Case: Forstaff Pty Ltd v Chief Commissioner of State Revenue (2004) 144 IR 1
Outcome: cited
The evolution of Australian authority, in particular in a labour hire context as here, may next be made to Forstaff Pty Ltd v Chief Commissioner of State Revenue (2004) 144 IR 1 at [106]-[107], where the following appears in the comprehensive reasons for judgment of McDougall J (the abbreviated references below to Forstaff being to a labour hire company and to the client of Forstaff being to the operator of the business for whom a relevant worker undertook working duties): '106. I think it is clear that, when a worker accepts an offer of work and goes to the client's premises to perform that work, the worker is subject to the immediate control and supervision of the client. The client must: (1) Explain to the worker the precise nature of the work to be done. (2) In most cases, supply the worker with appropriate clothing (including safety clothing) and tools and equipment. (3) Direct or control the worker in the performance of his or her work. 107. The direction and control that the client has arises, I think, de facto rather than de [jure]. That is because ... there is no contractual relationship between the client and the worker. The worker is bound, by the terms of his or her contract with Forstaff, to accept "the care, control and supervision of [the] client" and acknowledges "the right of [the] client to direct my work activities". If the worker does not accept the care, control and supervision, or direction, of the client then the client may terminate the assignment. But the client is doing so pursuant to its contract with Forstaff, the effect of which the worker acknowledges in his or her contract with Forstaff.' His Honour held in Forstaff that since a contract of employment will normally come into existence whenever a labour hire company offers and a worker accepts an assignment of work from a client of the labour hire company, there was no contractual relationship accordingly in operation between the worker and that client of the labour hire company. His Honour referred in that context to the indicia at [118] as tending to indicate the existence of a contractual relationship of employment, being the deduction of PAYE tax, the arrangement and payment of superannuation, the arrangement and payment of workers compensation insurance, entitlement to overtime, penalty rates, public holidays and other allowances. As to indications to the contrary, his Honour referred to the absence of entitlement to holidays or sick leave. 162 The opinion of Munby J at [89] was therefore that '[i] f the obligation to remunerate the worker is imposed on the agency, there cannot be a contract of service between the worker and the end-user' , and conversely 'if, at the same time, control is vested in the end-user, then there equally cannot be a contract of service between the worker and the agency' . Those propositions were considered by his Lordship to reflect 'a consistent line of authority holding that in [such] circumstances there is no contract of employment indeed no contract at all between the worker and the end-user' . Moreover it is in line with Australian authority (for example Forstaff ) to postulate the need for there to be a contract in operation between a putative employer and a putative employee in order to establish the relationship of employer and employee. The extensive line of authority listed in [90] of his Lordship's reasons bearing upon the propositions which he enunciated include Stephenson . I would draw attention to the concluding sentence at [53] of the reasons for judgment in Stephenson , being that '[o] n any view it would, in our opinion, be unusual to describe an individual as having a contract of employment with a party who has no legal obligation to pay his wages and to whom he had no legal obligation to provide work' . Further authority in England conceivably to like effect was nevertheless cited by Munby J at [90] of his reasons. 163 As I foreshadowed, the submission of CAO on the implications of the authorities identified by Munby J was that his Lordship '... appears to have approached the case in a more conventional way', and seemingly 'to have included the question of "intention" in the mix of issues for considering what the facts actually proved including whether or not there was a contract with anyone at all'. There is in my opinion considerable force in that submission, in the light also of Drake Personnel and Forstaff more recently in Australia. Whilst agreeing with Mummery and Sedley LJJ upon the outcome to the appeal, Munby J parted company with the thrust of what I think may be described as their Lordships' obiter dicta , as Munby J at least implicitly indicated at [80]; indeed Munby J further expressed in [81] 'very serious misgivings about the course on which [such dicta] would have us embark' . 192 I think that CAO is correct in its comprehensive case advanced, in a sense in the alternative, to the effect that the conduct and functions of the respective parties were not otherwise indicative of an employment relationship between the applicants and CAO, having regard to the totality thereof, and having regard in particular also to the criteria apparent from the authorities to which I have already referred, inclusive in particular of Stevens, Hollis, Damevski, ACT Visiting Medical Officers and BHP Billiton , keeping in mind in so doing that it is labour hire arrangements that are here inherently involved. I would acknowledge the relevance and force of all of the factors formulated in [135], each having varying significance without each being determinative in any fulfilment of the need for undertaking a balancing exercise in relation to all relevant factors bearing upon resolution of the principal issue arising as the existence or otherwise of relationships of employment. I would further acknowledge the prospective operation, in cases such as the present, of the principles enunciated generally in Mason and Humberstone , as well as perhaps more specifically in Drake , and additionally of course in Forstaff where reference to and examination of authority is undertaken by way of focus on labour hire arrangements.