ON CALL INTERPRETERS AND TRANSLATORS AGENCY PTY LIMITED v COMMISSIONER OF TAXATION (NO.3) [2011] FCA 366 (13 APRIL 2011)

Justice Bromberg has provided a useful summary of the applicable law in relation to the common dispute as to whether a particular person is an employee or an independent contractor.  This case involved a challenge by On Call Interpreters and Translators Agency Pty Limited (On Call) against  a finding by the Commissioner of Taxation that its interpreters and translators were properly characterised as employees. As a consequence of which On Call should have paid the superannuation guarantee charge on the remuneration it had paid. In reaching his conclusion, Justice Bromberg traversed the major authorities and tests established by the High Court and other senior courts. He supported the need to go behind the label parties may expressly place upon their relationship in order to determine its proper legal characterisation. He referred to the colourful language Justice Gray  adopted from one of the senior counsel( Michael Black  QC) in  Re Porter; Re Transport Workers Union of Australia [1989] FCA 226; (1989) 34 IR 179 at 184  where he said that:

“The parties cannot create something which has every feature of a rooster, but call it a duck and insist that everybody else recognises it as a duck.”

Continuing  the analogy  drawn from the animal kingdom, he referred to Lord Wedderburn’s multi-factorial test of looking at the whole picture as the ‘“elephant-test” – an animal too difficult to define but easy to recognise when you see it.’(The Worker and the Law, (3rd Edition, Penguin Books Limited, 1986 at 116) at [205].  He cited with approval the majority opinion in the High Court in  Hollis v Vabu . He said the distinction between an employee and an independent contractor is “rooted fundamentally” in the fact that when personal services are provided to another business, an independent contractor provides those services whilst working in and for his or her own business, whereas an employee provides personal services whilst working in the employer’s business [207].  Justice Bromberg stated that an independent contractor when providing personal services will be typically “autonomous rather subservient in its decision-making; financially self-reliant rather than economically dependent upon the business of another; and, (as I have said), chasing profit (that is a return on risk) rather than simply a payment for the time, skill and effort provided.” Whereas, an employee seeks the security of fixed and certain remuneration  nor desire in the exposure to the risk of loss in return for a chance of profit [214]-[215].

In reaching his conclusion, Justice Bromberg does not ignore the so-called   “control test,” however sets out a detailed assessment as to what constitutes a business and what constitutes working within one’s own business.  He usefully identifies the relevant indicia of what distinguishes  an independent contractor from an employee.

In this case, one of the difficulties for On Call was Justice Bromberg’s criticism that the few employees it called as witnesses ,out of 2,500 people engaged , were not agreed to be a representative of the whole.  Of the seven called, five were interpreters and two were translators.  Justice Bromberg found that the two translators were in their own business, whereas the interpreters were not. These findings could  not affect all of the 2,500 employees as each person’s individual circumstances might be different.  On Call lost the case because it was the party which bore the onus that the assessments made by the ATO were wrong.

This case provides further example of the evidentiary and legal burden imposed upon someone seeking to have set aside a decision that a particular individual is or is not an employee.  The tests are reasonably clear as to what has being referred to as “the totality” or “the business” tests.  Each case needs to be looked at on its merits.  It may be difficult to draw conclusions from an alleged representative sample( but see Redeemer Baptist School Limited v Glossop [2006] NSWSC 1201 where the sample called was found to be representative). Courts will not be motivated by speculation, generalisations and extrapolation, such concepts being decidedly unhelpful [224].