WORKERS COMPENSATION CASE LAW UPDATE – 2013

Marco Tedeschi

I will review some recently decided and some earlier cases in relation to the following topics:

(1) The cross-border provisions in the Workers Compensation legislation;

(2) The limitation issues arising out of the Workers Compensation legislation;

(3) Contract of service or contract for services.

Compensation not payable unless worker's employment connected with this State

It is not uncommon for a worker to be employed in Western Australia having to travel to another State for the purpose of work.
Section 20 of our Workers Compensation legislation provides that compensation is not payable unless the worker’s employment is connected with the State of Western Australia.
Compensation under the Act is only payable in respect of employment that is connected with the State of Western Australia. The fact that a worker is outside the State when the injury occurs does not prevent compensation being payable under the Act in respect of employment that is connected with this State: Sections 20(1) and (2).
A worker’s employment is connected with:

(a) the State in which the worker usually works in that employment;

(b) if no State or no one State is identified by paragraph (a), the State in which the worker is usually based for the purposes of that employment; or

(c) if no State or no one State is identified by paragraph (a) or (b), the State in which the employer’s principal place of business in Australia was located: Section 20(4).

If no State is identified by sub-section (4) a worker’s employment is connected with this State if:

(a) a worker was in this State when the injury occurs; and

(b) there is no place outside Australia under the legislation of which the worker may be entitled to compensation for the same matter: Section 20(6).

In deciding whether a worker usually works in this State, regard must be had to:

(a) the worker’s work history with the employer over the preceding period of 12 months; and

(b) the intentions of the worker and the employer,

(c) but regard must not be had to any temporary arrangement under which the worker works in the State for a period of no longer than 6 months.

Subject to section (7), in deciding whether a worker usually works in this State or is usually based in the State for the purposes of employment, regard must be had to any period during which a worker works in the State or is in the State for the purposes of employment, whether or not under the statutory Workers Compensation Scheme of that State the person is regarded as a worker or is working or employed in the State: Section 20(8).
Similar provisions were recently considered by the Supreme Court of New South Wales in Weir Services Australia Limited v Allianz Australia Insurance Limited [2013] NSWSC 26.
The issue for determination was whether Allianz Australia Insurance Limited (Allianz), the first defendant, was obliged to indemnify Weir Services Australia Limited (Weir) the first plaintiff, pursuant to a policy of insurance in relation to workers compensation payments made to the worker Thomas Taylor, the second defendant, in respect of an injury suffered by him in an accident whilst employed with Weir at a smelter at Hobart, Tasmania, owed by Nyrstar Hobart Pty Ltd (Nystar). The second plaintiff, CGU Workers Compensation (NSW) Limited (CGU), was joined because there was an issue in respect of certain payments made by it that had been settled.
The following declarations and orders were made by the Court:

(a) A declaration that Allianz was and is obliged to indemnify Weir against any liability established against Weir by Taylor arising out of any claim made by Taylor for compensation for personal injuries sustained by Taylor in Hobart, Tasmania on the date of injury and such indemnity was made pursuant to the policy of insurance subsisting between Weir and Allianz at the date of injury.

(b) Judgement for CGU against Allianz in the sum of $150,000.

Background

In late 2007 Weir entered into a contract with Nyrstar to provide labour to carry out general mechanical works in respect of parts of a smelter in Hobart. Weir was contractually obliged to take out workers compensation insurance “in accordance with legislative requirements”. Weir obtained a policy of insurance to cover its liability under the Workers Rehabilitation and Compensation Act 1988 (Tas.) (the Act) from Allianz for the period 30 June 2007 to 30 June 2008 (the policy). Weir engaged about 25 employees to complete the works, some of whom were its full time employees deployed to Tasmania for the works and others, some of whom were contractors. Mr Taylor was in the latter category.
On 13 January 2008 Mr Taylor accepted Weir’s offer dated 7 January 2008 for the “fixed task assignment position of project specific – Nyrstar – shut down 2008 equipment refurbishment” (the contract). The contract was headed “Casual assignment (fitter)”. It was for the “duration” of 14 days “subject to customer requirements”. The duration was not guaranteed “due to unknown emergent work activities” and was to be determined “as a result of customer requirements”. The date for practical completion of the works under the contract was 27 February 2008.
Mr Taylor had moved from North Wales in the United Kingdom to live in Perth, Western Australia. The cost of his flight from Perth to Hobart for his employment was met by Weir. However the contract provided that the “assignment” was “project specific” and costs for journeys to Mr Taylor’s home and back to the site during the project period were not to be borne by Weir.
The contract provided that the “casual-project specific” rate for the assignment was an all-up flat rate of $50.40 per hour. There was also provision for a living away from home allowance of $65 per day. Mr Taylor was accommodated in a motor lodge in North Hobart for the period of the assignment.
The contract also included a provision in respect of termination of employment to the effect that as the position was a fixed task, the project manager shall advise of completion date. This assignment shall provide reasonable notice to allow completion at shift end.
Mr Taylor commenced his employment on 11 February 2008 and was injured in an accident at the smelter five days later on 16 February 2008. He did not return to work and returned to Perth.
A workers compensation claim form was lodged with Allianz who advised the worker that it was investigating and assessing his claim to decide whether he was a worker within the State of Tasmania. Allianz agreed to pay the worker on an ex gratia basis without an admission of liability. However, Allianz subsequently refused to indemnify Weir under the policy. CGU subsequently paid the workers compensation payments to Mr Taylor.

Issue for Determination

The real issue in the proceedings was whether Mr Taylor’s employment was “connected” with Tasmania as provided in sub-sections 31A(1) and 31A(3) of the Act. Those provisions are identical to Sections 20(1) and (2), (4)(a), (7) and (8) of the Western Australian legislation.
The Court noted it was far from clear on what basis Allianz claimed that Mr Taylor’s employment was not connected with Tasmania. Weir’s submissions were made on the basis that Allianz contended that the contract between Weir and Mr Taylor was a “temporary arrangement” to which regard could not be had for the purpose of decision whether Tasmania was the State where Mr Taylor “usually works in the employment”.
Weir submitted that a short term contract of less than 6 months that is not part of a longer or indefinite period of employment is not a “temporary arrangement” as that term is to be understood in Section 31A(6)(b) of the Act. Support for this proposition was to be found in the decisions in Martin v RJ Hibbens Pty Ltd [2010] NSW CC CPD 83 and in Tamoritha Consultants Pty Ltd v Knight (2008) 58 SR(WA) 291 at 309 [73] in which Commissioner Heron dealt with the equivalent provision in the Workers Compensation and Injury Management Act 1981 (WA).
The Court also referred to Klemke v Grenfell Commodities Pty Ltd [2011] NSW CC CPD 27 dealing with the equivalent provision in Section 9AA of the Workers Compensation Act 1987 (NSW). Referring to the proviso in Section 9A(6) “any temporary arrangement under which the worker works in the State for a period of not longer than 6 months” the Court held that for the proviso to have any work to do, any temporary arrangement contemplated by that provision must be seen as part of a longer or indefinite period of employment. The arbitrator was correct to conclude that the employer’s submission that the short nature of the employment would permit the applicant to come under the temporary arrangements in Section A(6) is to misread the section, noting that the purpose of the section is to cover an employee who is normally based in one State and who on a temporary basis, not longer than 6 months, is required to work in another State.
The analysis of the equivalent provision in New South Wales was compelling. The description of an employee being “based” in one State means that the usual place or base of employment (as opposed to residence) is in that particular State. Mr Taylor’s only place or base of employment with Weir was in Tasmania. This was not a “temporary arrangement” as that term is used in Section 31A(6)(b) of the Act.
The description “casual assignment” in the contract needs to be read in the context of the description “fixed task assignment position for project specific” for the refurbishment of the smelter. The completion date for the works was 27 February 2008. There was no work history between Weir and Mr Taylor. This was a contract for the provision of services on a specific project for a limited duration. It was not part of longer or any other employment with Weir. The Court was not satisfied that Weir and Mr Taylor entered into the contract on the basis that, or in the expectation that, it would lead to further employment for Mr Taylor. The work was performed in Tasmania. It was not contemplated that Mr Taylor would work in any other State. Tasmania was the State where Mr Taylor usually worked in the employment which was the subject of the contract. (Section 31A(6) of the Act.) Tasmania was the “State of connection” as that term was used in Section 31A(1) of the Act and Alliance was liabile to indemnify Weir pursuant to the policy.
The provisions of Section 20 were considered by Commissioner Heron in Tamoritha Consultants Pty Ltd v Knight [2008] WADC.
The worker, who was a defendant in the action, was a director of a company apparently based and registered in Indonesia. He worked as a remotely operated vehicle supervisor. He resided in Willetton in Perth. The plaintiff company carried on business of sub-sea contractors and had an office locate in St. George’s Terrace, Perth. It operated its business from a yard located in Henderson, Western Australia.
On 19 May 2006 the worker commenced working on and in connection with a ship located in Melbourne. The ship was to lay down anchors and chains and devices known as floating storage and production off-loading. The defendant travelled from Perth to Melbourne and boarded the ship at Melbourne, when it departed from Melbourne. On the day the worker was injured the ship was located in Port Phillip Bay off the coast of Victoria when he suffered serious burns in a fire on board the ship. The worker’s workers compensation claim against the plaintiff company was demand by the workers compensation insurer on the basis that the worker’s employment was not connected with Western Australia.
Section 23C of the Workers Compensation legislation provides if a claim for compensation has been made under the Act, a party to the claim may apply to the District Court for a determination of the question of which State is the State with which the worker’s employment is connected. That issue must be determined in accordance with Section 20 and entered in the records of the Court.
Section 20 and Division 1a of Part III of the Act were introduced by the Workers Compensation & Rehabilitation Amendment (Cross-Border) Act 2004. The new provisions commenced operation on 22 December 2004.
The expression “Regard must be had to” the work history with the employer does not limit the Court’s discretion by only requiring it to have regard to the work history over the preceding of 12 months. The meaning of Section 20(7) is that regard must be had to at least the preceding 12 month period and not to “only” the 12 month period. The concluding words of Section 20(7) indicate regard must not be had to any temporary arrangement under which the worker works in the State for a period of not longer than 6 months. If, in a 12 month period, there was a temporary arrangement by which a worker worked in the State for a period of 6 months that would only leave the remaining 6 months to be considered or regarded in determining whether a worker usually worked in the State.
If only a 6 month period was considered, it does not provide any useful test or measure in determining where a worker usually works and such result could not have been intended by Parliament.
By Section 20(7)(b) regard must also be had to the intentions of the worker and the employer. Often it will be the case that the intentions of the worker and the employer cannot be properly considered if only a 12 month work history is taken into account. There will be occasions in which it is appropriate in seeking to determine what are the intentions of the worker and the employer, to have regard to a work history beyond a 12 month period. However, the intentions of the worker and the employer cannot be properly considered unless at least regard is had to a 12 month work history.
The passage quoted with approval in Weir Services Pty Ltd v Alliance Australia Limited of the decision by Commissioner Heron states:

“Further, the nature of the arrangement between the parties was that each period of work constituted a separate contract. There was no continuing period of employment as seems to be contemplated by Section 20(7). Therefore there was no “temporary arrangement” for the purposes of Section 20(7).” Each period of work constituted a separate period of employment. When the plaintiff worked on board a ship in Victoria, it was not a temporary arrangement. The arrangement was permanent in the sense that the defendant was required to work on the ship for the duration of the period of the work. There was no intention on the part of the parties that once the period of work had been completed on the ship in Victoria the defendant would return to Western Australia and continue work or employment with the plaintiff.”

Commissioner Heron took the view that the nature of the arrangements between the parties are not comprehended by and do not fit within the provisions of Section 20(7). The fact that for the twelve month period in 2005 and 2006 the Defendant worked for more of his time in Victoria, and if the whole work history is considered, for more of his time in Western Australia did not in his view provide any useful guide or assistance in deciding what were the intention of the parties and whether the defendant usually worked for the purposes of Section 20(7). Accordingly he was not able to determine whether the Defendant’s employment was connected with either Western Australia or Victoria, pursuant to Section 20(4)(a) on the basis that the defendant usually worked in his employment with the plaintiff in one State.
In relation to the proviso is s20 (7), the up-shot of those decisions appears to be that it would be extremely difficult for an employer or its insurer to bring itself within the proviso that regard must not be had to any temporary arrangement under which the worker works in the State for a period of not longer than 6 month, where it is not clearly part of a continuing period of employment.
The expression “principal place of business” in Section 20(4)(c) is not the same as the principal place of business registered with ASIC under the Corporations Act. The expression “principal place of business” means the chief, most important or main place of business from where the employer conducts most or the chief part of its business.

Section 20(4)(a) and Section 20(7) – “Usually Works”

Section 20(4) provides a sequential series of steps or tests to be taken in determining with which State a worker’s employment is connected. Commissioner Heron was unable to determine whether the defendant’s employment was connected with either Western Australia or Victoria pursuant to Section 20(4)(a) on the basis the defendant usually worked in his employment with the plaintiff in one State. He rejected the argument that the test for determining with which State the worker’s employment was connected should be by reference to the State in which the worker worked for the majority of his time or by reference to some percentage calculation of the time spent in different States. The expression “usually works” is not synonymous with where the worker “works for the majority of the time”.
No State was identified by the test in Section 20(4)(a).

Section 20(4)(b) – “Usually Based”

Having determined there was no one State in which the defendant usually works he was required to determine whether by Section 20(4)(b) there is a State in which the defendant is “usually based for the purposes of his employment”.
The expression “usually based for the purposes of that employment” includes a campsite or accommodation provided by an employer such as in the mining industry. Where the worker is usually based and where he or she usually works might also coincide, such as workers working on oil or gas rigs or, indeed as in the case with the defendant, a ship on which he both worked and lived. The types of matters contemplated by the expression also included in his opinion, matters such as:

(a) the work location specified in the contract of employment;

(b) the location the worker routinely attends to receive directions or collect materials or equipment in relation to the work;

(d) the location from which the worker’s wages are paid.

The argument that the percentage of time the defendant spent in one state rather than another, should determine where the worker was “usually based” was rejected. Having considered the various factors he referred to, Commissioner Heron regarded the fact that each new job or contract for work commences and concludes in Western Australia, and that each contract for work is entered in Western Australia, as relevant in considering where the defendant is usually based for the purposes of that employment. Those facts combined with the fact that the defendant is paid from the plaintiff’s premises in Western Australia, that another employee kept in contact with the defendant by telephone from Western Australia, with the further fact that when he is not working on the shift the worker performed electrical contracting work for the plaintiff at its premises in Western Australia, persuaded him that the worker was “usually based” in Western Australia for the purposes of his employment with the plaintiff.
A finding was made that pursuant to Section 20(4)(b) the worker’s employment is connected with Western Australia.

Section 20(4)(c) – “Employer’s Principal Place of Business”

In light of the findings he made, already referred to, the Court concluded that the main and chief part of the plaintiff’s business was conducted in Western Australia.
The Supreme Court of Queensland in Ferguson v Workcover Queensland [2013] QSC 78 considered a matter where the worker was employed as a delivery driver and deliveries were made from the employer’s warehouse in Tweed Heads and the worker delivered stock in Queensland and New South Wales. The majority of the worker’s deliveries were made in Queensland and the issue which arise was whether the applicant’s employment was connected with Queensland for the purpose of s113 of the Workers Compensation Rehabilitation Act 2003 and whether the worker’s employment was connected with New South Wales for the purpose of s155 of the Workers Compensation Act 1987 (NSW). There was consideration of whether the worker “usually works” in New South Wales as well as in Queensland and whether the worker was “usually based” in Queensland or in New South Wales.
After reviewing the statutory provisions and the authorities already referred to in my paper, the conclusion was reached that the authorities discussed applied the ordinary meaning of “usually” in its statutory context and conclude that the expression “usually works” means the place where the worker habitually or customarily works, or works on a regular manner. The determination of the State in which the worker “usually works” in that employment is not determined by deciding the State in which the worker spends the majority of his or her time. The time spent in any particular State is still relevant. It is possible that a worker usually works in more than one State. The sub-section does not involve a mathematical test. There is no fixed percentage of time spent working, above which a worker is usually taken to work in this State. It is possible to imagine clear cases in which the worker’s presence in the State is gratuitous, fleeting, uncommon or sufficiently unusual that one can easily conclude that the worker does not usually work in the relevant employment in that State. Other cases may be more finely balanced.
The relevant provisions make specific provision to not regard “any temporary arrangement under which the worker works in a State for a period of not longer than 6 months” in deciding whether a worker usually works in this State. Leaving aside such a temporary arrangement, an occasional, even irregular attendance in another State for training or attendance at a meeting may not constitute a sufficient connection. In such a case the worker’s occasional presence in this State for work related purposes may mean that he or she does not “usually work” in that State.
The authorities illustrate that the determination of whether there is a State in which the worker “usually works” in that employment depends upon the circumstances of the particular employment. The fact that a worker’s time in employment is predominantly spent in one State does not necessarily mean that the State is the only State in which the worker “usually works”. The worker will usually work in more than one State if the worker habitually or customarily works in the second State. In such a case there will be no one State identified as being “the State in which the worker usually works in that employment” and the enquiry will turn to determining the State in which the worker is “usually based” for the purposes of that employment.
The test is where the worker is “usually based” for the purpose of that employment and this may not be the same place in which a majority of the worker’s time is spent each day.
Judge Applegarth respectfully agreed with the statement in Martin v RG Hibbens Pty Ltd that where “a worker is usually based may coincide with the place where the worker usually works, but that need not necessarily be so.” He also agreed with the other observations in that case about the factors that may be taken into account in considering where a worker is usually based. He added that the place at which the worker’s employment is based may not be the same place in which the worker is based for the purposes of that employment. The place in which the employer chooses to base certain operations for the purpose of administering the contract of employment, for example, for administering payroll, may have little to do with the place at which the employee is based for the purposes of that employment. The location at which the worker routinely attends during the term of employment to receive directions or collect materials or equipment may be highly relevant.
In Avon Products Pty Ltd v Falls (2010) 5 ACTLR 34, the Court of Appeal contemplated that it might be said that while working in her sales district in the ACT, the respondent’s vehicle was her base. What would have particular relevance is the provision by the employer of a place from which the employee is expected to operate.
The authorities which have been required to consider the meaning of “usually based” in the same or similar statutory contexts have adopted the ordinary meaning of “usually” and “base”. The Judge agreed with this approach. The determination in those cases of the factual question of where a worker was usually based for the purposes of his or her employment was dependent upon the facts of the case.
In the present case the place at which the worker started and finished work each day has an obvious relevance. So too is the place to which he returned to collect products, and the place at which the vehicle he used for the purposes of his employment was based. The place at which he planned his daily runs and the place at which he received directions about the work he was to undertake by way of delivering products also are relevant in determining where he was “usually based”. The place at which he worked whilst awaiting delivery jobs is also relevant in determining where he was “usually based”.
Whilst regard must be had to these and other factors, none may be decisive in determining where the applicant was “usually based”. The statute contemplates that there may be cases in which there is no State or no one State in which the worker is usually based for the purposes of his or her employment. In that event, the cascading test requires consideration of the State in which the employer’s principal place of business in Australia is located.
Depending upon the facts of a particular case, a worker may have no “base” for the purpose of his or her employment, even in the case in which he or she starts and finishes work each day in the same place. If however, a base or bases are identified, then the question turns to whether a particular base is the place at which the worker is “usually based” for the purpose of that employment. The requirement that the worked is “usually” based involves consideration of whether the worker is customarily, commonly or habitually based in that place.

Which State or States did the Worker usually work

The evidence indisputably establishes that the applicant usually works in Queensland. The issue is whether he also usually worked in New South Wales. The Court concluded that the worker usually worked in Queensland, and also usually worked in New South Wales. As to the latter, his work in New South Wales was customary, common and frequent. It was not unusual since New South Wales was the place he would attend each day for the purpose of planning his deliveries, loading his truck and receiving instructions. He would return there each day. Deliveries by him in New South Wales were a common, indeed regular, feature of his work, including on days when he was the only driver. The fact that in percentage terms he spent much more time in Queensland making deliveries than he did in New South Wales does not mean that he did not usually work in New South Wales. There was nothing unusual about him making deliveries in New South Wales. In fact, it was usual for him to do so.

In Which State or States was the Applicant Usually Based

Because there was no one State in which the applicant usually worked in his employment, it was necessary to consider the State in which he was “usually based for the purposes of that employment”.
The organisation of the Tweed Heads on-site warehouse as part of the employer’s Queensland operations, and the fact that the applicant’s employment was mainly administered through and costed to the Queensland branch is relevant to the State in which he was usually based for the purpose of his employment. So too are some of the other facts including that the worker took Queensland public holidays, not New South Wales public holidays. Tweed Heads was the place where the applicant turned up for work each morning, received his instructions, loaded his truck, reported to and returned to at the end of each work day. Tweed Heads was the place at which the truck he used was based. It was the centre out of which he operated, and the fact that he spent, on average, a large part of his working day driving on roads in Queensland does not alter this fact. The Tweed Heads warehouse was his base. It was his usual base. The Court concluded New South Wales was the State in which the worker was usually based for the purpose of his employment.

The limitation issues arising out of the Workers Compensation legislation

An issue which has arisen with respect to s93K(4), is whether this provision displaces the effect of s14(1) of the Limitation Act 2005(WA), which requires a claim for damages for personal injury to be commenced within 3 years of the date of the accrual of the cause of action.
In Abreu v Thomas Peacock & Sons Limited [No 3] [2012] WADC 31, the plaintiff worker argued, inter alia, that the effect of section 9 of the Limitation Act 2005 (WA) was to permit other limitation provision in other legislation to operate and s93K(4) ousted the operation of s14(1) of the Limitation Act 2005 (WA). The employer defendant’s position was that s14(1) of the Limitation Act 2005 (WA) governed all actions for damages relating to personal injuries.
The primary judge’s decision, upheld the plaintiff workers position regarding the construction of s93K(4) of the Act and at [54] stated:

“The only certainty that can come from a proper interpretation of the compensation provisions is to hold to those provisions are in fact limitation provisions as defined in section 9 of the Limitation Act and therefore the limitation period in section 14 does not apply. In respect of workers who potentially have a claim at common law the scheme of the Compensation Act is to restrict the worker’s access to the common law system by reference to the termination date. That date may be short or long (and may be extended) depending on the circumstances, but it is a provision that will then operate fairly in the circumstances of each individual case. Support for this interpretation which produces a modification or extinguishment of a cause of action or otherwise bars the right of action is to be found in the requirement in s93O Compensation Act that the employer to give notice to the worker as set out earlier. That requirement is a necessary adjunct to the modification or extinguishment of what would otherwise be limitation periods.”

The primary judge’s decision, was overturned on appeal, by the Full Court of the Supreme Court of Western Australia: Thomas Peacock & Sons Pty Ltd v Abreu [2013] WASCA 19.
Section 93K(4) does not extinguish the cause of action, it prescribes a time within which an action for damages must be commenced if the Court is to have the power to award damages. Whether this makes s.93K(4) a limitation provision within the meaning of s.9(2) of the Limitation Act was not the subject of any submissions. However, even if it is such a limitation provision it makes no difference to what follows.
The critical question is whether, by virtue of s.9(1) of the Limitation Act, the relevant limitation period for a claim for damages made pursuant to s.93K is contained in s.93K(4), and s.14(1) of the Limitation Act has no operation.
The Court unanimously held that was not the case. S.14(1) of the Limitation Act does not “affect” the operation of s.93K of the Workers Compensation Act; the provisions are directed to different ends and operate quite independently. Both provisions apply to a claim for damages made pursuant to s.93K. The limitation period of three years after the cause of action accrues reflects the balance which has been struck by the legislature between the interests of the respective parties.
It recognizes that a plaintiff must have a reasonable opportunity to bring a claim but, on the other hand, a defendant should not have a claim hanging over its head indefinitely or be subjected to a delay of a magnitude which puts at risk a fair trial of the claim. The purpose of the limitation period is to ensure a final point at which a potential defendant can assume that it is no longer at risk from a claim; when it can part with any relevant papers and order its affairs on the basis the potential liability has gone: Yew Bon Tew v The Kenderaam Bas Mara [1983] 1 AC 553 at 563.
There may be hard cases where the limitation period expires before the requirements of s.93D(4) of the Workers Compensation Act are complied with, although having regard to the regime set out in the Act, they should be rare indeed. The Court held the primary judge erred in finding that s.14 of the Limitation Act did not apply. His Honour should have held that it did and that the respondent’s claim was out of time.
A contention raised on cross-appeal that where s.93K applies to an action for damages for personal injury, the cause of action does not accrue for the purposes of s.14(1) of the Limitation Act until the worker obtains an assessment that he or she has a permanent impairment greater than 15% was rejected.
The Court accepted that it was plainly the purpose of s.55(1)(a) and (b) of the Limitation Act that time did not run while a person was unaware that he or she had suffered a “not insignificant” personal injury, that is an injury which is not “trifling” or “of no consequence”. Whether or not an injury is of such a nature must depend upon the extent of the injury itself. The effect of s.55 is that the cause of action accrues when the person first becomes aware that they have suffered such a personal injury or there is some symptom, clinical sign or other manifestation consistent with such a personal injury. The relevant criterion is awareness, or means of awareness, of the existence of a personal injury which is not insignificant.

Contract of service or contract for services

In Tasmanian Contracting Services Pty Ltd v Young [2011] TAS SC 49, the Court reviewed the law relating to whether the particular relationship being considered in that case amounted to a “contract of service”. The fact that the sort of relationship that amounts to a contract of service remains largely undefined as a legal concept, except in terms of various criteria of no fixed relevance, makes it difficult to determine whether a particular relationship or a particular occupation gives rise to a contract of service. The real question is whether the person is an employee.
The source documents signed by the parties in Tasmanian Contracting Services Pty Ltd v Young were based upon similar documentation used in Accident Compensation Commission v Odco Pty Ltd (1990) 95 ALR. Those documents provided for the person performing the work to be an independent contractor who was hired out to third parties. After detailed examination of the terms of the agreement and the totality of the relationship the Court upheld the efficacy of the contractual documents and held that Young was not an employee, but an independent contractor.
The Full Court of the Supreme Court of Victoria in Elozac Pty Ltd v Shirreff [2011] VSCA 405 held that, while earlier authorities often regarded “control” as the determinative factor in deciding whether someone was an employee or an independent contractor, later authorities have recognised that control (or more particularly, the right to exercise control) is only one of a number of possibly relevant factors (albeit an important one) in determining the issue. Modern authorities are to the effect that it is the totality of the relationship between the parties which must be considered. Relevant factors in determining the nature of the relationship between a person who engages another to perform work and a person so engaged include:

(a) the degree of control which the former can exercise over the latter;

(b) whether what is being supplied is work and skill of a person (contract of service) or the supply of equipment or its performance (contract of services);

(d) the method of payment (and in particular, whether payment is determined by hours of service or output of production);

(e) whether or not income tax is deducted in holiday pay or long service leave or any holiday pay or long service leave or superannuation paid;

(f) whether or not the person engaged employs employees or conducts his business in partnership;

(g) whether or not there is a power to delegate the work; and

(h) whether or not the person engaged considered the relationship as one of an independent contractor.

The Full Court of the Federal Court of Australia recently delivered a judgement in ACE Insurance Limited v Trifunowski [2013] FCA FC 3. The issue under consideration was an entitlement to annual leave and long service leave and raised the issue of whether insurance agents were employees or independent contractors.
The central issue in the appeal was whether five insurance sales agents were the employees of a general insurer. The agents sold or oversaw the selling of insurance products of the insurer. They were rewarded by way of commission. They were each engaged under a contract which stipulated that they were not employees of the insurer. The Trial Judge, however, found that they were employees. The appeal was dismissed.
The leading judgement was written by Buchanan J who extensively reviewed the authorities concerning the law for contracts whereby work is performed, loan or hire cases, direct engagement cases – statutory rights (salesmen), direct engagement cases – taxation, recent cases on vicarious liability, labour hire or supply.
When analysing the laws in regard to contract whereby work is performed, Buchanan J observed in the present case, the contracts executed by the parties stated that the agents were not employees, but were independent contractors. The judgement under appeal held to the contrary.
There may be many good reasons why it might suit an individual worker to be treated as an agent or a contractor rather than as an employee. Those reasons may include a freedom to incorporate or act in partnership (with one’s spouse for example); different taxation obligations; more freedom about when, and how, work is done; the ability to work for others at the same time etc. However it is increasingly necessary that parties conduct themselves (in their relationships with regulatory agencies, and not just each other) in accordance with the correct appreciation of the nature of their relationship, not just as it may suit them (or one of them). The parties may agree the terms of their contract, but any statement by them about the character of their relationship, or of their contract, has consistently been held not to be decisive of the true legal character of either.
It is also difficult to give much independent weight to arrangements about taxation, or even matters such as insurance cover or superannuation. These are reflections that are viewed by one party (or both) that the relationship is, or is not, one of employment. For that reason, in Buchanan J’s view, those matters are in the same category as declarations by the parties in their contract (from which they often proceed). They may be taken into account but are not conclusive. These matters are less important than the adoption by the parties (where this occurs) of the rights and obligations which are fundamentally inconsistent with basic requirements of a contract of employment, such as the ability to delegate the discharge obligations under a contract to another person, or where there is a lack of control over how work is done.
The fundamental test remains more or less constant. The examination of various cases should also be understood in the context that a basic (but often unstated) premise is that a contract of service requires discharge of duties by the personal service of the employee, whereas in a contract for services that is only one of the possibilities. The fact that the need to characterise the relationship at all only ever arises when personal service, is, in fact, provided is an important element to be borne in mind. The possibility for confusion about the character of the relationship can usually only arise in that circumstance.
In relation to loan or hire cases, Buchanan J observed apart from the (relatively) simple case of a person working directly in, or for, the business of another there is a variety of other arrangements whereby a person’s labour may be provided to a business, without an employment relationship thereby arising. For example, there have been a number of cases where an employee was loaned to a different business or provided to it with machinery under hire.
Under more modern arrangements, individuals may be provided to an enterprise or business by a labour hire agency, by which agency the individuals are themselves employed, or to which they contract.
The notion of ultimate, or reserved, authority came to be seen as an essential aspect of the application of the “control” test. In the case where the issues are vicarious liability for the consequences of negligent performance of work, it is readily apparent why attention should be concentrated on ultimate authority over the manner of performance of work. The same approach was adopted in later cases turning on different contractual arrangements, but it has not survived as the sole determinant of the question.
There is a marked distinction between the transfer of a servant on the one hand, and the transfer of his services on the other. This last aspect is critical so far as modern labour hire arrangements are concerned.
Considering direct engagement cases – vicarious liability (early cases) these were cases where no loan or hire was involved. Engagement to perform work was direct. The cases involved consideration of vicarious liability. The question was: what was the nature of the engagement? The control test (in one form or another) was at the forefront of the principles to be applied to the question of employment. Reviewing the direct engagement cases – statutory rights (workers compensation) involved a review of the decisions in Humberstone v Melbourne Timber Mills, Zuijs v Worth Bros. Pty Ltd and Marshalls v Whitakers Building Supply Company and consideration of an extended definition bringing manual workers under workers compensation coverage, the references to notion of control, provision of equipment and payment by the results are all instructive.
Considering direct engagement cases – statutory rights (salesmen), there have been a number of cases decided at the highest level concerning whether salesmen working on commission were employees. The cases (like the present) had the feature that they involved contracts stating that the salesmen were not employees. That contention has been frequently disapproved. A variety of different outcomes were reached in the cases referred to. In Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue (Vic.) market researchers who were not conducting business on their own account were held to be employees.
Different considerations carried the day in Vabu Pty Ltd v Commissioner of Taxation which concerned couriers of three types: using bicycles, motorbikes or motor vehicles. The New South Wales Court of Appeal emphasised there were several considerations favouring the view that the couriers were not employees. They supplied their own vehicles (be they bicycles, motorbikes, cars, utilities or vans). They have to bear the expense of providing for and maintaining these vehicles: They pay for running repairs, petrol, insurance and registration. The company provides telephones, uniforms and signage. The couriers’ expenses are very considerable. The status of the bicycle couriers was later dealt with differently by the High Court, but the conclusions of the Court of Appeal concerning motorbike and motor vehicle couriers remain undisturbed.
Those conclusions are, however, not at large. In particular, so far as they concern the provision of motor vehicles, the use of the vehicles as a conveyance for goods in that case must be given due weight. In Roy Morgan Research Pty Ltd v Federal Commissioner of Taxation the Full Court of the Federal Court came to a similar view as the Full Court of the Supreme Court of Victoria in the earlier Ray Morgan case. It rejected, as it did so, reliance on the cost of motor vehicles as a sufficient indicator of a separate business, at least in so far as such a purchase was directed to personal transport.
Recent cases on vicarious liability were considered commencing with Stevens v Brodridge Sawmilling Company Pty Ltd which was extensively quoted from. The existence of control, while significant, is not the sole criterion by which to gauge whether a relationship was one of employment. It is merely one of a number of indicia which must be considered in the determination of that question. Other relevant matters include, but are not limited to, the note of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and the provision for holidays, the deduction of income tax and the delegation of work by the putative employee. The “so-called organisation test” is referred to by the Court but Mason J was unable to accept that the organisation test could result in an affirmative finding that the contract was one of service when the control test either on its own or with other indicia yields the conclusion that it is a contract for services. Of the two concepts, legal authority to control is the more relevant and more cogent in determining the nature of the relationship.
The nature of the relationship may be legitimately examined by reference to the actual way in which the work is carried out.
His Honour came to some conclusions as follows:

(a) It was trite to say that the survey of the cases yielded no single or unifying test to determine whether an employment relationship exists. Some features of a particular relationship may tend strongly against such a conclusion. The principal among such features, are the contractual terms which deny any requirement for personal service or represent clear indications of the pursuit of an independent business. Even where such features are absent the proper conclusion may be that a particular relationship is not one of employment, but the analysis is less straight forward.

(b) Of the indicia of employment it is clear that a right of control remains an important consideration in many cases. It may be found in the right of organisation and allocation of work, as much as in some theoretical right to say how actual work should be done.

(c) The terms of the contract establishing the legal parameters of the relationship are the appropriate point of reference and post contractual conduct is not relevant under contract law. However in cases involving a consideration of the particular relationship where it is necessary to examine whether a particular relationship is valid employment or of a different character, it now seems established in Australian law that all the circumstances should be taken into account.

Section 7 of the Industrial Relations Act 1979 contains a definition of the word “employee”. Relevantly to this matter, it means any person whose usual status is that of an employee. Unlike Section 5 in the Workers Compensation and Injury Management Act 1981, it does not contain an extended definition of “worker” to include someone who is in substance, remunerated for their manual labour or service, irrespective of how they are paid.

Labour Hire or Supply

Before turning to the facts of the present case, mention was made that increasingly, alternative forms of provision of labour have been used in Australia which do not involve direct employment by the enterprise in whose business the labour is provided.
Some of those arrangements were discussed in Fairwork Ombudsman v Ramsey Food Processing Pty Ltd [2011] 198 FCR 174 at [61]‑[92]. Such arrangements may legitimately (i.e. as already proved by various courts) include provision of workers by a company at arms-length from the business being supplied, or provision of labour by a related company. The individuals whose personal service is thereby provided may be engaged as the employee of the labour provider or as contractors to it.
Provided the arrangements are not a sham (see Ramsey at [102]‑[117]) there is no objection in principle to the use of any particular form of legal relationship. However, as the cases referred to show, there may be a lively contest, for any one of a number of reasons about the accuracy of the characterisation given to the relationship, even from one of the parties, well after it begins. So it was in the present case.

Conclusions about Employment

The following list of matters arising under the relevant contracts with the agents were said to be evidence of non-employment:

(a) each agent was “engaged in the business of selling insurance on his own account as an independent contractor”;

(b) each agent was to operate as an independent contractor and nothing in the contract was to create any relationship of employer and employee;

(d) there was power to conduct a business through a corporation (provided that he or she was a director) and to assign to any such corporation his or her rights and benefits under the contract after giving 45 days’ notice;

(e) there was power to engage in other activities or business, provided that they did not conflict or compete with the obligations under the contract;

(f) there was power to engage persons to provide secretarial, administrative or other services to the agents at their sole expense;

(g) there was a requirement on each agent to maintain an “agency account”, and against which the insurer may set off any amounts owing to it against commissions owing by the insurer;

(h) there was a requirement that agents bear all expenses and indemnify the insurer against losses;

(i) there was provision that the agents had sole responsibility for all credit arrangements made between them and any other person and for any contracts made between them and any “employee, delegate, partnership or corporation”;

(j) there was a promise by the agents that they shall not cause, commit or suffer any of their servants or agents to do anything which would cause them to be in breach of their contract;

(k) payment was only by a commission in the event of a sale or renewal; there was no fixed wage or salary;

(l) each agent was empowered to allocate and distribute to other sales agents in his or her territory or sub-region sales leads referred to him or her by the insurer;

(m) the contracts provided for termination on 7 or 10 days’ notice.

Of this list, (d), (f) and (h) were in the Judge’s view, the strongest indications against an employment relationship, but they must be seen in context. The permission in (f) did not extend to a power of delegation of the work in question, which was carried out personally by the agent concerned. Reference to another agent under (l) does not detract from this conclusion, because it refers to sub-regional and territory representatives. It reinforces the methods of control and organisation of work employed by the insurer.
The expenses referred to in (h) were, in the case of sales representatives, principally the provision of a motor vehicle of choice. Employment of secretarial assistance or rent of offence space by sub-regional representatives was insufficient to make a critical difference, even in their cases.
The strongest indicator of truly separate business was the nominal power of incorporation (d) however, the precise nature of this provision requires attention. These contracts were made with individual agents. The agent was the authorised seller, no one else, what was assignable to a corporation were “rights and benefits” under the contract. The Trial Judge inclined to the view that this merely permitted channelling of income to a corporate vehicle. The right to engage in other business was subordinated to the personal obligations owed by the agents to the insurer. Permission to engage staff did not amount to a power of delegation. Like the Trial Judge, those matters were not regarded as sufficient indications of incompatibility whether relationship of employment, so far as representatives at any level were concerned, nor were they regarded or the contracts as a whole as indicative of that level of independence which would be necessary to displace the indications that the true relationship was one of employment.
There were a few examples of a contract purportedly with a corporation. Those few examples were also in the standard form and in most cases also personal service by an individual agent was necessarily required. The existence of those contracts was an insufficient obstacle to a finding that two of the agents were employed by the insurer. It was only they who were entitled legally to sell the insurance policy, regardless of any payment of resulting commissions was directed.
Of the authorities referred to, the case which gave the greatest support by way of general analogy to the position of the appellants in the present case was the decision of the Privy Council in Australian Mutual Provident Society v Chaplain 18 ALR 385. That case involved an insurance salesman. It concerned a claim for long service leave. The salesman was found not to be an employee. There were a number of factors mentioned which were, in context held not to be conclusive. There were some other factors which were held to point clearly to the conclusion that the salesman was not an employee. One was his right to enter into a partnership. Another was the lack of any restriction preventing the salesman in that case from delegating the whole performance of his work to one or more sub-agents. Another was the right of a salesman to incorporate. Another was the fact that the contract contemplated that the salesman might carry out his duties through his own employees. Each of those features were at odds with the essential nature of a contract of employment as a contract for the provision of only personal services. There are other indications that the salesman was carrying on business on his own account. Those indications were seen in the large proportion of business expenses claimed in tax returns, including commissions to sub-agents, wages to secretarial staff, depreciation of motor car and office furniture and equipment, and other typical business expenses.
However, the Court held it was easy to distinguish Chaplain on the facts in a way which drew the attention to the weakness in the appellant’s position. In the present case, there was close control over the organisation of the work and the deployment of agents in sales teams. The agents had no right to contract in partnership, nor to appoint sub-agents. When recruiting was done, the relationship created was directly with the insurer. There was no effective right of incorporation; simply a right to assign the rights and benefits of the contract (nor the burden, as the Trial Judge noted). There was no demonstrated history, at the level of sales representatives at least, that business expenses of the kind thought important in Chaplain were incurred, with the exception of motor vehicle expenses. Any comfort from Chaplain was meagre and not much weight was placed on it. Whether the facts as found by the Trial Judge are tested against the analysis by the Privy Council in Chaplain, or the High Court in Hollis, or whether they are tested more generally against the jurisprudence which developed over a long period of time, the Court concluded the Trial Judge was correct to conclude that the agents in the present case lacked the independence to be regarded as not employees of the insurer. None of the indicia which would stand positively against a relationship of employment was truly established.
The overwhelming impression from the evidence is that the agents at each of the levels considered were specifically trained by the insurer in particular techniques of selling which the insurer had adopted as its own, and the training was constantly reinforced. They then worked under close direction, supervision and organisation with a view to selling insurance products in a way determined by the insurer. They had no real independence of action or true independence of organisation. Once the mutual representation, that the agents were not employees, were set to one side there was no adequate foundation to put a conclusion that the relationship was anything other than one of employment. The representation did not suffice to make it one.

Incorporation

The Trial Judge’s conclusion that the arrangements which allowed incorporation

WORKERS COMPENSATION CASE LAW UPDATE &ndash; 2013

WORKERS COMPENSATION CASE LAW UPDATE – 2013

Marco Tedeschi

WORKERS COMPENSATION CASE LAW UPDATE – 2013