Court cases
Vabu Pty Ltd v FC of T 96 ATC 4898
The case involved a courier company, Vabu Pty Ltd, trading as Crisis Couriers. Most couriers used bicycles but some had motorcycles and a few had light trucks. Under the contracts used, almost all aspects of the couriers work was dictated by the company although the contract stated the workers were contractors.
The Commissioner of Taxation sought to have the couriers covered by the Superannuation Guarantee (Administration) Act as 'employees'. The NSW Supreme Court determined they were contractors and leave to appeal to the High Court was refused.
The NSW Supreme Court cited various factors which it thought relevant.
The couriers:
supplied and maintained their own vehicles
provided their own street directories, ropes, tarpaulins, etc
received no 'salary or wages', being paid for each successful delivery
could use a business name or incorporate themselves
bore the risk of providing their own capital and incurring any losses, and
were free to work for other businesses so long as they satisfied their commitment to Crisis Couriers.
The Commissioner of Taxation relied on the high level of control existing in the despatching, uniform and training of the couriers particularly the bicycle couriers. The NSW Supreme Court was required to consider all the types of couriers and the value and costs incurred by the motor vehicle owners was a major barrier to a finding that an employee status was appropriate to all of the couriers.
Hollis V Vabu Pty Ltd, High Court of Australia 2001 ref [2001] HCA 44-S149/2000
In Hollis V Vabu Pty Ltd this finding was partly overturned. Mr Hollis was hit by a bicycle courier of Vabu Pty Ltd and suffered extensive injuries. Of the 7 judges 4 found that Mr Hollis was injured by an employee of Vabu Pty Ltd. Their honours found that the NSW Supreme Court had placed too much emphasis on the couriers owning their own bicycles. As a practical matter, the couriers were not running businesses of their own, nor were they independent of Vabu Pty Ltd. The judges noted that a different conclusion might be reached if the investment in capital equipment was more significant and greater skill and training was required to operate it.
The decision of the NSW Supreme Court had to apply to all types of couriers including those with light trucks while the High Court was only concerned with the employment status of a bicycle courier.
JA&BM Bowden & Sons Pty Ltd V Chief Commissioner of State Revenue 2000 ATC 4596
The NSW Supreme Court has held that payments to orchard hands constituted wages paid to them as employees for NSW payroll tax purposes.
The orchard hands were hired on a casual basis under contracts of engagement. The work done was picking fruit or pruning fruit trees. General supervision of the work was done by a company employed quality controller. The controller instructed each worker which fruit and row of trees were to be picked.
The orchard hands were paid at the rate per bin of fruit picked. Income tax was deducted and they were covered by workers compensation insurance. The orchard hands provided their own secateurs, loppers and saws but were provided by the company with ladders, picking bags and bins.
Although it appeared the workers were free to work on whatever days, at whatever hours and whatever pace they chose, those whose attendance, speed and hours worked were unacceptable, would be replaced.
The company was assessed for NSW payroll tax but argued that the orchard hands were not employees but independent contractors working under contracts to provide services or produce results. The Supreme Court held that the right to control the activities of the workers was the most significant factor in determining whether they were employees. The Court found that the company did have the right to control the working activities of the orchard hands even if at times it was difficult to exercise or was not exercised frequently.
The Court found that task based payment was normally an indicator that a person was not an employee but that in this case the factor was unimportant. It found that the orchard hands were not required to produce a result but were paid on a piece work basis and their freedom to work at their own pace and for as long as they chose was reflected in this context. The Court determined that the payments were liable for payroll tax.
Using the Commonwealth Government results test both the bicycle couriers and the orchard hands might have assessed themselves as contractors. This does not reflect the reality of their working conditions. They were not in business for themselves but depended on the businesses they worked for, for employment.
