Fair work says that taxi driver is employee

In a fair work case between a taxi driver and the owner of the taxi, the FWC has held that the relationship between them was one of employer/employee and not bailor/bailee, and therefore held that the unfair dismissal laws applied to their relationship. Facts The taxi driver (the Applicant) began driving for the owner (the Respondent) in 1996, and the arrangements made between them were all verbal (i.e., there was no written arrangement between the taxi driver and the owner). Nonetheless, the relationship was typical of taxi-driver/owner relationships generally, with the driver and the owner sharing the takings from the taxi (the owner’s share being 52% of total takings and the taxi driver receiving 48%, according to the trip sheets). Whilst the taxi driver would actually pay for the fuel, either out of cash takings received on that day or out of his own money, he would claim the amount back from the owner. The owner maintained the taxi and kept it registered and in running order, maintained the insurance on the taxi and bore the costs of repairing the taxi if the driver damaged it. In addition, the owner did not:

• provide the taxi driver with any form of paid leave;
• deduct any tax from the taxi driver’s earnings, nor pay any tax on the driver’s behalf; or
• make any superannuation payments on behalf of the driver.

The relationship between the owner and the taxi driver ended on 5 December 2012 when the owner advised the driver that the relationship was terminated. However, this appeared to be related to the fact that the driver had, since 2002, been the tenant in a house owned by the owner’s wife, and a dispute had arisen between them in relation to the condition of the house and unpaid rent. On 29 November 2012, the driver had been given notice to quit the house he and his family were living in. The submissions by the parties The owner had submitted that the relationship between himself and the driver was one of bailment, the driver was not an employee, nor did he receive payment under a contract of labour, and therefore the application by the driver was not within the jurisdiction of the FWC. In contrast, in support of his contention that he was an employee, the driver contended that:

• he had no ability to sub-contract or delegate work;
• he was paid by sharing the income of the taxi with the owner;
• the owner owned the vehicle, tools and other assets and provided repairs to the vehicle and maintained the insurance and registration of the vehicle;
• all commercial risk was taken by the owner and the driver merely drove the vehicle and gave the owner the share of profits as agreed;
• the owner had full control over the work and who could drive the vehicle;
• the driver was provided with owner created tax invoices for six years; and
• at no stage have there been any quotes, invoices, tools, equipment or risk provided by the driver for the business

The driver further contended that during this 16 year period:

• he had worked exclusively for the owner. No other work was taken by him during the period;
• he had always worked the ‘day shift’. This shift started at 5 am and finished at approximately 4 pm; u he usually worked 6 days a week, and at times 7 days a week. From June 2010, the driver worked 7 days a week; u
• as a practical matter he was working for the business of the owner and the relationship was characterised by the sale of his labour to the owner;
• he also understood that his WorkCover premiums were paid by the owner on his behalf;
• he did not generate goodwill as an independent business but rather as a part of the owner’s business; and
• he did not provide his own tools or equipment, relying instead exclusively on the vehicle of the owner

Reasons for Decision There has been a long history of case law which has examined the relationship of taxi owners and taxi drivers, including the seminal case of De Luxe Red & Yellow Cabs CoOperative (Trading) Society Ltd v FCT [1997] FCA 840, in which Hill J held: “In my view, reinforced by the preponderance of authority to which reference has been made, the agreement between the operators and drivers in each of the present cases was one of bailment and not one of employment. Although no single factual matter is determinative, it is the cumulative weight of all the facts which leads me to this conclusion.” However, the FWC stated: “Whilst the approach of the Federal Court in both of the De Luxe Red and Yellow Cabs cases might have been sufficient for the purposes of deciding a tax case, the decisions are not helpful when dealing with a jurisdictional challenge in an unfair dismissal case or in matters which involve compliance with modern awards or the Fair Work Act 2009”. Considering all the circumstances, as well as the changed industrial relations environment since the De Luxe Red & Yellow Cabs cases), the FWC concluded: “The Applicant was clearly and unambiguously not carrying on a business of his own but is clearly and unambiguously providing his personal labour to the Respondent for the benefit of the Respondent’s business. The Applicant was an employee of the Respondent.” Ref: Alan Dick v James Voros [2013] FWC 6715 Editor: Given the FWC’s comment that the approach for an unfair dismissal case might be different from that taken for a tax case, it is not yet clear what impact this case will have on the ATO’s approach to taxi driver/owner relationships.