WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATE’S COURT

PARTIES JENNIFER JILL BARRETT-LENNARD

CLAIMANT

-v-

EUROGROUP PTY LTD

RESPONDENT

CORAM INDUSTRIAL MAGISTRATE W.G. TARR

HEARD WEDNESDAY, 11 JANUARY 2006

DELIVERED WEDNESDAY, 11 JANUARY 2006

CLAIM NO. M 79 OF 2005

CITATION NO. 2006 WAIRC 03530

CatchWords Contravention of Long Service Leave Act 1958 - alleged failure to pay accrued long service leave - whether claimant an employee

Legislation Long Service Leave Act 1958

Cases referred to in decision 

Western Australian Builder’ Labourers, Painters and Plasterers Union of Workers –v- RB Exclusive Pools Pty Ltd trading as Florida Exclusive Pools 77 WAIG4

Result Claim allowed

Representation 

Claimant Mr T Hobday (of Counsel) instructed by Lewis Blyth & Hooper, Barristers & Solicitors appeared for the Claimant

Respondent Mr R Slater appeared for the Respondent

REASONS FOR DECISION

 (Delivered extemporaneously at the conclusion of the hearing, extracted from the transcript and edited by His Honour)

1         This is a claim pursuant to the provisions of the Long Service Leave Act 1958 (the Act).  That is an Act which provides for the granting of long service leave to certain employees whose employment is not regulated under the Industrial Relations Act 1979 and for matters incidental thereto.

2         The Act provides in section 8(1) that:

"An employee is entitled in accordance with, and subject to, the provisions of this Act, to long service leave on ordinary pay in respect of continuous employment with one and the same employer, or with a person who, being a transmittee, is deemed pursuant to section 6(4) to be one and the same employer."

3         Section 8(2) sets out the requirements to qualify for long service leave.

4         Section 4(1) of the Act defines "employee" and says inter alia that “employee” means:

 (a)   any person employed by an employer to do work for hire or reward including an apprentice or industrial trainee or any person whose usual status is that of an employee;

(b)   any person whose usual status is that of an employee;"

5         The entitlement to long service leave can be contracted out under section 5 of the Act and that section provides:

"An employer and an employee may agree that the employee may forgo his entitlement to long service leave under this Act if –

(a)   the employee is given an adequate benefit in lieu of the entitlement; and

(b)   the agreement is in writing."

6         The evidence before me is that the Claimant and Mr Slater, the Managing Director of the respondent company, commenced a social relationship in 1974, and that continued and resulted in them entering into a de facto relationship.  The parties lived together for some time prior to 1984 when there was an agreement that the Claimant would work with the respondent company.

7         The Respondent has given evidence by way of a statement from Mr Slater of what he claims were the terms of the agreement and, to quote, he said that:

"I explained to her, that she would receive a “fixed” weekly remuneration identical to mine, 52 weeks of the year, regardless of the hours worked, and that the amount would be reviewed on an annual basis."

8         He went on and said:

"I further explained that she would receive considerable additional personal benefits, including flexible working hours, interstate and overseas travel, an active and exciting business and social lifestyle and that we would take time out as and when necessary and she would be paid the same weekly amount regardless of the hours worked."

9         He also said:

 “I pointed out that she would not receive any formal “award” benefits, such as overtime, leave loading or long service leave, as she would be in fact a “Working Director” receiving special no-taxed benefits, which would not be able to be justified if she were engaged as a normal employee.”

10      The terms "normal employee" and "ordinary employee" have been mentioned on a number of occasions during the course of this hearing but the Act does not make a distinction between the types of employee.  A person is either an employee or they are not an employee.

11      This Court, when dealing with the question of whether or not a person is an employee, is generally faced with the task where one of the parties claims the other not to be an employee but a subcontractor.  It is normally in a breach of an award type claim that that issue arises.  There are certain tests that have found their way into the authorities.  In the Full Bench decision in Western Australian Builders' Labourers, Painters and Plasterers Union of Workers v RB Exclusive Pools Pty Ltd trading as Florida Exclusive Pools 77 WAIG 4 the methods of determining whether or not a person is an employee or subcontractor were set out and were under the headings of control, the time of starting work and hours of work, whether or not the person was conducting their own business, whether or not there was an obligation to work for the respondent, the mode of remuneration, whether or not it was based on an hourly rate or whether there was a quote for each job that was given.

12      Taxation was another consideration which was used to determine whether or not a person was an employee or a subcontractor, and the method of taxation deduction was a factor which helped a court determine whether or not the person was an employee or a subcontractor.  The provision and maintenance of equipment was another and, lastly, there was an organisational test, and in the Florida Pools case under that heading is said:

"There was evidence from Mr Morley that Mr Bon was part of the respondent's organisation.  If one applied the organisational test,

 . . . one considers whether an employee is employed as part of the business and his/her work is done as an integral part of that business.  That would demonstrate that a person was under a contract of service.  Under a contract of service the work, although done for the business, is not integrated into it but only accessory to it."

13      There does not seem to me to be any doubt in this case, when looking at the work that was being done by the Claimant, she was certainly an integral part of the organisation.  There is no suggestion that she was a subcontractor and as I have just mentioned those tests give some indication of the types of things that the Court looks at when determining whether or not a person is an employee or a subcontractor.

14      There does not seem to be any issue that the Claimant worked for the company.  The company, Eurogroup Pty Ltd, is a legal entity and it can only operate through the activities of humans and it employs them to do so.  They may be directors or shareholders, but it seems to me that if they start working within the company they become employees of the company.

15      The conditions of employment in relation to Ms Barrett-Lennard were such as were affected by the relationship she had with the Managing Director of the company and he, obviously, engaged her.  She was engaged by the company, and he was acting on behalf of the respondent company when he engaged her to work in the organisation for the company, and she did so, taking over, as I understand the evidence, from the accountant who resigned in 1984.  It seems as though she continued in that capacity until she resigned in 2004.

16      It is the case that she received liberal benefits as a result of her employment in the company and, certainly, she received benefits and enjoyed conditions that were not enjoyed by other employees, and that was because of her relationship with Mr Slater.  It cannot be said that she was in any partnership with Mr Slater and the only way I would have thought that she could be called anything other than an employee is if, in fact, it was the case that she was in a partnership; but this was not a partnership, this was an employment arrangement with a legal entity, as I said, and that was Eurogroup Pty Ltd.

17      There was a master-employee relationship of sorts.  Notwithstanding she was in a personal relationship with Mr Slater, she was involved in an active part of the business.  She was involved in the administration of the company, something that had to be done on behalf of the company.  As I have indicated, she certainly was not in a partnership with Mr Slater because he also was working for the company as Managing Director.  There is evidence that time and wages records were kept which included wages records of Ms Barrett-Lennard and, as I understand the evidence, each year she was provided with a group certificate.  She had, although she may have done it herself or had it done by some other employee, arranged for PAYE taxation to be deducted from her salary and , as I understand, that continued throughout the period of employment.

18      It is not uncommon in industry for different employees to have different benefits depending on their status within an organisation, their length of service and their relationship with the organisation, or parties in the organisation.  It is not suggested that Ms Barrett-Lennard did not work, although there was a hint of a suggestion that she was not doing the work she was required to, but as was put to Mr Slater, it was the case (and he agreed) that her performance as an employee, and they were the words used, was not up to scratch from, as I understand, 1999 when the personal relationship finished until she retired in 2004, but she still continued on doing the same work generally as she did but without the same benefits that applied when she was in a personal relationship with Mr Slater.

19      As I have indicated earlier, this is a claim under the Act.  The Act creates an entitlement to long service leave for employees.  As I have found on the evidence before me, Ms Barrett-Lennard could only be classified as an employee of the respondent company.  She may well have been a director, she may well have been a shareholder, but she was still an employee and it is not unusual to have a situation in a company where there are a number of directors, some work for the company and the others, while not putting in work for the company, gain benefits in other ways, but there are working directors and non-working directors and those directors that are working for the company, I would have thought, would be considered to be employees.

20      It has been suggested that this is an opportunistic claim, but it is not for me to determine whether or not that is so or whether there is fairness in the claim.  Fairness is not an issue.  The parties, it would seem, did not turn their mind to the requirements of the Act in relation to contracting out of the long service leave obligation, and the only way that can be done is in writing.  There is no evidence before me that there was any written agreement that the directors of the company would not be eligible for long service leave as is sometimes the case.

21      I repeat, the fact that she received the liberal benefits and worked the hours that suited her and the fact that she was provided with accommodation and other benefits, including overseas travel, was a result not of her relationship with the respondent company but the relationship with Mr Slater, the Managing Director of the company.

22      For the reasons I have said, I do not believe I can come to any other conclusion but to find that Ms Barrett-Lennard was an employee of the respondent company for the purposes of the Act and that she is entitled to the entitlement as provided for under section 8 of the Act.

23      It is the case that there is no issue being taken with the claim in relation to the duration of the employment and, that being so, it is ordered that the Respondent pay the Claimant the sum of $10,200.00 plus interest at the rate of 6% from 22 October 2004 fixed at $746.13.

24      Costs generally will not be awarded as I find that the claim has not been frivolously or vexatiously defended, however, disbursements costs of $45.00 will be allowed.

WG Tarr

Industrial Magistrate