The Fair Work Commission’s (FWC) decision in Alan Dick v James Voros, to characterize the taxi owner and driver relationship as one of employment, is in direct contrast to earlier Federal Court decisions and rulings of the ATO.

The FWC dismissed the jurisdictional challenge by the taxi owner and held that the taxi driver was not a bailee or independent contractor of the owner, thereby enabling the driver to gain access to the unfair dismissal remedies under the Fair Work Act 2009.

The taxi driver worked for the owner between 1996 until December 2012, when the relationship was terminated. The agreement was verbal and included an earning arrangement which allowed the driver to keep 48% of his takings, whilst the owner retained 52%.

Commissioner Ryan of the FWC distinguished the earlier Federal Court of Appeal decision in De Luxe Red & Yellow Cabs Co-Operative (Trading) Society Ltd & Ors v Commissioner of Taxation (De Luxe) which held cab drivers were contractors, rendering it unhelpful in dealing with a jurisdictional challenge in an unfair dismissal case. He also noted that the decision lacked direct evidence from the drivers as to the actual features of the relationship, and was informed by generalisations as to the character of the relationship.

Commissioner Ryan considered the changing industrial relations environment since De Luxe. He recognised that at the time no industrial instrument applied regulating taxis, and that the subsequently introduced Passenger Vehicle Transportation Award 2010impacted upon the protections now available to taxi drivers.

A qualitative assessment of the relationship was conducted by reference to a re-casted summary of the law in the FWC full bench decision Jiang Shen Cai trading as French Accent v Do Rozario. Factors in support of the employment relationship included:

  • the exclusivity of the driver’s services;
  • the owner’s responsibility to maintain the vehicle;
  • the driver’s inability to delegate or sub-contract;
  • the driver’s inability to build goodwill as an independent business;
  • the owner’s ability to terminate the driver; and
  • the minimal expenditure by the driver on business expenses.

The earnings of the cab driver were also considered and it was found that the cab driver received an annual earning substantially inferior to the award entitlement, and contrary to a driver conducting his own business.

The Commissioner ruled that the driver was “clearly and unambiguously not carrying on a business of his own but is clearly and unambiguously providing his personal labour”.

Notwithstanding, the unequivocal findings of the FWC, various factors were identified in possible support of a bailment or contractor relationship, including:

  • a 52:48 split arrangement in relation to takings instead of a periodic wage;
  • the driver having an ABN number, albeit at the request of the owner; and
  • the fact that during the 16 years the driver never requested nor received any sick leave and paid holiday leave.

The FWC heard evidence from both parties that during the 16 year relationship there were no PAYG deductions made on the driver’s remuneration. The taxi owner exhibited an ATO document which sat in stark contrast with case law and set a different test for the existence of an employment relationship. Although the ATO advice did not vindicate the taxi owner’s position it aligned with the parties’ assumption as to the contractor relationship.  

The case is a pertinent reminder of the substantive approach being taken by courts, and the obligations of employers to ensure accurate classification of workers, and the obligation to provide their due entitlements pursuant to the Fair Work Act 2009, the National Employment Standards, and any relevant Modern Award.

The courts will continue to look behind the label the parties use to describe their relationship, and focus on the reality of their relationship.