• The impact of this case on ATO policy is discussed in Decision Impact Statement: Jamsek v ZG Operations Australia Pty Ltd (No 3) (Published 15 May 2024).

ZG Operations Australia Pty Ltd & Anor
v Martin Jamsek & Ors

Judges: Kiefel CJ
Gageler J
Keane J

Gordon JEdelman J

Steward JGleeson J

Legislative References:
Fair Work Act 2009 - 13; 14

Canberra

Decision by:
Gordon J
Steward J

92 The central question is whether Mr Jamsek and Mr Whitby were "employed, or usually employed" by a "national system employer" so as to be "national system employee[s]" for the purposes of ss 13 and 14 of the Fair Work Act 2009 (Cth). The answer to this question is determinative of claims brought by Mr Jamsek and Mr Whitby for contraventions by one of the appellants or their predecessors ("ZG") of ss 44, 45 and 357 of the Fair Work Act ^[119] .

93 Other questions were raised in this appeal, namely: (2) for the purposes of the definition of "[w]orker" in s 3(1) of the Long Service Leave Act 1955 (NSW), whether Mr Jamsek and Mr Whitby were "employed, whether on salary or wages or piecework rates" by ZG (so as to enliven an entitlement to long service leave and payment for untaken long service leave ^[120] ); and (3) for the purposes of s 12(1) and (3) of the Superannuation Guarantee (Administration) Act 1992 (Cth), whether Mr Jamsek and Mr Whitby were employees of ZG, including on the basis that they worked under a contract that was wholly or principally for their labour (so as to create the possibility of a superannuation guarantee shortfall ^[121] ).

94 It was common ground that the second question was resolved by the answer to the central question. One aspect of the third question was in a different category. The parties accepted that even if Mr Jamsek and Mr Whitby were not employees of ZG (and they were not), the separate question of whether for the purposes of s 12(3) of the Superannuation Guarantee (Administration) Act they worked under a contract that was wholly or principally for their labour should be remitted to be determined according to law. It is a separate question about, and requires separate characterisation of, the contracts.

95 The principles we consider should be applied and the approach to be adopted in deciding whether the totality of a relationship between two parties is one of employer and employee are set out in Gordon J's reasons for judgment in Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd ^[122] ("CFMMEU").

96 The claims made by Mr Jamsek and Mr Whitby related to periods when the identity of the putative employer - the company that owned the business - changed. No party submitted that this affected the answer to the question whether the relationships between Mr Jamsek and Mr Whitby and ZG were relationships of employer and employee. It is therefore not necessary to differentiate between the two appellants or to differentiate between the two appellants and their predecessors. It is for this reason that the putative employer is referred to as "ZG". And, further, no party suggested that the various contracts which were in place during the claim period resulted in a different characterisation of the totality of the parties' relationships. It is therefore sufficient to primarily refer to two of the contracts - the 1986 Contract and the 1993 Contract.

97 The relevant facts may be stated simply. Mr Jamsek and Mr Whitby were each employed by ZG from 1977 until late 1985 or early 1986. For the latter part of that period, each was employed to drive ZG's trucks. In late 1985, ZG told Mr Jamsek and Mr Whitby (and the other drivers employed by ZG) that if they did not agree to become contractors and provide their own trucks, ZG could not guarantee them a job going forward. Mr Jamsek and Mr Whitby (and the other drivers) accepted ZG's offer. In 1986, the Jamsek Partnership (comprised of Mr Jamsek and his wife, established in late 1985 or early 1986) and the Whitby Partnership (comprised of Mr Whitby and his wife, established in late 1985 or early 1986) each entered into a written contract with ZG ("the 1986 Contract"). Under the 1986 Contract, each partnership provided a truck and contracted to deliver goods for ZG for which the partnership was entitled to be paid a minimum "per carton" rate of $120 per day or $600 per week. A copy of the 1986 Contract could not be located and was not in evidence.

98 In July 1993, each partnership and ZG executed a written "Contract Carriers Arrangement" ("the 1993 Contract"). The parties to the 1993 Contract again included each of the partnerships, identified as "Contractors", and ZG. Senior counsel for Mr Jamsek and Mr Whitby submitted that each contract, or "instrument", constituted a multiplicity of contracts, including contracts "between [ZG] and several partnerships", contracts "between the partnerships" and contracts "involv[ing] rights which [were] particular to the male members of those partnerships". But then junior counsel for Mr Jamsek and Mr Whitby submitted that "a partnership is not a separate legal entity" and so the contract was directly with Mr Jamsek and Mr Whitby.

99 The identity of the contracting parties was not in dispute. The 1993 Contract was a contract between the partnerships and the other drivers (referred to as "Contractors") and ZG. The nature of the contracting parties ^[123] and the context in which the contract was entered into assists to identify the purpose or object of the contract ^[124] . As we have seen, the partnerships were established in late 1985 or early 1986, contemporaneously with Mr Jamsek and Mr Whitby being offered, on a take it or leave it basis, the opportunity to "become contractors" with ZG and to "[u]ndertake carriage of goods as reasonably directed" ^[125] by ZG, and that offer being taken up. A partnership, being the relation which exists between persons carrying on their own business with a view of profit ^[126] , cannot, with respect to the activities of the partnership, be contracted to work in another's business or enterprise.

100 The relationships created by the 1993 Contract between each partnership and ZG were not ones of employer and employee. Under the 1993 Contract, the partnerships were required to supply a vehicle of a particular kind if the partnership was to "[u]ndertake carriage of goods as reasonably directed" ^[127] under that contract ^[128] . The pay rates under the 1993 Contract were set by reference to the partnerships supplying vehicles of a particular kind - "trucks over one year old with a carrying capacity of not less than 5 tonnes but less than 8 tonnes" ^[129] .

101 Under the 1993 Contract, each partnership's obligations in relation to the truck it supplied included:

(1)

to pay all legal costs, such as tax and duty, in relation to the vehicle and keep the vehicle mechanically sound, road worthy and clean (cl 2.1(c));

(2)

to obtain and maintain a public liability insurance policy for an amount of $2,000,000 or greater in respect of any liability incurred by the partnership in performing work for ZG (cl 2.1(h)); and

(3)

to obtain and maintain a comprehensive motor insurance policy over the vehicle for an amount of $5,000,000 or greater for third party property damage in respect of one accident (cl 2.1(i)).

102 Consistent with those contractual obligations, each partnership also agreed "[n]ot [to] offer [its] vehicle for sale with any guarantee of either continuity of work for [ZG], or implied acceptance by [ZG] of the purchaser" ^[130] . The significance of the supply of the vehicle by each partnership under the contract was reinforced by cl 5(e), which provided that sale of "the vehicle" for any reason other than replacement "automatically terminate[d] [the 1993 Contract] ... unless specifically, and in writing, agreed otherwise with the NSW Branch Manager".

103 Next, cl 1(b) provided that the partnerships were "[a]ble to work for other parties, providing that such work [was] not detrimental to either [ZG] or [ZG's] customers" and cl 2.1(g) provided that the partnerships agreed to "[n]ot engage or use the services of a driver for the vehicle without prior and continuing approval by [ZG]". This made explicit that the partnerships were not tied to ZG and that performance of the contractual obligations was not personal to Mr Jamsek and Mr Whitby ^[131] .

104 The work - carriage of goods - and the payment for that work do not suggest relationships of employer and employee. Under cl 1(c) of the 1993 Contract, the partnerships were to invoice ZG for the work carried out in the preceding week. Under the 1993 Contract, the pay rates changed. Under cl 7(a), the partnerships were entitled to invoice ZG on an hourly rate, rather than on a "per carton" basis.

105 The work the partnerships were contracted to carry out under the contract - carriage of goods - was as reasonably directed by ZG ^[132] . Much was made of this clause by senior counsel for Mr Jamsek and Mr Whitby, who suggested that it was "the most complete example of control one can conceive of". While cl 2.1(a) did confer control on ZG, it was control of a particular kind: a power to give directions to make deliveries rather than to direct how that should be done. Put in different terms, ZG engaged the partnerships to carry its goods to its customers; not to carry goods absent a specified destination.

106 There are clauses in the 1993 Contract that may suggest relationships of employer and employee. For example, cl 7(b) provided that the parties had "agreed to a standard nine hour working day with a usual starting time of 6 am, both parties accepting that the actual hours may vary due to work load fluctuations". While this may tend slightly in favour of relationships of employer and employee, it should be viewed in the context of cl 9(a), which provided that "[ZG] [would] where ever possible, offer any extra work to the [partnerships] at a mutually agreed rate for each job". This suggests that while the parties agreed on a nine-hour working day as a starting point, there was flexibility built into the contract for the remuneration to increase as extra work was undertaken ^[133] .

107 Assessing the totality of the relationships between the partnerships and ZG as set out in the 1993 Contract, Mr Jamsek and Mr Whitby were not employed by ZG. The partnerships, not Mr Jamsek and Mr Whitby, were the contracting parties. The partnerships each contracted to provide, to operate and to maintain a truck to carry ZG's goods to its customers. The partnerships were entitled to invoice ZG for carrying the goods that they carried. It is true that the 1993 Contract between the partnerships and ZG addressed the obligations of the partnerships providing drivers. But that is to be expected. A truck could not in 1986 or 1993 carry and deliver goods without a driver.

108 In 2012, the Whitby Partnership was dissolved after the dissolution of Mr Whitby's marriage. The evidence at trial was that Mr Whitby alone continued to provide, to operate and to maintain a truck to carry ZG's goods to its customers and, in return, Mr Whitby for himself (not on behalf of the Whitby Partnership) invoiced ZG for carrying the goods that he carried. That evidence was admissible to establish discharge of what had by that time become the contract terms pursuant to the "Contract Carriers Agreement Rate Review - 23rd May 2008" ("the 2008 Contract") ^[134] and the making of a new contract between Mr Whitby alone and ZG on terms identical to the 2008 Contract. The totality of that relationship was not that of employer and employee.

109 Consistent with the principles set out in CFMMEU ^[135] , it was both relevant and admissible to adduce evidence to establish, in the case of the Whitby Partnership and Mr Whitby, that the 2008 Contract was discharged, that a new contract was formed and what the terms of that contract were. By contrast, however, how the parties exercised their rights, performed their duties or unilaterally conducted themselves, whether at the time of a change in ownership of the business, the time of the dissolution of the Whitby Partnership or any other time during the period of the claim, was not relevant ^[136] .

110 Throughout the claim period, there were changes to the pay rates which were agreed between ZG and the partnerships. It was both relevant and admissible to adduce evidence to establish that an increase in pay rates was agreed and the terms of that agreement ^[137] . So, for example, evidence was adduced that in 1998 Mr Whitby approached the New South Wales State Manager of ZG to seek an increase in the pay rates from those set out in the 1993 Contract and that an increase was agreed which was then set out in the 1998 Contract. Evidence was adduced that similar requests were made in 2001 and 2008 and increased rates were agreed.

111 We agree with the orders proposed by Kiefel CJ, Keane and Edelman JJ.