Tutorial Question 2 (Week 2)

TUTORIAL QUESTION 2 (WEEK 2)

(a)  What is that nature of the work relationship between Ahmed, John and the Trench family business?

The first step is to identify the nature of the relationships between Ahmed and Trench and John and Trench. This is because a key issue will be whether the relationship (in either case) is one of employer/employee, or whether it is one of employer/independent contractor. The significance of this distinction relates to matters such as the employer’s vicarious liability, taxation issues, annual and long service leave, and superannuation.

In order to determine which type of relationship Ahmed and John have with Trench, the common law has developed various tests to determine whether a worker is an employee or an independent contractor. However, a few main distinctions can be made between the two.

Firstly, an employee has a contract of service. The personal nature of this contract means that an employee cannot sub-contract their services, and the employer cannot simply transfer the employer. Generally speaking the employer also has lawful authority or control over the employee. But perhaps the most important feature of this relationship is that an employer is vicariously liable for the actions of an employee.

As opposed to this, an independent contractor has a contract for services. This generally means that the employer has no control over how the contractor performs their work, and as it is a contract to produce a certain result, it does not matter whether the contractor sub-contracts the work out. Likewise here, the most important feature is the vicarious liability of the employer. At common law, the principal is NOT vicariously liable for the acts of the contractor unless it is a non-delegable duty care, such as in Kondis v STA.

The first test proposed by the courts was the Control Test in Zuijs v Wirth Bros, which involved the issue of whether a circus trapeze artist was an employee of the circus. This test looked at the nature and degree of control exercised the circus, and the fact that the trapeze artist possessed special skill and knowledge. In finding that the trapeze artist was an employee, the High Court held that although the exact performance of his act was up to him, the circus retained the right to control when and how long he performed for, when he had to rehearse, etc. What therefore matters is the right to exercise control, rather than the actual exercise of that control.

Applying the control test to the facts:

·  Trench has the right to control the (colour of the) uniform and equipment that the couriers can use and are to carry with them;

·  Trench controls how they are to use the radios and fill out the forms;

·  Trench exercises control over the courier’s ability to receive work (by requiring them to report by 9am each day).

Applying this test, it would seem that as Trench reserves the right to control how the couriers perform most of their job, Ahmed and John would in fact be employees. However, the control test has been criticised as been too out-dated, and more suited to the conditions of earlier times.

Another test that can be applied is the integration test, which looks at whether the work is ancillary or integral to the business. As Trench is a courier service, the work of Ahmed and John as couriers would be integral to the business, and would therefore deem them to be employees. Likewise, the Ready Mix Concrete test would probably also deem the couriers to be employees of Trench rather than contractors. However, both of these tests are not the preferred tests in Australia.

The preferred test in Australia is the multi-factor test, which was laid down by the High Court in Stevens v Brodribb Sawmilling and confirmed as the appropriate test in Hollis v Vabu Pty Ltd, a case which also involved the question of whether a bike courier was an employee or an independent contractor. As well as the issue of control, which is the major indication of an employee, the court looks to other indicia such as:

·  Mode of remuneration – Here the couriers were paid depending on the number of deliveries they made in conjunction with the number of kilometres covered.

·  The provision and maintenance of tools – John and Ahmed are required to keep and maintain their bikes in working condition.

·  Who controls the place and hours of work – Trench requires John and Ahmed to report to the business by 9am each day, or else they will receive no work for that day. Trench then determines where the couriers will go for the day

·  Tax treatment – John, Ahmed and the other couriers are responsible for their own taxation affairs.

In Vabu, the court held that the couriers were contractors, even though the degree of control exercised over them was considerable, because they were required to provide and maintain their own gear, and were paid according to the number of successful deliveries made, rather than on an hourly or weekly wage. Applying this to the facts at hand, I would conclude that the nature of the relationship between Trench and Ahmed and John is one of employer to independent contractor.

(b)  Advise Ahmed and John as to the possible remedies they may have available in relation to the events listed.