personnel v The Construction Forestry Mining and Energy Union of Workers (2005) 85 WAIG 5
Philip Digney v The Black Cockatoo Preservation Society of Australia [2014] WAIRC 01285; (2014) 95 WAIG 562
Shepperd v Ryde Corp (1952) 85 CLR 1
Case(s) also cited:
Australian Mutual Provident Society v Chaplin (1978) 18 ALR 385
Balfour v Travelstrength Ltd (1980) 60 WAIG 1015
BGC (Australia) Pty Ltd v Phippard [2002] WASCA 191
Byrne v Australian Airlines Limited (1995) 185 CLR 410
Coventry v Charter Pacific Corporation Limited [2005] HCA 67
Deane v The City Bank of Sydney (1904) 2 CLR 198
Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55
Fair Work Ombudsman v D’Adamo Nominees Pty Ltd (No.4) [2015] FCCA 1178
Fergusson v The Salvation Army (Western Australia) Property Trust as the trustee for the Salvation Army (WA) Social Work trading as Salvos Stores [2014] WAIRComm 1042
Gye v McIntyre (1991) 171 CLR 609
Hart v McDonald (1910) 10 CLR 417
Hartwig v Interstate Enterprises Pty Ltd trading as ATS Recruitment Services [2016] WAIRComm 741
Health Services Union of Western Australia (Union of Workers) v Director General of Health in Right of the Minister for Health as the Metropolitan Health Service, the South West Health Board and the WA Country Health Service [2008] WAIRComm 215
HAW Jones Pty Ltd v Neille [1967] WAR 181
Hoffman v TVT Media Pty Ltd (1997) 77 WAIG 2999
Hollis v Vabu (2001) 207 CLR 21
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41
Hoyt’s Pty Ltd v Spencer (1919) 27 CLR 133
James Turner Roofing Pty Ltd v Peters [2003] WASCA 28
Keane v Lomba Pty Ltd [1998] WAIRComm 25
Major v Bretherton (1928) 41 CLR 62
O’Donoghue v Argyle Diamond Mines Pty Ltd [1999] WAIRComm 120
Perth Finishing College Pty Ltd v Watts (1989) 69 WAIG 2307
Re Nguyen (1992) FCR 320
Stein v Blake [1996] AC 243
The Western Australian Builders’ Labourers, Painters and Plasterers Union of Workers v R B Exclusive Pools Pty Ltd t/as Florida Exclusive Pools [1996] WAIRComm 231
Thompson v Gregmaun Farms Pty Ltd (2000) 80 WAIG 1733
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165

Reasons for Decision

Background

1 These proceedings have a long history. The applicant filed his notice of application claiming denied contractual benefits under s 29(1)(b)(ii) of the Industrial Relations Act 1979 (WA) (‘IR Act’) on 25 November 2013. Following three prior adjournments to allow proceedings in the Federal Circuit Court to run their course, the proceedings before the Commission were stayed by order dated 21 May 2015, on the basis that a sequestration order was made against the applicant under the Bankruptcy Act 1966 (Cth) on 11 May 2015. In accordance with s 60(2) of that Act proceedings must be stayed, unless and until, the applicant’s trustee makes an election, in writing, to either continue or discontinue these proceedings.
2 On 9 October 2018 this matter was listed for mention because the applicant informed my Chambers by letter of 30 August 2018, that he had been discharged from his bankruptcy. By letter dated 26 November 2018, a copy of which was provided to my Chambers by the applicant, the Official Trustee, appointed as trustee of the applicant’s bankrupt estate, confirmed that any interest in the chose in action pertaining to the proceedings in the Industrial Relations Commission had been assigned to the applicant, and this had completed on 8 November 2018. Accordingly, the applicant advised that he wished to proceed with his application and the matter was listed for a hearing on the merits.
3 The applicant was initially engaged by the respondent, an electrical and refrigeration business, on or around April 2011, to carry out refrigeration work as a subcontractor. The applicant had his own business Refrigid Pty Ltd trading as Absolute Climate Control. He was contracting to the respondent for this work. How this arrangement came about is somewhat unclear. The applicant gave evidence that he first contacted the respondent when he responded to an advertisement for the sale of the respondent business. On the other hand, the respondent’s position is that the applicant responded to an advertisement for the position of refrigeration mechanic. In any event, the applicant spoke with the respondent and decided to visit the respondent business in Margaret River to, according to the applicant, observe business operations, work with the respondent and consider purchasing the business. The respondent maintained that the applicant came to Margaret River to perform refrigeration work for the respondent in a subcontractor capacity.
4 At some point after April 2011, the idea was discussed that the applicant could complete an electrical apprenticeship under the supervision of the respondent, so that the applicant could gain a qualification in electrical work. There was some disagreement as to which party suggested or initiated this arrangement. The applicant gave evidence that the respondent offered the apprenticeship position to make the offer of the sale of the respondent business more attractive. The respondent’s position is that the applicant approached the respondent to enquire about commencing an electrical apprenticeship.

The Training Contract
5 On 30 June 2011, the applicant and respondent signed a Training Contract under the Vocational Education and Training Act 1996 (WA) (‘VET Act WA’) and the applicant commenced an electrical apprenticeship under the supervision of the respondent’s Director, Mr Moloney. The contract stated the applicant was employed on a fulltime basis of 38 hours per week. The applicant gave evidence that the parties agreed to a salary of $1,140.00 per week. He said that despite the apprenticeship, most of his work, approximately 90%, was refrigeration related. The applicant maintained that the respondent gave him an invoice book which he used for work done for the respondent. Tendered as exhibits A2 and R1 were bundles of invoice/statement documents from Absolute Climate Control to the respondent. These covered the period May to December 2011. The documents show that most of the work was for refrigeration services supplied by the applicant.
6 Mr Moloney testified that the applicant saw great potential working in business in the Margaret River region. He said the applicant “begged” him to give him an electrical apprenticeship, so he could get the skills in the electrical side of the business. According to Mr Moloney, the applicant would continue working as a contractor and would receive training at the same time. The agreement was the applicant would be paid $50 per hour for refrigeration work and $30 per hour for electrical work. This was significantly above the rates prescribed by the Electrical, Electronic and Communications Contracting Award 2010, which applied to the Training Contract and was specified in it. Despite this, Mr Moloney testified that he in fact paid the applicant, more often than not, the higher rate for all of the work done. Mr Moloney said in his evidence that he paid the applicant for all work that he did for the respondent. Cheque records and bank statements, tendered as exhibits R6 and R7 respectively, were said by the respondent to support this.
7 The respondent also submitted that there was a separate collateral agreement to the Training Contract which created the obligation to pay Mr Martin for work he performed. The terms of this separate agreement, according to the respondent, were based on the payments of $50 per hour for refrigeration work and $30 per hour for electrical work, that were over the award rate.
8 The respondent submitted that it was open to the Commission to make findings that the relationship between the parties was a contracting arrangement. Despite this, the respondent conceded that a Training Contract, by nature, is one that would typically be an employment relationship. The applicant maintained that he was employed by the respondent between 30 June 2011 and 27 April 2012 and that it is contrary to the law to engage an electrical apprentice as a subcontractor.

Cancellation of the Training Contract
9 On or around 1 September 2011, the applicant purchased the respondent’s refrigeration business name which traded as Margaret River Air Conditioning and Refrigeration. Whilst Mr Moloney said the respondent had an industrial property in Karratha, in the period October 2011 to January 2012, the respondent was still operating in the Margaret River area, mainly doing electrical work. He said that there was no reason the applicant could not have been involved in some of this work.
10 The respondent gave evidence that after September 2011, the applicant ceased regularly attending work for the respondent and after 2 December 2011, he did not attend work at all. The respondent says the applicant was experiencing a marital breakdown at that time and the respondent’s Director, Mr Moloney, received numerous complaints from regular clients about Mr Martin, who “would go to a job and swear, kick and yell” and act otherwise inappropriately. The respondent said that when the applicant did work, it was as a refrigeration mechanic and he had to advertise for an electrician to cover the work that the applicant was supposed to do for the respondent company in Margaret River. The applicant also failed to attend the SouthWest Institute of Technology Training for required training.
11 The applicant gave evidence that after the sale of the business was complete, Mr Moloney would disappear for weeks at a time and in December 2011, Mr Moloney stopped providing work or training under the Training Contract . The applicant said that the work provided to him by the respondent was not sufficient to warrant employing a refrigeration mechanic, and this is why the applicant had to perform this work himself. The applicant said he could not afford to attend TAFE because he was not being provided with work. A bundle of documents tendered as exhibit R3, were tax invoices issued by Absolute Climate Control to various customers over the period September 2011 to December 2011. The applicant contended he had to work on his own behalf over this period because the respondent was not paying him.
12 The respondent gave evidence that he postponed cancelling the applicant’s apprenticeship to give the applicant a chance to return to work, however eventually decided to make an application to cancel the Training Contract , after which the cancellation date of 27 April 2012 was granted. The applicant gave evidence that he was not opposed to the cancellation, as he was not receiving the requisite supervision and training required to successfully complete his qualification.
13 The applicant claims a sum of $37,058.90 for the denied contractual benefit of underpayment of salary that the applicant says was not paid to him. The applicant says he was paid a total of $13,706.00 throughout the period of his employment with the respondent.

Relevant legal principles
Denied contractual benefits
14 The relevant principles in relation to denied contractual benefits claims are well established. The issue to be determined is whether the applicant had a legal right under his employment contract with the respondent, to receive the claimed underpayment of salary. The applicant must establish that his claim relates to an industrial matter; that the applicant was an employee; that the benefit claimed is one to which the applicant was entitled under his contract of service; the contract is a contract of service; the benefit claimed is not under an award or order; and the benefit claimed has been denied: Hotcopper Australia Ltd v Saab (2001) 81 WAIG 2704; Ahern v AFTPI (1999) 79 WAIG 1867.

Employee or contractor
15 The issue of whether a person is an employee or an independent contractor, involves the consideration of the totality of the relationship between the parties: Personnel Contracting Pty Ltd t/as Tricord Personnel v The Construction Forestry Mining and Energy Union of Workers (2005) 85 WAIG 5. In Philip Digney v The Black Cockatoo Preservation Society of Australia [2014] WAIRC 01285; (2014) 95 WAIG 562 I set out the relevant principles at par 23, as follows:
23 The relevant principles as to whether a person should, as a matter of fact and law, be regarded as an employee or an independent contractor, have been dealt with by the Industrial Appeal Court. In Personnel Contracting Pty Ltd t/as Tricord Personnel v The Construction Forestry Mining and Energy Union of Workers (2004) 85 WAIG 5, Steytler J dealt with this issue at pars 20-28, EM Heenan J at pars 50-52 and Simmonds J dealt with the issue at pars 98-100. In particular, Simmonds J said at pars 95-101 as follows:
95 The common law test for distinguishing a relationship of employer/employee, on the one hand, and principal/independent contractor, on the other, has recently been reviewed in some detail in the judgment of Hasluck J of this Court in Birighitti (supra), at [57] to [67]. The other members of the Court (Anderson J, who dissented on the jurisdictional issue in the case, and Scott J) did not find it necessary to enter into the question in as much detail because of the case's particular facts.
96 In this case, where it seems to me the matter is rather more evenly balanced than in Birighitti , I consider it is necessary to review the matter again, particularly as it was contended in this case that there had been a shift in the law not entered into in Birighitti . I review the matter again without meaning to depart from the view of Hasluck J there in any way, but to emphasise matters of first principle particularly relevant to this case.
97 The most recent High Court authority in point, for the purposes of vicarious liability for the negligence of a bicycle courier, is Hollis v Vabu Pty Ltd (supra). There was a clear majority on the issue of the application of the test, that of Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ, with McHugh J dissenting, and Callinan J not expressing a concluded view on the matter. As to the test itself, however, I see no clear difference between all of the members of the Court who expressed a concluded view.
98 The test set out in Vabu by the majority is expressed in terms of the difference between a person (an employee) whose work serves another, and is done in that other's business, on the one hand, and a person whose work is likewise for the benefit of another's business, but is done in the course of the carrying on of a trade or business of the person doing the work, on the other. The majority referred (Vabu, at 39) for this purpose to Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of Australia Ltd (1931) 46 CLR 41, at 48, per Dixon J, and to Marshall v Whittaker's Building Supply Co (1963) 109 CLR 210, at 217 per Windeyer J, where language of this sort is used. The Vabu majority also referred to Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313, at 366 per McHugh J, where the distinction is expressed in terms of the independent contractor as a person who does the work not as "the representative of the employer".
99 For the application of the test, and particularly for the relevance of the matter of "control" of the work done, the Vabu majority refer to the dicta in Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16, at 29 per Mason J. There, his Honour acknowledges the historical significance of the "control test" and the difficulties in using it in the historical ways in modern working conditions, where he says
"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 [(1955) 93 CLR 461, at 571]. 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."
100 What his Honour meant by the reference to the factors, including but not limited to control, subsumed by the "totality of the relationship" is indicated by an earlier passage in his judgment in Stevens (supra), which is not referred to in Vabu, but which is a passage quoted in Odco as setting out the law on this point ((supra) at 754):
"The approach of this court has been to regard it [control] merely as one of a number of indicia which must be considered in the determination of the question: Queensland Stations Pty Ltd v FCT (1945) 70 CLR 539 at 552; Zuijs' case [supra]; FCT v Barrett (1973) 129 CLR at 401; 2 ALR 65; Marshall [supra] at 218. Other relevant factors include, but are not limited to, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and provision for holidays, the deduction of income tax and the delegation of work by the putative employee."
101 As these dicta tend to indicate, the application of the test is a matter of some difficulty, as this case illustrates. I need to consider that question separately.
24 His Honour then went on to apply the test set out in the various decisions of the High Court referred to, and took into account a number of factors including control, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and provision for holidays, the deduction of income tax, the delegation of work, indicia of a separate business, integration in the organisation, and the language of the parties’ written contract: see pars 108-150 inclusive.
25 The “multi factor” test referred to and applied by Simmonds J, as set out above, was referred to and applied by the High Court in Hollis v Vabu Pty Limited (2001) 207 CLR 21

Contract of service or contract of training?
16 In Western Australia, apprentices can be employees and any rights and duties as between the apprentice and their employer arise in the first instance and are governed by, the applicable training legislation. The relevant legislation applicable to the applicant’s contract of training is the VET Act WA. Section 60E is in the following terms:

60E. Training Contracts
(1) A training contract is a contract under which –
(a) a person who is or will be an employer agrees the following –
(i) that a person who is or will be an employee will be employed while he or she fulfils the requirements of the contract in order to obtain a class A or class B qualification;
(ii) to train the employee in accordance with the contract;
(iii) to permit the employee to fulfil his or her obligations under the contract and to be trained and assessed in accordance with the contract;
(iv) that any time spent by the employee in performing his or her obligations under the contract and is being trained and assessed under the contract, whether at the employer’s workplace or not, is to be taken for all purposes (including the payment of remuneration) to be time spent working for the employer;
and
(b) the employee agrees to fulfil his or her obligations under the contract and to be trained and assessed in accordance with the contract.
(2) With the approval of the chief executive, 2 or more employers may enter into a training contract with one apprentice.
(3) A training contract must do the following –
(a) state the class A or B qualification to which the contract relates;
(b) comply with the regulations and with any requirements imposed under the regulations.
(4) Subject to the regulations, a training contract –
(a) may be varied by the parties; and
(b) may be suspended by a party; and
(c) may be assigned by the employer to another person who employs the apprentice.

17 It is well-established that an apprentice/trainee is usually an employee and the fact an apprentice is an employee, does not necessarily mean that a contract of service is in force. As was said by the Full Court of the Supreme Court of South Australia in Coxon v Kat [2009] SASC 28 at 305 (Bleby J with Duggan and White JJ agreeing):
305 At common law, there is a distinction between a contract of service and a contract of apprenticeship depending on whether the primary purpose of the contract is the performance of work for the master or the teaching of a trade. [6] A contract is either one or the other. It was never suggested that there could be two contracts in parallel - a contract of employment and a separate contract of apprenticeship. It follows that a contract of apprenticeship could always provide, as a secondary purpose, for the performance of work or service for the employer such that the apprentice was also an employee.
18 It appears that the contract of traineeship is generally the sole contract existing between the apprentice/trainee and their trainer. The contract establishes the relationship of an apprentice as an employee with their employer, who is also the trainer of the apprentice.
19 Contracts of traineeship are regulated by the relevant training legislation and may therefore be exempt from some common law practices where the common law position is clearly overridden. For example, in Coxon, it was unanimously held that upon the change of ownership of the business in question, the contract of training that the business entered into with a trainee was not terminated, as would be the effect at common law of a contract of employment (see for example, Ford v Lismore City Council (1989) 28 IR 68). The common law position is that a relationship will be governed by either a contract of employment or a contract of traineeship, however it is recognised that a contract of traineeship may and often does have a secondary purpose of providing a service. It is well-established in Western Australia that the common law position has been altered by statute which has provided, for more than a century, that an apprentice is an employee. This is recognised in the definition of “employee” in s 7 of the current IR Act.
20 The approach on the cases, given the regulation of contracts of traineeship by statute, is to consider the operation of the legislation. The terminology used by the legislation is a significant factor in determining whether the contract of traineeship creates a contract of service and an employment relationship. In Coxon, the use of terms such as “employer”, “conditions of employment” and “to employ and to teach” in Part 4 of the Vocational Education, Employment and Training Act 1994 (SA) were considered relevant. This terminology is largely in the same terms in the VET Act WA and is consistent with an apprentice being employed. Furthermore, in s 60E(2) of the VET Act WA, two or more employers may be party to the same Training Contract with a trainee or an apprentice. This concept is plainly at odds with a contract of employment at common law. So too is the ability for a Training Contract to be assigned from one employer to another under s 60E(4)(c). A contract of service is a contract of a personal nature and may not be assigned in this manner, without the express or implied consent of the employee: Nokes v Doncaster Amalgamated Collieries Ltd [1940] AC 1014; [1940] 3 All ER 549.
21 The applicant was to complete an electrical qualification, part of which included an apprenticeship with the respondent. As such, the applicant and respondent entered into the Training Contract under the VET Act WA. Prior to this, the applicant may have commenced work with the respondent in an alternative capacity, as a subcontractor or as an employee performing refrigeration work as a mechanic. The circumstances of the present case are unusual in that the apprentice also completed other work for the employer or trainer, outside the scope of the Training Contract , or work of a different kind to that contemplated by the Training Contract. Some work performed by the applicant was not electrical work.

Consideration
22 The difficulty arising in this case is the lack of clarity in relation to the work done by the applicant on his own behalf, through his business Absolute Climate Control, in relation to refrigeration services, and other non-refrigeration work. It was common ground that the applicant was performing refrigeration work for both the respondent and for other customers at some time in the working relationship. In this respect, the applicant used his own business and invoiced for the work performed, including for GST. The respondent also maintained that the applicant was engaged as a contractor in relation to both the electrical and refrigeration work, despite the parties entering into the Training Contract.
23 An issue arising therefore is whether a person who is an independent contractor can also be an apprentice for the purposes of s 60E of the VET Act WA. I do not consider they can be. As I have mentioned above, the independence of an independent contractor/principal relationship is quite at odds with the required training, oversight and supervision inherent in an apprenticeship. The essence of an apprenticeship is a commitment by the employer to train in the relevant field and the corresponding commitment by the apprentice to undertake and successfully complete the training offered. As an apprenticeship requires close supervision and, by implication, further training, this is intrinsically at odds with the notion that an independent contractor could be the subject of an apprenticeship contract.
24 Furthermore, the terms of the Training Contract (exhibit A1) and the relevant provisions of the VET Act WA, set out above, make it plain that in addition to the training obligations set out in the Training Contract, the relationship between the parties under the Training Contract is one of employer and apprentice. Nowhere in either the Training Contract or the VET Act WA, is it contemplated that the relationship between the parties is or could be, that of principal and independent contractor. Accordingly, to the extent that work was done by the applicant under the terms of the Training Contract, in relation to electrical work, it was governed by the Training Contract, the VET Act WA and the relevant award. The applicant was an employee in relation to this work and not an independent contractor.
25 This does not mean however, that the applicant was also employed under a separate common law contract of service, which is an essential ingredient of a contractual benefits claim in this jurisdiction. In my view, the conclusions reached by the Court in Coxon, apply with equal force in this jurisdiction. The material terms of the vocational and training legislation under consideration in that case are very similar to the terms of the VET Act WA. It is clear from both the VET Act WA and the terms of the Training Contract itself, that its primary purpose was not the performance of work, but an undertaking to provide and receive training respectively. In such circumstances, as concluded in Coxon, a secondary purpose of the Training Contract can be the performance of work, which the applicant clearly did during the period it was in effect.
26 Accordingly, whilst I accept that, at least in relation to work performed under the Training Contract the applicant was an “employee” for the purposes of s 7 of the Act, he was not party to a separate contract of service. His claim for wages is not within the Commission’s denied contractual benefits jurisdiction.
27 In relation to other work performed by the applicant, this is also a difficult issue to resolve. It is difficult because of the overlap and degree of confusion on the evidence as to the work done by the applicant under the Training Contract as an employee on the one hand, and the work done as a contractor under the auspices of his own business, on the other. It was clear on the evidence that prior to and on the sale of the business to the applicant, the applicant was performing refrigeration contracting work on his own behalf. Exhibit R3 demonstrates that at least over the period September to December 2011, the applicant was performing refrigeration work on behalf of his business for a range of different customers in the Margaret River area. Whilst the applicant maintained that he had to do so because the respondent was not giving him sufficient work, the fact remains that the applicant performed a substantial amount of work as an independent contractor and not as an employee of the respondent, under a common law contract of employment.
28 As noted above, the respondent also advanced an alternative argument to the effect that the arrangement between the applicant and the respondent, to pay the applicant the higher hourly rate of $30 per hour for electrical work, significantly higher than the award rate, constituted a collateral contract. A collateral contract is one where there is a separate representation or promise by one party to the other, to induce the other to enter the main contract: Shepperd v Ryde Corp (1952) 85 CLR 1. The respondent submitted that it was open to conclude from the evidence that the applicant would not enter into the Training Contract at the base rate of pay in the award and the offer of the higher rate of $30 was made. Part of this arrangement was that the applicant would continue to perform refrigeration work via his own company, as required. The applicant would record his hours of work by way of an invoice presented to the respondent and the applicant would be paid at the higher rate for those hours. On this basis, it was submitted by the respondent that the collateral contract had an independent existence and constituted an enforceable contract: Heilbut Symons and Co v Buckleton [1912] AC 30. The further argument put in this regard was that for the over award rate of pay agreed to be effective under the Training Contract, there needed to be compliance with reg 46 of the Vocational Education and Training (General) Regulations 2009. This requires a formal variation to the Training Contract. In the absence of this, any purported variation is ineffective.
29 The upshot of this according to the respondent, was that any collateral contract to pay the applicant the higher rate of pay cannot constitute a denied contractual benefit. This is because whilst the payment of the hourly rate constitutes a “benefit” for the purposes of s 29(1)(b)(ii) of the IR Act, it is not a benefit “arising under a contract of employment”.
30 In my view there is considerable force in this argument. I accept that on the evidence it is open to conclude that the applicant, understandably, would not accept the award rate of pay for the adult apprenticeship, given his skills and experience. I also accept that the higher rate of pay was agreed on the basis it would make the apprenticeship more attractive to the applicant, as an experienced refrigeration tradesperson. As such, this is a further basis to conclude that the arrangement for the higher agreed rate was not a separate contract of employment, but a collateral contract, which stood apart from the Training Contract. It was not a contract of service and as such, cannot form the basis for a contractual benefits claim in this jurisdiction.
31 Furthermore, under reg 46(3) of the Regulations, the parties may vary the employment arrangement that governs a training contract under the VET Act WA. However, such a variation must be provided in writing to and receive the written approval of the Chief Executive Officer under reg 46(5) of the Regulations. Any purported variation that does not comply with this requirement is of no effect. The only employment arrangement specified in cl 38 of the Training contract was the federal award that applied. There was no reference to the agreed higher hourly rates of $30 and $50 per hour respectively. Thus, even if the terms of the Training Contract could constitute a separate and enforceable contract of service, its terms did not include the rates of pay on which the applicant’s claim was based.
32 As to the claims for annual leave and loading, these were award benefits under the relevant award as specified in the Training Contract. In the absence of any separate common law contract aside from the Training Contract, there is no basis for any contention that the terms of the award could be incorporated into the contract and be enforceable in this jurisdiction. The applicant has not established any common law contractual entitlement in this respect. As for the applicant’s superannuation claim, it is settled that statutory entitlements to superannuation are not enforceable as contractual benefits: Oates v Sanders Executive Pty Ltd t/a L J Hooker Morley (1999) 79 WAIG 1192. There was no suggestion that the superannuation claim had a basis other than as a statutory entitlement.
33 For these reasons I am not satisfied the applicant’s claims constitute contractual benefits amenable to the Commission’s jurisdiction.
34 In the alternative, if I am incorrect in this regard, I turn to consider whether, on the evidence, if there was a contract of service between the parties at the material times, any benefit claimed under it has been denied. It is important to clearly re-state in this respect what the agreement was. The Training Contract specified the application of the award at cl 38. However, these proceedings are not in the nature of enforcement of the award. Claims of that kind must be brought elsewhere. As I have already found, the agreement between the parties was for the payment by the respondent to the applicant of $30 an hour for electrical work and $50 per hour for refrigeration work. I reject the contention of the applicant that it was agreed that the applicant be paid $1,140.00 per week for a 38-hour week. This seems to be how the applicant has chosen to describe the arrangement. Whilst reference to this figure was made in a document entitled “Support for Adult Apprentices Claim Form Checklist”, attached to the applicant’s notice of application, it is unclear what this was about. It seems it may have been part of some form of incentive scheme to employers to employ apprentices. However, I am only concerned for present purposes, with the terms of any contract of service and the evidence before me in these proceedings.
35 The material tendered in evidence, by way of invoices provided by the respondent and cheque and bank statements of the respondent, lead to the conclusion, as summarised by the respondent in its written submissions, that the applicant was paid for all work that he performed under the Training Contract. This covered the entire period from July 2011 to June 2012. I have no reason on the documentary evidence and the testimony of Mr Moloney, to doubt that the applicant was paid about $15,200 over this period. I have also found that for the reasons set out above, the applicant’s attendance for work was very irregular after September 2011 and he did not attend TAFE, as required under the Training Contract, at any time. On the evidence, it seems that after early December 2011, the applicant did not attend for work at all.
36 The essence of the applicant’s contractual claim was for payment of $1,140.00 per week for 38 hours of work for the duration of the Training Contract, until its termination on 27 April 2012. This claim could not be made out, even if there was a stand-alone contract of service on the terms alleged by the applicant. This is because the applicant cannot claim for payment of wages or salary in respect of work not performed by him. The essence of a contract of service is the performance of work, in return for which, a wage or salary is paid: Automatic Fire Sprinklers v Watson (1946) 72 CLR 435; Csomore v Public Service Board of New South Wales (1987) 10 NSWLR 587. It is also the case that the terms of the Training Contract itself, expressly reflected this core principle.
37 For these reasons, the applicant cannot demonstrate that he performed the work to be entitled to payment under any contract of service with the respondent, even if one had been in existence over the relevant period. Given this conclusion, it is unnecessary for me to consider the respondent’s alternative argument that if any monies are found to be owed to the applicant, it should be the subject of a set-off under s 86 of the Bankruptcy Act 1966 (Cth).
38 Accordingly, for the foregoing reasons, the application must be dismissed.




Leigh Martin -v- Michael Moloney Wildflower Electrical and Refrigeration Services Pty Ltd

WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

 

CITATION : 2019 WAIRC 00232

 

CORAM

: Senior Commissioner S J Kenner

 

HEARD

:

Thursday, 14 February 2019

 

DELIVERED : Friday, 10 May 2019

 

FILE NO. : B 189 OF 2013

 

BETWEEN

:

Leigh Martin

Applicant

 

AND

 

Michael Moloney

Wildflower Electrical and Refrigeration Services Pty Ltd

Respondent

 

Catchwords : Industrial Relations Law (WA) - Contractual benefits claim - Claim for underpayment of salary - Whether applicant was an independent contractor or employee - Whether a separate contract of service and training contract existed -Whether an apprentice under the Vocational Education and Training Act 1996 (WA) can be an independent contractor - Whether a collateral contract existed for payment above award rate - Principles applied – Applicant was an employee for work performed under training contract - Separate contract of service did not exist - Agreed rate of pay above award rate formed collateral contract - Applicant's claims do not constitute contractual benefits within Commission's jurisdiction - If separate contract did exist no benefit has been denied - Claim for underpayment of salary refused  - Order issued

Legislation : Industrial Relations Act 1979 (WA)     

  Bankruptcy Act 1966 (Cth) ss 60(2), 86

  Vocational Education, Employment and Training Act 1994 (SA)

  Vocational Education and Training Act 1996 (WA)

Result : Application dismissed

Representation:

 


Counsel:

Applicant : In person

Respondent : Mr D Kiel of counsel

Solicitors:

Respondent : DLA Piper

 

Case(s) referred to in reasons:

Ahern v AFTPI (1999) 79 WAIG 1867

Automatic Fire Sprinklers v Watson (1946) 72 CLR 435

 

Coxon v Kat [2009] SASC 28

 

Csomore v Public Service Board of New South Wales (1987) 10 NSWLR 587

 

Ford v Lismore City Council (1989) 28 IR 68

 

Heilbut Symons and Co v Buckleton [1912] AC 30

 

Hotcopper Australia Ltd v Saab (2001) 81 WAIG 2704

Nokes v Doncaster Amalgamated Collieries Ltd [1940] AC 1014; [1940] 3 All ER 549

 

Oates v Sanders Executive Pty Ltd t/a L J Hooker Morley (1999) 79 WAIG 1192

 

Personnel Contracting Pty Ltd t/as Tricord Personnel v The Construction Forestry Mining and Energy Union of Workers (2005) 85 WAIG 5

Philip Digney v The Black Cockatoo Preservation Society of Australia [2014] WAIRC 01285; (2014) 95 WAIG 562

Shepperd v Ryde Corp (1952) 85 CLR 1

Case(s) also cited:

Australian Mutual Provident Society v Chaplin (1978) 18 ALR 385

Balfour v Travelstrength Ltd (1980) 60 WAIG 1015

BGC (Australia) Pty Ltd v Phippard [2002] WASCA 191

Byrne v Australian Airlines Limited (1995) 185 CLR 410

Coventry v Charter Pacific Corporation Limited [2005] HCA 67

Deane v The City Bank of Sydney (1904) 2 CLR 198

Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55

Fair Work Ombudsman v D’Adamo Nominees Pty Ltd (No.4) [2015] FCCA 1178

Fergusson v The Salvation Army (Western Australia) Property Trust as the trustee for the Salvation Army (WA) Social Work trading as Salvos Stores [2014] WAIRComm 1042

Gye v McIntyre (1991) 171 CLR 609

Hart v McDonald (1910) 10 CLR 417

Hartwig v Interstate Enterprises Pty Ltd trading as ATS Recruitment Services [2016] WAIRComm 741

Health Services Union of Western Australia (Union of Workers) v Director General of Health in Right of the Minister for Health as the Metropolitan Health Service, the South West Health Board and the WA Country Health Service [2008] WAIRComm 215

HAW Jones Pty Ltd v Neille [1967] WAR 181

Hoffman v TVT Media Pty Ltd (1997) 77 WAIG 2999

Hollis v Vabu (2001) 207 CLR 21

Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41

Hoyt’s Pty Ltd v Spencer (1919) 27 CLR 133

James Turner Roofing Pty Ltd v Peters [2003] WASCA 28

Keane v Lomba Pty Ltd [1998] WAIRComm 25

Major v Bretherton (1928) 41 CLR 62

O’Donoghue v Argyle Diamond Mines Pty Ltd [1999] WAIRComm 120

Perth Finishing College Pty Ltd v Watts (1989) 69 WAIG 2307

Re Nguyen (1992) FCR 320

Stein v Blake [1996] AC 243

The Western Australian Builders’ Labourers, Painters and Plasterers Union of Workers v R B Exclusive Pools Pty Ltd t/as Florida Exclusive Pools [1996] WAIRComm 231

Thompson v Gregmaun Farms Pty Ltd (2000) 80 WAIG 1733

Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165

 


Reasons for Decision

 

Background

 

1         These proceedings have a long history. The applicant filed his notice of application claiming denied contractual benefits under s 29(1)(b)(ii) of the Industrial Relations Act 1979 (WA) (‘IR Act’) on 25 November 2013. Following three prior adjournments to allow proceedings in the Federal Circuit Court to run their course, the proceedings before the Commission were stayed by order dated 21 May 2015, on the basis that a sequestration order was made against the applicant under the Bankruptcy Act 1966 (Cth) on 11 May 2015. In accordance with s 60(2) of that Act proceedings must be stayed, unless and until, the applicant’s trustee makes an election, in writing, to either continue or discontinue these proceedings.

2         On 9 October 2018 this matter was listed for mention because the applicant informed my Chambers by letter of 30 August 2018, that he had been discharged from his bankruptcy. By letter dated 26 November 2018, a copy of which was provided to my Chambers by the applicant, the Official Trustee, appointed as trustee of the applicant’s bankrupt estate, confirmed that any interest in the chose in action pertaining to the proceedings in the Industrial Relations Commission had been assigned to the applicant, and this had completed on 8 November 2018. Accordingly, the applicant advised that he wished to proceed with his application and the matter was listed for a hearing on the merits.

3         The applicant was initially engaged by the respondent, an electrical and refrigeration business, on or around April 2011, to carry out refrigeration work as a subcontractor. The applicant had his own business Refrigid Pty Ltd trading as Absolute Climate Control. He was contracting to the respondent for this work. How this arrangement came about is somewhat unclear. The applicant gave evidence that he first contacted the respondent when he responded to an advertisement for the sale of the respondent business. On the other hand, the respondent’s position is that the applicant responded to an advertisement for the position of refrigeration mechanic. In any event, the applicant spoke with the respondent and decided to visit the respondent business in Margaret River to, according to the applicant, observe business operations, work with the respondent and consider purchasing the business. The respondent maintained that the applicant came to Margaret River to perform refrigeration work for the respondent in a subcontractor capacity.

4         At some point after April 2011, the idea was discussed that the applicant could complete an electrical apprenticeship under the supervision of the respondent, so that the applicant could gain a qualification in electrical work. There was some disagreement as to which party suggested or initiated this arrangement. The applicant gave evidence that the respondent offered the apprenticeship position to make the offer of the sale of the respondent business more attractive. The respondent’s position is that the applicant approached the respondent to enquire about commencing an electrical apprenticeship.

 

The Training Contract

5         On 30 June 2011, the applicant and respondent signed a Training Contract under the Vocational Education and Training Act 1996 (WA) (‘VET Act WA’) and the applicant commenced an electrical apprenticeship under the supervision of the respondent’s Director, Mr Moloney. The contract stated the applicant was employed on a fulltime basis of 38 hours per week. The applicant gave evidence that the parties agreed to a salary of $1,140.00 per week. He said that despite the apprenticeship, most of his work, approximately 90%, was refrigeration related. The applicant maintained that the respondent gave him an invoice book which he used for work done for the respondent. Tendered as exhibits A2 and R1 were bundles of invoice/statement documents from Absolute Climate Control to the respondent. These covered the period May to December 2011. The documents show that most of the work was for refrigeration services supplied by the applicant. 

6         Mr Moloney testified that the applicant saw great potential working in business in the Margaret River region. He said the applicant “begged” him to give him an electrical apprenticeship, so he could get the skills in the electrical side of the business. According to Mr Moloney, the applicant would continue working as a contractor and would receive training at the same time. The agreement was the applicant would be paid $50 per hour for refrigeration work and $30 per hour for electrical work. This was significantly above the rates prescribed by the Electrical, Electronic and Communications Contracting Award 2010, which applied to the Training Contract  and was specified in it. Despite this, Mr Moloney testified that he in fact paid the applicant, more often than not, the higher rate for all of the work done. Mr Moloney said in his evidence that he paid the applicant for all work that he did for the respondent. Cheque records and bank statements, tendered as exhibits R6 and R7 respectively, were said by the respondent to support this.

7         The respondent also submitted that there was a separate collateral agreement to the Training Contract which created the obligation to pay Mr Martin for work he performed. The terms of this separate agreement, according to the respondent, were based on the payments of $50 per hour for refrigeration work and $30 per hour for electrical work, that were over the award rate. 

8         The respondent submitted that it was open to the Commission to make findings that the relationship between the parties was a contracting arrangement. Despite this, the respondent conceded that a Training Contract, by nature, is one that would typically be an employment relationship. The applicant maintained that he was employed by the respondent between 30 June 2011 and 27 April 2012 and that it is contrary to the law to engage an electrical apprentice as a subcontractor.

 

Cancellation of the Training Contract

9         On or around 1 September 2011, the applicant purchased the respondent’s refrigeration business name which traded as Margaret River Air Conditioning and Refrigeration. Whilst Mr Moloney said the respondent had an industrial property in Karratha, in the period October 2011 to January 2012, the respondent was still operating in the Margaret River area, mainly doing electrical work. He said that there was no reason the applicant could not have been involved in some of this work.    

10      The respondent gave evidence that after September 2011, the applicant ceased regularly attending work for the respondent and after 2 December 2011, he did not attend work at all. The respondent says the applicant was experiencing a marital breakdown at that time and the respondent’s Director, Mr Moloney, received numerous complaints from regular clients about Mr Martin, who “would go to a job and swear, kick and yell” and act otherwise inappropriately. The respondent said that when the applicant did work, it was as a refrigeration mechanic and he had to advertise for an electrician to cover the work that the applicant was supposed to do for the respondent company in Margaret River. The applicant also failed to attend the SouthWest Institute of Technology Training for required training.

11      The applicant gave evidence that after the sale of the business was complete, Mr Moloney would disappear for weeks at a time and in December 2011, Mr Moloney stopped providing work or training under the Training Contract . The applicant said that the work provided to him by the respondent was not sufficient to warrant employing a refrigeration mechanic, and this is why the applicant had to perform this work himself. The applicant said he could not afford to attend TAFE because he was not being provided with work. A bundle of documents tendered as exhibit R3, were tax invoices issued by Absolute Climate Control to various customers over the period September 2011 to December 2011. The applicant contended he had to work on his own behalf over this period because the respondent was not paying him. 

12      The respondent gave evidence that he postponed cancelling the applicant’s apprenticeship to give the applicant a chance to return to work, however eventually decided to make an application to cancel the Training Contract , after which the cancellation date of 27 April 2012 was granted. The applicant gave evidence that he was not opposed to the cancellation, as he was not receiving the requisite supervision and training required to successfully complete his qualification.

13      The applicant claims a sum of $37,058.90 for the denied contractual benefit of underpayment of salary that the applicant says was not paid to him. The applicant says he was paid a total of $13,706.00 throughout the period of his employment with the respondent.

 

Relevant legal principles

Denied contractual benefits

14      The relevant principles in relation to denied contractual benefits claims are well established. The issue to be determined is whether the applicant had a legal right under his employment contract with the respondent, to receive the claimed underpayment of salary. The applicant must establish that his claim relates to an industrial matter; that the applicant was an employee; that the benefit claimed is one to which the applicant was entitled under his contract of service; the contract is a contract of service; the benefit claimed is not under an award or order; and the benefit claimed has been denied: Hotcopper Australia Ltd v Saab (2001) 81 WAIG 2704; Ahern v AFTPI (1999) 79 WAIG 1867.

 

Employee or contractor

15      The issue of whether a person is an employee or an independent contractor, involves the consideration of the totality of the relationship between the parties: Personnel Contracting Pty Ltd t/as Tricord Personnel v The Construction Forestry Mining and Energy Union of Workers (2005) 85 WAIG 5. In Philip Digney v The Black Cockatoo Preservation Society of Australia [2014] WAIRC 01285; (2014) 95 WAIG 562 I set out the relevant principles at par 23, as follows:

23 The relevant principles as to whether a person should, as a matter of fact and law, be regarded as an employee or an independent contractor, have been dealt with by the Industrial Appeal Court. In Personnel Contracting Pty Ltd t/as Tricord Personnel v The Construction Forestry Mining and Energy Union of Workers (2004) 85 WAIG 5, Steytler J dealt with this issue at pars 20-28, EM Heenan J at pars 50-52 and Simmonds J dealt with the issue at pars 98-100. In particular, Simmonds J said at pars 95-101 as follows:

95 The common law test for distinguishing a relationship of employer/employee, on the one hand, and principal/independent contractor, on the other, has recently been reviewed in some detail in the judgment of Hasluck J of this Court in Birighitti (supra), at [57] to [67]. The other members of the Court (Anderson J, who dissented on the jurisdictional issue in the case, and Scott J) did not find it necessary to enter into the question in as much detail because of the case's particular facts.

96 In this case, where it seems to me the matter is rather more evenly balanced than in Birighitti , I consider it is necessary to review the matter again, particularly as it was contended in this case that there had been a shift in the law not entered into in Birighitti . I review the matter again without meaning to depart from the view of Hasluck J there in any way, but to emphasise matters of first principle particularly relevant to this case.

97 The most recent High Court authority in point, for the purposes of vicarious liability for the negligence of a bicycle courier, is Hollis v Vabu Pty Ltd (supra). There was a clear majority on the issue of the application of the test, that of Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ, with McHugh J dissenting, and Callinan J not expressing a concluded view on the matter. As to the test itself, however, I see no clear difference between all of the members of the Court who expressed a concluded view.

98 The test set out in Vabu by the majority is expressed in terms of the difference between a person (an employee) whose work serves another, and is done in that other's business, on the one hand, and a person whose work is likewise for the benefit of another's business, but is done in the course of the carrying on of a trade or business of the person doing the work, on the other. The majority referred (Vabu, at 39) for this purpose to Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of Australia Ltd (1931) 46 CLR 41, at 48, per Dixon J, and to Marshall v Whittaker's Building Supply Co (1963) 109 CLR 210, at 217 per Windeyer J, where language of this sort is used. The Vabu majority also referred to Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313, at 366 per McHugh J, where the distinction is expressed in terms of the independent contractor as a person who does the work not as "the representative of the employer".

99 For the application of the test, and particularly for the relevance of the matter of "control" of the work done, the Vabu majority refer to the dicta in Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16, at 29 per Mason J. There, his Honour acknowledges the historical significance of the "control test" and the difficulties in using it in the historical ways in modern working conditions, where he says

"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 [(1955) 93 CLR 461, at 571]. 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."

100 What his Honour meant by the reference to the factors, including but not limited to control, subsumed by the "totality of the relationship" is indicated by an earlier passage in his judgment in Stevens (supra), which is not referred to in Vabu, but which is a passage quoted in Odco as setting out the law on this point ((supra) at 754):

"The approach of this court has been to regard it [control] merely as one of a number of indicia which must be considered in the determination of the question: Queensland Stations Pty Ltd v FCT (1945) 70 CLR 539 at 552; Zuijs' case [supra]; FCT v Barrett (1973) 129 CLR at 401; 2 ALR 65; Marshall [supra] at 218. Other relevant factors include, but are not limited to, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and provision for holidays, the deduction of income tax and the delegation of work by the putative employee."

101 As these dicta tend to indicate, the application of the test is a matter of some difficulty, as this case illustrates. I need to consider that question separately.

24 His Honour then went on to apply the test set out in the various decisions of the High Court referred to, and took into account a number of factors including control, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and provision for holidays, the deduction of income tax, the delegation of work, indicia of a separate business, integration in the organisation, and the language of the parties’ written contract: see pars 108-150 inclusive.

25 The “multi factor” test referred to and applied by Simmonds J, as set out above, was referred to and applied by the High Court in Hollis v Vabu Pty Limited (2001) 207 CLR 21

 

Contract of service or contract of training?

16      In Western Australia, apprentices can be employees and any rights and duties as between the apprentice and their employer arise in the first instance and are governed by, the applicable training legislation. The relevant legislation applicable to the applicant’s contract of training is the VET Act WA. Section 60E is in the following terms:

 

60E.           Training Contracts

(1)         A training contract is a contract under which –

(a)   a person who is or will be an employer agrees the following –

(i)                 that a person who is or will be an employee will be employed while he or she fulfils the requirements of the contract in order to obtain a class A or class B qualification;

(ii)               to train the employee in accordance with the contract;

(iii)            to permit the employee to fulfil his or her obligations under the contract and to be trained and assessed in accordance with the contract;

(iv)             that any time spent by the employee in performing his or her obligations under the contract and is being trained and assessed under the contract, whether at the employer’s workplace or not, is to be taken for all purposes (including the payment of remuneration) to be time spent working for the employer;

and

(b)   the employee agrees to fulfil his or her obligations under the contract and to be trained and assessed in accordance with the contract.

(2)   With the approval of the chief executive, 2 or more employers may enter into a training contract with one apprentice.

(3)   A training contract must do the following –

(a)   state the class A or B qualification to which the contract relates;

(b)   comply with the regulations and with any requirements imposed under the regulations.

(4)   Subject to the regulations, a training contract –

(a)   may be varied by the parties; and

(b)   may be suspended by a party; and

(c)   may be assigned by the employer to another person who employs the apprentice.

 

17      It is well-established that an apprentice/trainee is usually an employee and the fact an apprentice is an employee, does not necessarily mean that a contract of service is in force.  As was said by the Full Court of the Supreme Court of South Australia in Coxon v Kat [2009] SASC 28 at 305 (Bleby J with Duggan and White JJ agreeing):

305 At common law, there is a distinction between a contract of service and a contract of apprenticeship depending on whether the primary purpose of the contract is the performance of work for the master or the teaching of a trade. [6] A contract is either one or the other. It was never suggested that there could be two contracts in parallel - a contract of employment and a separate contract of apprenticeship. It follows that a contract of apprenticeship could always provide, as a secondary purpose, for the performance of work or service for the employer such that the apprentice was also an employee.     

18      It appears that the contract of traineeship is generally the sole contract existing between the apprentice/trainee and their trainer. The contract establishes the relationship of an apprentice as an employee with their employer, who is also the trainer of the apprentice.

19      Contracts of traineeship are regulated by the relevant training legislation and may therefore be exempt from some common law practices where the common law position is clearly overridden. For example, in Coxon, it was unanimously held that upon the change of ownership of the business in question, the contract of training that the business entered into with a trainee was not terminated, as would be the effect at common law of a contract of employment (see for example, Ford v Lismore City Council (1989) 28 IR 68). The common law position is that a relationship will be governed by either a contract of employment or a contract of traineeship, however it is recognised that a contract of traineeship may and often does have a secondary purpose of providing a service. It is well-established in Western Australia that the common law position has been altered by statute which has provided, for more than a century, that an apprentice is an employee. This is recognised in the definition of “employee” in s 7 of the current IR Act.

20      The approach on the cases, given the regulation of contracts of traineeship by statute, is to consider the operation of the legislation. The terminology used by the legislation is a significant factor in determining whether the contract of traineeship creates a contract of service and an employment relationship.  In Coxon, the use of terms such as “employer”, “conditions of employment” and “to employ and to teach” in Part 4 of the Vocational Education, Employment and Training Act 1994 (SA) were considered relevant. This terminology is largely in the same terms in the VET Act WA and is consistent with an apprentice being employed. Furthermore, in s 60E(2) of the VET Act WA, two or more employers may be party to the same Training Contract with a trainee or an apprentice. This concept is plainly at odds with a contract of employment at common law. So too is the ability for a Training Contract to be assigned from one employer to another under s 60E(4)(c). A contract of service is a contract of a personal nature and may not be assigned in this manner, without the express or implied consent of the employee: Nokes v Doncaster Amalgamated Collieries Ltd [1940] AC 1014; [1940] 3 All ER 549.   

21      The applicant was to complete an electrical qualification, part of which included an apprenticeship with the respondent. As such, the applicant and respondent entered into the Training Contract under the VET Act WA. Prior to this, the applicant may have commenced work with the respondent in an alternative capacity, as a subcontractor or as an employee performing refrigeration work as a mechanic. The circumstances of the present case are unusual in that the apprentice also completed other work for the employer or trainer, outside the scope of the Training Contract , or work of a different kind to that contemplated by the Training Contract. Some work performed by the applicant was not electrical work.

 

Consideration 

22      The difficulty arising in this case is the lack of clarity in relation to the work done by the applicant on his own behalf, through his business Absolute Climate Control, in relation to refrigeration services, and other non-refrigeration work. It was common ground that the applicant was performing refrigeration work for both the respondent and for other customers at some time in the working relationship. In this respect, the applicant used his own business and invoiced for the work performed, including for GST. The respondent also maintained that the applicant was engaged as a contractor in relation to both the electrical and refrigeration work, despite the parties entering into the Training Contract.

23      An issue arising therefore is whether a person who is an independent contractor can also be an apprentice for the purposes of s 60E of the VET Act WA. I do not consider they can be. As I have mentioned above, the independence of an independent contractor/principal relationship is quite at odds with the required training, oversight and supervision inherent in an apprenticeship. The essence of an apprenticeship is a commitment by the employer to train in the relevant field and the corresponding commitment by the apprentice to undertake and successfully complete the training offered. As an apprenticeship requires close supervision and, by implication, further training, this is intrinsically at odds with the notion that an independent contractor could be the subject of an apprenticeship contract.

24      Furthermore, the terms of the Training Contract (exhibit A1) and the relevant provisions of the VET Act WA, set out above, make it plain that in addition to the training obligations set out in the Training Contract, the relationship between the parties under the Training Contract is one of employer and apprentice. Nowhere in either the Training Contract or the VET Act WA, is it contemplated that the relationship between the parties is or could be, that of principal and independent contractor.  Accordingly, to the extent that work was done by the applicant under the terms of the Training Contract, in relation to electrical work, it was governed by the Training Contract, the VET Act WA and the relevant award. The applicant was an employee in relation to this work and not an independent contractor.

25      This does not mean however, that the applicant was also employed under a separate common law contract of service, which is an essential ingredient of a contractual benefits claim in this jurisdiction. In my view, the conclusions reached by the Court in Coxon, apply with equal force in this jurisdiction. The material terms of the vocational and training legislation under consideration in that case are very similar to the terms of the VET Act WA. It is clear from both the VET Act WA and the terms of the Training Contract itself, that its primary purpose was not the performance of work, but an undertaking to provide and receive training respectively. In such circumstances, as concluded in Coxon, a secondary purpose of the Training Contract can be the performance of work, which the applicant clearly did during the period it was in effect.

26      Accordingly, whilst I accept that, at least in relation to work performed under the Training Contract the applicant was an “employee” for the purposes of s 7 of the Act, he was not party to a separate contract of service.  His claim for wages is not within the Commission’s denied contractual benefits jurisdiction. 

27      In relation to other work performed by the applicant, this is also a difficult issue to resolve. It is difficult because of the overlap and degree of confusion on the evidence as to the work done by the applicant under the Training Contract as an employee on the one hand, and the work done as a contractor under the auspices of his own business, on the other.  It was clear on the evidence that prior to and on the sale of the business to the applicant, the applicant was performing refrigeration contracting work on his own behalf. Exhibit R3 demonstrates that at least over the period September to December 2011, the applicant was performing refrigeration work on behalf of his business for a range of different customers in the Margaret River area. Whilst the applicant maintained that he had to do so because the respondent was not giving him sufficient work, the fact remains that the applicant performed a substantial amount of work as an independent contractor and not as an employee of the respondent, under a common law contract of employment.

28      As noted above, the respondent also advanced an alternative argument to the effect that the arrangement between the applicant and the respondent, to pay the applicant the higher hourly rate of $30 per hour for electrical work, significantly higher than the award rate, constituted a collateral contract. A collateral contract is one where there is a separate representation or promise by one party to the other, to induce the other to enter the main contract: Shepperd v Ryde Corp (1952) 85 CLR 1. The respondent submitted that it was open to conclude from the evidence that the applicant would not enter into the Training Contract at the base rate of pay in the award and the offer of the higher rate of $30 was made. Part of this arrangement was that the applicant would continue to perform refrigeration work via his own company, as required. The applicant would record his hours of work by way of an invoice presented to the respondent and the applicant would be paid at the higher rate for those hours. On this basis, it was submitted by the respondent that the collateral contract had an independent existence and constituted an enforceable contract: Heilbut Symons and Co v Buckleton [1912] AC 30. The further argument put in this regard was that for the over award rate of pay agreed to be effective under the Training Contract, there needed to be compliance with reg 46 of the Vocational Education and Training (General) Regulations 2009. This requires a formal variation to the Training Contract. In the absence of this, any purported variation is ineffective.

29      The upshot of this according to the respondent, was that any collateral contract to pay the applicant the higher rate of pay cannot constitute a denied contractual benefit. This is because whilst the payment of the hourly rate constitutes a “benefit” for the purposes of s 29(1)(b)(ii) of the IR Act, it is not a benefit “arising under a contract of employment”.

30      In my view there is considerable force in this argument. I accept that on the evidence it is open to conclude that the applicant, understandably, would not accept the award rate of pay for the adult apprenticeship, given his skills and experience. I also accept that the higher rate of pay was agreed on the basis it would make the apprenticeship more attractive to the applicant, as an experienced refrigeration tradesperson. As such, this is a further basis to conclude that the arrangement for the higher agreed rate was not a separate contract of employment, but a collateral contract, which stood apart from the Training Contract. It was not a contract of service and as such, cannot form the basis for a contractual benefits claim in this jurisdiction.

31      Furthermore, under reg 46(3) of the Regulations, the parties may vary the employment arrangement that governs a training contract under the VET Act WA.  However, such a variation must be provided in writing to and receive the written approval of the Chief Executive Officer under reg 46(5) of the Regulations. Any purported variation that does not comply with this requirement is of no effect. The only employment arrangement specified in cl 38 of the Training contract was the federal award that applied. There was no reference to the agreed higher hourly rates of $30 and $50 per hour respectively. Thus, even if the terms of the Training Contract could constitute a separate and enforceable contract of service, its terms did not include the rates of pay on which the applicant’s claim was based.    

32      As to the claims for annual leave and loading, these were award benefits under the relevant award as specified in the Training Contract.  In the absence of any separate common law contract aside from the Training Contract, there is no basis for any contention that the terms of the award could be incorporated into the contract and be enforceable in this jurisdiction. The applicant has not established any common law contractual entitlement in this respect. As for the applicant’s superannuation claim, it is settled that statutory entitlements to superannuation are not enforceable as contractual benefits: Oates v Sanders Executive Pty Ltd t/a L J Hooker Morley (1999) 79 WAIG 1192. There was no suggestion that the superannuation claim had a basis other than as a statutory entitlement. 

33      For these reasons I am not satisfied the applicant’s claims constitute contractual benefits amenable to the Commission’s jurisdiction.

34      In the alternative, if I am incorrect in this regard, I turn to consider whether, on the evidence, if there was a contract of service between the parties at the material times, any benefit claimed under it has been denied. It is important to clearly re-state in this respect what the agreement was. The Training Contract specified the application of the award at cl 38.  However, these proceedings are not in the nature of enforcement of the award. Claims of that kind must be brought elsewhere.  As I have already found, the agreement between the parties was for the payment by the respondent to the applicant of $30 an hour for electrical work and $50 per hour for refrigeration work.  I reject the contention of the applicant that it was agreed that the applicant be paid $1,140.00 per week for a 38-hour week. This seems to be how the applicant has chosen to describe the arrangement. Whilst reference to this figure was made in a document entitled “Support for Adult Apprentices Claim Form Checklist”, attached to the applicant’s notice of application, it is unclear what this was about. It seems it may have been part of some form of incentive scheme to employers to employ apprentices. However, I am only concerned for present purposes, with the terms of any contract of service and the evidence before me in these proceedings. 

35      The material tendered in evidence, by way of invoices provided by the respondent and cheque and bank statements of the respondent, lead to the conclusion, as summarised by the respondent in its written submissions, that the applicant was paid for all work that he performed under the Training Contract. This covered the entire period from July 2011 to June 2012. I have no reason on the documentary evidence and the testimony of Mr Moloney, to doubt that the applicant was paid about $15,200 over this period. I have also found that for the reasons set out above, the applicant’s attendance for work was very irregular after September 2011 and he did not attend TAFE, as required under the Training Contract, at any time. On the evidence, it seems that after early December 2011, the applicant did not attend for work at all.

36      The essence of the applicant’s contractual claim was for payment of $1,140.00 per week for 38 hours of work for the duration of the Training Contract, until its termination on 27 April 2012.  This claim could not be made out, even if there was a stand-alone contract of service on the terms alleged by the applicant. This is because the applicant cannot claim for payment of wages or salary in respect of work not performed by him. The essence of a contract of service is the performance of work, in return for which, a wage or salary is paid: Automatic Fire Sprinklers v Watson (1946) 72 CLR 435; Csomore v Public Service Board of New South Wales (1987) 10 NSWLR 587. It is also the case that the terms of the Training Contract itself, expressly reflected this core principle.

37      For these reasons, the applicant cannot demonstrate that he performed the work to be entitled to payment under any contract of service with the respondent, even if one had been in existence over the relevant period. Given this conclusion, it is unnecessary for me to consider the respondent’s alternative argument that if any monies are found to be owed to the applicant, it should be the subject of a set-off under s 86 of the Bankruptcy Act 1966 (Cth).

38      Accordingly, for the foregoing reasons, the application must be dismissed.