This case deals with the interpretation and application of the ‘deemed worker’ provisions under the Workplace Injury Rehabilitation and Compensation Act 2013 (WIRC Act). The interpretation and application of these provisions had previously not been considered by a Court. This is the first appeal to reach verdict under s85 of the WIRC Act.
The primary issue for the Supreme Court to determine was whether the contracting company Cloudless Vision Pty Ltd (CV) through which Mr Yoresh (the injured party) provided services to BSA was carrying on ‘independent trade or business’ within the meaning of cl 9(2) of Schedule 1 of the WIRC Act.
Mr Yoresh was a telecommunications technician, he was the sole employee of CV and he was also a director of CV. CV was contracted by BSA to install Foxtel equipment into the homes of consumers.
Mr Yoresh was injured at work and lodged a claim against CV’s policy of insurance, it was rejected. Mr Yoresh subsequently lodged a claim against BSA’s insurance policy. The Victorian WorkCover Authority (VWA) accepted Mr Yoresh’s claim. The VWA deemed Mr Yoresh to be a worker in respect of the relevant period and BSA was deemed by the VWA to be Mr Yoresh’s employer.
BSA objected to the decision, pursuant to s79 of the WIRC Act. The VWA affirmed its original decision. Following this, BSA appealed the VWA’s decision under s85 of the WIRC Act.
The Decision on Appeal
The appeal was heard in the Supreme Court of Victoria, before Justice McDonald who determined that CV was not carrying on an independent trade or business, in the course of installing the Foxtel equipment, in accordance with the terms of its contractual relationship with BSA. BSA’s appeal was dismissed by Justice McDonald.
The phrase is not defined in the WIRC Act. In order to reach the conclusion that CV was not carrying out an independent trade or business, Justice McDonald followed the established principles of statutory interpretation. Justice McDonald examined the ordinary and natural meaning of the word ‘independent’ and then considered the word in the context in which it appears, within the phrase ‘independent trade or business’.
Justice McDonald also examined the statutory purpose of the surrounding provisions of the legislation, primarily ss 9(1) and (5) of the WIRC Act which extend the obligation to pay workers compensation premiums to a principal who enters into a contractual arrangement with a contractor in circumstances which satisfy the criteria in ss 9(1)(a)-(d).
Justice McDonald also examined various other factors that arose in the context of the relationship between CV and BSA to conclude that CV was not carrying out an independent business or trade installing Foxtel equipment. The factors that Justice McDonald examined included, but were not limited to:
- There was no negotiation between CV (Mr Yoresh) and BSA in respect of the terms of the initial contract of engagement i.e. BSA presented it to Mr Yoresh and told him to ‘take it or leave it’.
- BSA was CV’s only client for the relevant period and its sole source of income.
- CV was subjected to significant control from BSA. CV was required to provide BSA with details of its availability to undertake work three months in advance.
- Mr Yoresh would receive the work allocated to him by BSA the night before, and he accessed information in respect of the jobs by logging onto the online system.
- CV did not advertise its services to other potential customers, and did not hold itself out to the world at large as a company that undertook Foxtel installations.
- Mr Yoresh did not wear a CV uniform when he attended customers’ homes, and his CV van did not have any CV signage on it. CV was required to provide its own means of transport.
- Mr Yoresh wore a Foxtel T-shirt with BSA insignia on it, and he introduced himself to customers as being from Foxtel.
- CV had no financial dealings with Foxtel’s customers i.e. all invoices were automatically generated by BSA’s computer system once Mr Yoresh had closed off a job.
- Mr Yoresh was supervised by BSA. A BSA quality assurance employee would check the work which Mr Yoresh completed to ensure that he had done it properly.
Taking the above factors into consideration, along with the ordinary meaning of the word ‘independent’ and the operation and purpose of the surrounding sections of the legislation, Justice McDonald concluded that in its provision of services to BSA, CV was not carrying on an independent business of Foxtel installation.
Implications for you
Regardless of whether or not a person is deemed to be an independent contractor and not an employee, businesses who engage contractors to undertake work for them should be aware that these contractors might be classified as ‘deemed employees’ for the purposes of workers compensation insurance.
Businesses should examine the relationships between themselves and contracting parties, with reference to the factors examined by Justice McDonald in this case, some of which are set out above.
Businesses should be aware that in the event that the VWA determines that a contractor is a deemed employee for the purposes of the WIRC Act, that the business may be liable to pay a penalty and/or back pay insurance premiums that are payable to the VWA.