It is not uncommon that Australian courts are asked to consider whether an individual is an employee or an independent contractor. However, what is uncommon is the question of who an individual’s employer is. The NSW Court of Appeal in Andonovski v Park Tec Engineering Pty Ltd [2009] NSWCA 305 was recently asked to consider such a dilemma.

What was not in dispute was that Mr Andonovski was employed by a company within the Barbeques Galore group (the Group). However, the identity of the employing company within the Group was not clear and in turn became a pivotal question.

Mr Andonovski commenced employment with the Group during late 1996 or early 1997. In March 2004 whilst working at the premises of a subsidiary of the Group, Mr Andonovski injured himself when attempting to empty cardboard waste contained in a wire cage, resulting in him falling backwards from a platform onto a concrete floor.

The premises were occupied by Park Tec Engineering Pty Ltd (Park Tec) (a subsidiary company of the Group) which manufactured components for barbeques and other items. His Honour Judge Johnstone of the NSW District Court found that Mr Andonovski’s employer was Park Tec.

This finding meant that Mr Andonovski was not able to continue a common law claim for damages against Park Tec.

On appeal, the NSW Court of Appeal was required to re-examine whether Barbeques Galore or Park Tec was Mr Andonovski’s employer. Justice Sackville, who wrote the leading judgment, approved the decision of Shaw v Bindaree Reef Pty Ltd [2007] NSWCA 125 where Acting Justice Giles said that an objective assessment as to the state of affairs relating to an employment contract was paramount in ascertaining which employer entered into an employment contract. The subjective intention of the parties was not considered material to the enquiry.

Ordinarily, the letter of employment or employment contract is the starting point for identifying a person’s employer. In this case no such material was produced, nor was evidence adduced as to the signatory to the letter of termination given to Mr Andonovski on a Barbeques Galore letterhead. The Court therefore had to examine the totality of the employment relationship.

Justice Sackville considered the following circumstances to be significant:

  • Mr Andonovski had completed a form seeking employment with Barbeques Galore Limited
  • The weekly payslips issued were in the name of “Barbeques Galore” and made no mention of Park Tec
  • The PAYG payment summary provided to Mr Andonovski for the year ending 30 June 2004 recorded the payer’s name as Barbeques Galore
  • The letter of termination was signed on Barbeques Galore letterhead.

In contrast, Park Tec had admitted it was the employer of Mr Andonovski and pointed to some facts that it said proved that it was the employer. These included a code number on Mr Andonovski’s details in the personnel file which referred to his employer as being Park Tec; that the work undertaken by Mr Andonovski was performed at the premises of Park Tec’s operations; and that Mr Andonovski’s leave forms were submitted to and approved by Park Tec.

However, Justice Sackville considered these matters to be equivocal and concluded that, on the balance of probabilities, the employer was Barbeques Galore and not Park Tec, at the time Mr Andonovski was injured.

This recent NSW Court of Appeal decision provides a warning to employers to maintain clear and unambiguous employment records in relation to their employee’s employment, particularly if their employees are working for entities with many related or subsidiary companies, if they undertake long term secondments, or in the case of transfers of businesses.

Employers should ensure that all employment contracts and letters of appointment clearly identify the employing entity. Significant changes to the terms and conditions of an employee’s employment should be recorded in writing and agreed to by the employee and then kept in safe storage. In doing so, this will ensure that:

  • employers comply with their statutory record keeping obligations under section 535 of the Fair Work Act 2009 (which attracts civil penalties for breaches)
  • employers comply with their statutory obligations under the relevant income tax legislation
  • responsibility for injuries sustained by employees at work is easily attributable to the correct employer.